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From Seed to Shelf: Improving the Agricultural Supply Chain with Blockchain
With experts predicting the global population to grow from approximately 7.7 billion people today to nearly 10 billion in 2050, the $5 trillion food and agribusiness industry is inevitably poised for expansion. One approach to meeting the nutritional needs of the world’s growing population is to dramatically reduce the 1.6 billion tons of food that gets wasted each year, which translates into $750 billion dollars in lost revenue, thereby offering a tremendous revenue growth opportunity for the agribusiness industry.
Reducing food waste and locking in would-be profits starts with optimizing the supply chain to increase transparency around food location, availability, quality, freshness and more, and blockchain and distributed ledger technology (DLT) shows a lot of promise to help solve these challenges. What follows is a breakdown of how blockchain can support the agriculture industry and a few of the key supply chain-related use cases that can have the biggest business impact.
Increase Supply Chain Transparency from Seed to Shelf
For agribusinesses, tracking goods through the five major stages of the supply chain is at best inefficient and at worst riddled with uncertainty. For example, it’s often unclear where shipments are located, which results in lost and stolen goods and profits. In addition, what happens to crops once they leave the farm is largely a mystery to farmers, while consumers have little to no idea where their food comes from or how fresh or “organic” it really is.
Furthermore, as a result of this lack of transparency, agribusinesses which are working with third parties to transport goods across their supply chain struggle to control costs. In fact, 65% of procurement executives report that they don’t have visibility beyond their tier 1 suppliers. Interestingly, of those who do claim to have good supply chain visibility, greater than 60% have used it to deliver significant savings to their organization. In long and complicated supply chains like those in agribusiness, increased transparency might reveal unnecessary and redundant parties, parties that don’t meet agreed upon or required standards, and even inefficient and ineffective business processes causing delays, quality depreciation and profit loss.
A blockchain-enabled agribusiness supply chain platform can connect any number of entities on a single, shared, immutable ledger, replacing the existing multiple and disparate systems to thereby improve security, traceability and efficiency. Here’s a diagram of what such a solution would look like:
BLOCKCHAIN-BASED AGRIBUSINESS DLT SUPPLY CHAIN SOLUTION
In this scenario, goods are tracked with unique identifiers, e.g. QR codes, which are scanned at each point along the agribusiness supply chain to create a digitally traceable end-to-end journey, enabling real-time visibility into shipment location, content analysis and more. Using a shared blockchain-based platform instead of multiple individually siloed tracking solutions enables real-world use cases like product recalls or shipment tracking, as well as identifying order details for dynamic demand management.
Improve Quality Control & Enhance Regulatory Compliance
In addition to improving traceability in the agricultural supply chain, blockchain can be leveraged to improve quality control and enhance regulatory compliance by digitizing and, in turn, standardizing supply chain data management processes. In this scenario, having all tracking data sent to and stored on a single, shared blockchain increases transparency and enhances decision-making when quality and compliance come into question. Here are some examples of the types of quality control (QC) and regulatory data that can be stored and exchanged via blockchain:
Blockchain-based QC & Regulatory Data Storage
For example, in the event of a recall on tainted produce, parties can use data stored on the blockchain to act swiftly, whether that means business leaders making decisions on which particular set of produce to recall or triggering automated smart contracts set by a predefined plan to directly pull products from store shelves. Subsequent to these decisions, distributors can reroute shipments, retailers can pull produce from shelves, and consumers can discard already purchased products if they determine it is contaminated based on their scan of a QR code or proactive alerts and information from the store where they bought the product.
The potential result of this laser-like targeted recall system is saved lives, reduced liability, and a safer and more reliable food supply chain instead of the product recall model today, where entire regions of the US are affected, or multiple retailers, potentially causing panic or concern among consumers.
Potentially Eliminate Fraud or Counterfeit in the Supply Chain
Combining the two above use cases of supply chain traceability and quality control management, agribusinesses can seriously tackle fraud and counterfeit to protect their consumers and their own reputations. This happens by empowering farmers, suppliers, manufacturers and distributors to store and manage their data in a shared, transparent, permissioned environment that is secure and immutable, eliminating the possibility of fraud.
This enables an agribusiness to confidently claim AND demonstrate that its products are truly organic in the marketplace. Today, while there are multiple regulatory methodologies in place to ensure products labelled as organic do adhere to accepted standards, there may certainly be some level of non-compliance with these standards. However, with the blockchain-based supply chain, the agribusiness can show how a product from the farm to the shelf was handled with the strictest of adherence to organic principles. Consumers can scan a QR code to verify for themselves the organic nature of their products.
Furthermore, with this blockchain-enabled tracking system in place, there are far fewer chances for counterfeit or fraudulent goods to work their way into legitimate retail stores where unsuspecting consumers can purchase them and suffer the potential consequences. This makes it even easier to confidently brand and sell authentic, high-quality goods that stand up to premium labels like organic and locally grown.
Other Blockchain Use Cases for Agriculture & Conclusion
Beyond the supply chain-centric use cases described above, the Food and Agriculture Organization (FAO) of the United Nations has identified a number of other blockchain use cases for agriculture where improving data management and traceability is the primary goal. These include:
- Livestock traceability
- Fishery and forestry management
- Digital identity management
- Agricultural insurance for smallholder farmers
- Land registration
No matter the use case, as agribusinesses and the world’s food supply chain continue their digital transformations, it’s clear that blockchain is a technology worth considering for its ability to increase transparency, security and efficiency, especially if that translates to less food waste. If you’re interested in exploring whether or not blockchain is right for your business, visit our blockchain in agriculture landing page or contact us today!