Report “A chain of possibilities”
Fairfood, in collaboration with Wageningen Centre for Development Innovation (WCDI) and supported by the Food & Business Knowledge Platform (F&BKP), has conducted a scoping study on Blockchain Technology (BCT). The two key objectives to this study were to establish a solid understanding of BCT and the core principles behind BCT cases in the agri-food sector; and to identify good practices, challenges, and limitations of BCT use in agri-food chains that are relevant for LMICs.
Blockchain Technology (BCT) is still in the early stages of development. A proliferation of BCT experiments within the agri-food sector demonstrates the high level of interest in BCT both in public and private sectors. Although there are still several questions surrounding this emerging technology, in many cases BCT helps to solve or is solving problems in supply chains that most people did not know existed – such as quality issues, non-transparent chains, and violation of workers’ rights and low income levels. Misconceptions surrounding BCT highlight the apparent interest but also the urgent need to develop deeper understanding about what works in emergent BCT applications.
The scoping study conducted by Fairfood and WCDI provides information on the technology, the decisions that are at the basis of implementing BCT projects, the potential and limitations of BCT for the agri-food sector and value chains originating in low and middle income countries (LMICs). The study is an effort to scope for areas of joint learning and further research and for forms to shape learning, e.g. a Community of Practice (CoP) or online learning platform.
BCT offers the potential to develop decentralized and democratized ICT systems that enable transparent information sharing in a community. However, choices made during the development of BCT solutions influence to what extent this potential is realized. Nowadays, private companies rather go for more private and centralized BCT solutions, and consequently, the potential of decentralized BCT applications is not yet fully utilized.
For agri-food, it is not yet easy to offer a standardized BCT solution because BCT is yet immature and use cases are still not 100% validated in this particular sector.
In the context of LMICs, a number of use cases have proven that BCT can contribute to creating a fair distribution of rewards and risks throughout the value chain and to making farmers active players of the value chain. More specifically, the potential of BCT in LMICs lies primarily in creating direct contact between farmers and buyers, in enabling farmers to participate in global supply chains, in increasing farmers’ power in supply chains, in offering farmers to build their track records to prove their creditworthiness in order to access loans, in broadening the accessibility of financial services, and in creating upfront certainty about payments in supply chains. However, the further development of digital infrastructure, such as internet access, bandwidth speed and access to mobile phones, in LMICs is inevitable to be able to fully utilize the potential BCT in those countries.
In summary, blockchain is not a ready-made system, it is a technology in development which can be used for different purposes in different forms. Besides addressing the technical design of BCT, the societal and contextual realities should not be underestimated. Multiple stakeholders, who are rarely used to such a way of information sharing that BCT enables, need to get on board to implement, roll-out and scale BCT. Getting used to and accepting this new way of information sharing in supply chains takes time and effort.
Towards a Community of Practice
Besides the technical limitations of the BCT self and challenges regarding the digital infrastructure in LMICs, the social scalability and willingness also needs to be considered to be able to come up with standardized, mainstream solutions for agri-food.
There is interest and need for sharing experiences among BCT practitioners and the initial idea of establishing a learning platform was corroborated during the study. The study shows there are initiatives in LMICs that benefit smallholder farmers, however a learning community could help expanding the range of BCT solutions with the ultimate aim to improve livelihoods of smallholders. Such a community could contribute solving challenges related to technological issues and social scalability of BCT, as well.