The traceability of the blockchain gives farmers a competitive advantage


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The global food and agriculture industry is a trillion dollar sector that is growing exponentially. According to the World Bank, agriculture alone accounted for 4% of the United States’ global domestic product (GDP) in 2018. The report also found that agriculture could represent more than 25% of GDP in developing countries.

In the meantime, it is important to point out that large farms play a dominant role in agriculture. For example, research by the US Department of Agriculture (USDA) shows that in 2015, 89% of US food production was on large farms.

This still appears to be the case, as important agricultural markets are still dominated by very few companies. This became even clearer when the USDA recently announced plans to invest $ 500 million to ensure that U.S. agricultural markets are fairer and more accessible to smallholders and ranchers.

While government funding could help significantly, farmers around the world are also starting to adopt smarter farming technologies – like blockchain and data analytics – to ensure that growing farming needs are met. At the same time, these technologies offer smallholders a number of advantages that were previously not possible.

Farmers are entering global markets

Max Makuvise, President and Co-Founder of E-Livestock Global – a social enterprise that developed a blockchain-based cattle tracking app for farmers in Zimbabwe – told Cointelegraph that Africa accounts for 20% of the world’s cattle population, but the region only contributes 3% contributes to global beef consumption.

Makuvise says farmers in countries like Zimbabwe are finding it difficult to break into global value chains due to challenges such as visibility, ownership and trust. These problems got worse after the outbreak of a tick-borne disease in 2018 that caused the deaths of 50,000 cattle in Africa.

The lack of a reliable traceability system has meant that Zimbabwe has not been able to export beef to lucrative markets in recent years. To solve this, Makuvise hopes that a blockchain-based solution that aims to bring visibility and proof of ownership to the African cattle market might be the solution: “Blockchain provides trust and verification that can help bring farmers to global markets . “

The E-Livestock Global App is based on the blockchain-based provenance solution from Mastercard and offers end-to-end transparency of the cattle supply chain. To put this in perspective, Makuvise explained that thousands of cattle in Zimbabwe are regularly “dipped” to prevent ticks and parasites. But it is precisely during this process that livestock farming becomes a challenge. “About 2,000 cattle will pass through this plunge pool, all of which may belong to 500 or more ranchers,” Makuvise said.

Kamran Shahin, Vice President of Blockchain Product Development and Innovation at Mastercard MEA, told Cointelegraph that the E-Livestock Global solution solves this challenge by allowing commercial farmers and diving officers to tag each cow head with an ultra-high radio frequency identification ( RFID) tag as mandated by the Zimbabwe Ministry of Agriculture to register the cow and its owner. Shahin added:

“Every time the animal is immersed, vaccinated or medicated, the tag records the event in the traceability system. E-Livestock Global uses the provenance solution from Mastercard and records these events in order to obtain a secure and tamper-proof trace of the history of each animal. “

According to Shahin, this entire process collects valuable information for both the farmer and the beef buyers. “For farmers, it is an irrefutable document that proves ownership, supports sales and export, and enables them to take out a loan using their livestock as collateral.” On the other hand, Shahin stated that this enables buyers to efficiently manage their operations and guarantee customers product quality.

More importantly, farmers registered in E-Livestock Global’s system now have access to global markets due to the transparency achieved, which is captured and recorded in the blockchain. Makuvise said, “In Africa we didn’t have a traceability system, which made exporting beef impossible.” He added that “the animal can then be slaughtered and exported, and farmers can earn a premium for their beef.”

Cows with RFID tags on their ears; Image source: E-Livestock Global

In addition to ranchers in Africa, coffee and cocoa farmers in Honduras are using the traceability of the blockchain to gain access to new markets. Heifer International, a global non-profit that aims to end hunger and poverty in the world through sustainable agriculture, uses IBM Food Trust – a network based on IBM’s blockchain technology – to provide transparency in the supply chain for To reach coffee and cocoa farmers in Honduras.

Heifer International’s results show that small-scale coffee farmers lose, on average, between 46% and 59%, with farmers making less than 1% from selling a cup of coffee in a coffee shop. Jesús Pizarro, vice president of financial innovation at Heifer International, told Cointelegraph that Heifer specifically uses blockchain to manage the value chain for smallholders as it solves the traceability problem:

“Traceability issues have always been a challenge. We believe that end-to-end transparency in the food supply chain can solve many social problems, starting with the visibility of smallholders. “

So, IBM’s Food Trust platform tracks coffee beans from small farms to coffee shops. Kurt Wedgwood, manager of IBM Blockchain, told Cointelegraph that this specific process begins with Heifer uploading information about the care plants being delivered to farmers to the IBM Blockchain network. After the harvest, Wedgwood found the farmers tag their beans and ship them to Copranil processors, a coffee cooperative in Honduras.

Additional data about the beans is then stored on the blockchain, including how the beans were cleaned, dried and roasted and whether they meet the requirements for fair trade, organic or other specifications. Eventually, this information is shared with corporate buyers, who can also access the data on the beans to understand prices.

While this process sounds pretty straightforward, the most important element to understand is how it gives smallholder farmers access to global markets. Wedwood said:

“By using the blockchain, we create a connection between farmer, producer and consumer and enable the farmer to belong to a larger market. Ultimately, this offers the consumer more variety and a better coffee selection experience. We now have the opportunity to connect all of these people on a large scale, which could enable producers to demand more and result in higher profits for smallholders. ”

It all boils down to visibility

Overall, farmers using blockchain can get a huge advantage that is an ongoing challenge in the food industry – supply chain transparency. Once visibility is established, farmers can enter global markets, generate higher profits, and even gain benefits such as financial inclusiveness.

For example, Makuvise pointed out that financial inclusion is a challenge for farmers in many African countries, as these individuals cannot borrow money without proof of collateral. E-Livestock Global’s solution seeks to solve this by providing proof of ownership for the cows that allows farmers to take out a loan using their cattle as collateral.

Cattleman scans cows with RFID tags on their ears; Image source: E-Livestock Global

In addition, buyers and consumers benefit from the visibility of food because it creates trust. Keith Agoada, Co-Founder and CEO of Producers Market – a digital platform dedicated to the economic and social wellbeing of farmers – told Cointelegraph that people want to know where their products come from and how this affects the environment and communities while its production has affected the time:

“For farmers and producers who are managing their operations the ‘right’ ‘way, blockchain can be part of the trust building process to differentiate themselves in the marketplace by connecting with brands and consumers who share these values.”

A report from the Blockchain Research Institute titled “Agriculture on the Blockchain” further states that “food safety traceability is the most widespread use of blockchain in agriculture to date.” While this may be the case, challenges remain that hamper the growth and adoption of these solutions.

For example, Pizarro mentioned that in regions like Honduras, government support is needed for companies to understand the importance of the visibility of the food supply chain to consumers: “The technology is available, but I don’t think the status quo will change without it Governments are putting pressure on this change. “

While this may be the case in Central America, Makuvise announced that governments in regions of Africa are excited about blockchain solutions because of the data generated. Makuvise said the governments E-Livestock Global spoke to are pleased to have access to data showing how many cattle live in each provenance, which can help drive better planning efforts that are usually done through estimates. Makuvise further pointed out that in this case sensitive data would never be passed on, but relevant data that could help with urban planning would be provided.

On the flip side, Makuvise stated that the real challenge for introducing blockchain solutions to supply chain visibility in Africa is widespread adoption: “Blockchain-based solutions could take longer in Africa because people are visual and see the benefits want”. technology first. As soon as the benefits become apparent, more people will get on board. “