Blockchain for good: supply-chains and sustainability

Michael was on his way to his weekly shopping on a hazy Sunday afternoon in September. He was in his 30s, wearing a typical attire of a shirt, jeans and a pair of shoes made out of faux leather. This was his usual weekend shop. For his lunches in the office that he was working in he would get meals from the Greek place nearby. Michael tend to skip dinner. Instead he would go on an app for intermittent fasting log in his hours and put 1 dollar towards a carbon credits offsetting fund build on the blockchain. While eating his lunch, he would flick through the supermarket app where he bought his food and browse the source of each ingredient encoded on the blockchain. This was an interesting one, as he could go back as far as learning the name and story of the farmer who picked his avocados and bananas. A story that he supported by buying the sustainable sourced produce with the ability to track it with blockchain technology.

The global population is growing exponentially requiring an increased use of energy and food. Our current sources of those resources are strained and reaching the point of inability to cope with the demand. On another side, this increased demand affects the quality of the supply as producer try to keep up on the quantity demanded. Higher quantities with reduced quality of food for the growing population creates additional maladies and if there isn’t a system and rules in places to protect the quality and understand the source of our food supply, everybody will be affected. This doesn’t have to go down like this, as there is already technology with the ability to track and help improve the quality of food. We can trace the supply-chains of each banana, avocado, or meat from the farm. There is an opportunity to massively improve life quality by improving, tracking and proving the sustainable supply of food and bio-energy enhancing the global food chain. Accessing healthy and nutritious food that has been produced in an eco-efficient manner preserving the biodiversity of the area where it was produced shouldn’t be a privilege of the rich and the developed world rather just a simple basic right for everybody. The Blockchain technology can assist us in creating transparent and verifiable supply chains that can be traced from the source and their impact on the environment clearly visible and measurable. Value chains that are integrated from farm to consumer, more traceable, measurable, verifiable would help monitor intermediaries and apply the standards, rules and regulation to preserve the quality of our food supplies.

Around 15% of global GHGs are related to agricultural production. That number is higher when you consider forestry and land use. As climate change affects rainfall and temperature, the location and nature of crop systems are likely to change. Eliminating deforestation from our agricultural supply chains worldwide is crucial for preserving not only the food on your plate each day, but the environment as a whole. Risk for global supply chains are affected by a number of internal and external factors such as margin erosion and sudden demand change, lack of visibility, ineffective risk management, ripple effect and obsolescence of technology. The food chain worldwide is highly multi-actor based and distributed, with numerous different actors involved, such as farmers, shipping companies, wholesalers and retailers, distributors, and groceries. Exchange of goods within those supply chains between buyers and sellers is done using complex and manual settlement processes that lack transparency and carry loads of risks. Many intermediaries involved in this process add additional costs and make the transactions prone to fraud. Moreover, there is a lack of knowledge on the origin of products and their environmental production footprint. We can reduce greenhouse gas (GHG) emissions produced from our food production by:
• protecting peat land and other carbon-capturing ecosystems
• conserving freshwater and acting responsibly in water-stressed regions
• conserving biodiversity
• supporting livelihoods
• respecting labor and land use rights
• applying free, prior and informed consent

On the other hand, ensuring the quality of our produce can be verified sustainable through tracking and application of international food standards clearly visible on each packaging. Knowing the origin and what products are really made of provides reassurance. For example, some of the most popular products used in the food production of many everyday staples can be seen below, certified by Bunge – one of the biggest food conglomerates and one with the ability to track the food through most stages of the supply chain.

On the technology front, companies are already implementing the blockchain to trace the source and provenance of food and energy. Certifying the sustainability of the sources and helping farmers and producers of those resources get adequately paid for their work rather than getting ripped of by the middle man and multiple intermediaries bringing little value to both the consumer and producer. Moreover, there has been an increased desire among consumers of agricultural products to better understand where their food products come from. Bext360 has developed a device that combines machine learning and artificial intelligence with blockchain to create a more efficient and transparent coffee supply chain, ensuring that farmers are paid fairly and immediately, while simultaneously helping consumers better understand where and how their coffee was produced. Agridigital is working on the commodities market for grain offering a platform that allows tracking from farmer to consumer. The Grasroots Coop is also experimenting with blockchain tracking organic produce made by small farms where quality always goes above quantity. Finally, provenance is literary attempting to tell the story of each product by tracking and verifying its source allowing businesses to increase their sales and strengthen brand value. The potential benefit of increasing consumer awareness and empowerment, considering that the consumer is the market driving force. Consumer increased awareness would put pressure for more transparent, sustainable, safe and fair practices in food production. The blockchain technology doesn’t only offer fast transaction settlement and lower costs, but it is also transparent, auditable and reliable. A perfect solution to tackle the many challenges faced by the supply-chain industry that has massive environmental impact.

Disclaimer: Opinions are my own and not the views of my employer. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

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