Blockchain Technology: The Future of Traceability in Agriculture

Agriculture faces numerous challenges, particularly concerning traceability and transparency in supply chains. With the enactment of the Supply Chain Due Diligence Act in 2023, companies are required to document the conditions within their production chains. Blockchain technology offers innovative solutions that not only meet these requirements but also strengthen consumer trust. This paper outlines the benefits of blockchain technology for agriculture and presents implementation strategies and case studies that illustrate the advantages of this technology.

The Importance of Transparency

Ensuring transparency in the supply chain is crucial for improving working conditions and the quality of products. Consumers are increasingly interested in where their food comes from and under what conditions it is produced. The Supply Chain Due Diligence Act addresses this need by mandating that companies make their entire production process transparent.

The Benefits of Blockchain Technology in Agriculture

- Transparency: Blockchain technology allows all stakeholders to access the same data, thereby increasing transparency in the supply chain. Every step in the production process can be tracked in real time, giving end consumers confidence in the quality and origin of their products.

- Traceability: The ability to document every transaction and production step significantly improves product traceability. This is crucial for complying with the Supply Chain Due Diligence Act and for gaining consumer trust.

- Efficiency Improvement: Automating processes through smart contracts can enhance efficiency in the supply chain. Transactions are stored in an immutable format, saving time and costs.

- Fraud Prevention: The immutability of data in blockchain makes it difficult to falsify information. This reduces the risk of fraud and increases the integrity of the supply chain.

- Sustainability: Blockchain can help promote sustainable practices in agriculture. By enhancing traceability, environmentally friendly methods can be certified and encouraged.

- Deforestation-Free Supply Chains: With the EU regulation on deforestation-free supply chains, companies can ensure that their raw materials are sourced responsibly. Blockchain can assist in tracking the origins of raw materials to ensure they do not come from deforestation-prone areas.

Case Studies

###Implementation in the Sidama Coffee Supply Chain
Ethiopia is known for its Arabica coffee beans and plays a central role in the global coffee supply chain. Despite this significance, Ethiopian coffee suffers from substantial traceability and transparency issues. These challenges lead to trust problems in the international market and affect the competitiveness of coffee farmers.

In our paper (see references), we present a system that utilizes Hyperledger Fabric to implement a blockchain-based solution for the traceability of the Sidama coffee supply chain (a region in Ethiopia). By employing smart contracts, a transparent and traceable route for coffee has been established, documenting all transactions immutably.

Successful Applications in Other Industries

• Provenance: This platform uses blockchain to trace the origin of food products, thereby strengthening consumer trust in the brand.
• IBM Food Trust: This platform enables companies to trace the entire food supply chain, increasing transparency and reducing food waste.

Implementation Strategies

Partnerships

Collaborating with technology providers, NGOs, and other stakeholders is critical for the successful implementation of blockchain solutions. Joint initiatives can foster acceptance and utilization of the technology.

Training

Training stakeholders, including farmers and other participants, is necessary to ensure that all actors can effectively utilize the technology. Training programs should be tailored to the specific needs of the participants.

Pilot Projects

Conducting pilot projects allows for testing the technology on a smaller scale and making adjustments before broader implementation. This fosters trust in the technology and facilitates adoption.

Technology Adaptation

Adapting the technology to local conditions and the specific requirements of supply chain participants is crucial. This includes considering cultural, economic, and legal frameworks.

ESG Reporting

An effective ESG (Environmental, Social, Governance) reporting framework is essential for companies committed to sustainable practices. By leveraging blockchain, companies can ensure that their ESG data is transparent and traceable, thereby enhancing trust from investors and consumers.

Conclusion

Blockchain technology has the potential to significantly transform agriculture by improving transparency, traceability, and efficiency. By successfully implementing this technology, farmers and companies can not only meet consumer demands but also contribute to more sustainable practices. The Sidama coffee example illustrates how blockchain can be effectively utilized to enhance traceability.

The future of agriculture could be shaped by innovative technologies such as blockchain. Further research is necessary to fully explore the possibilities of this technology and its application in other agricultural sectors. The coming years will be critical in leveraging the benefits of blockchain in agriculture and strengthening collaboration among all supply chain actors.

References

Abebe, T. M., & Semegn, A. M. (2021). Blockchain Based Green Coffee Supply Chain Management to Improve Traceability and Transparency. ICST Institute for Computer Sciences, Social Informatics and Telecommunications Engineering.
Blog post: “Supply Chain Due Diligence Act - A Use Case for Smart Contracts and Blockchain.”