A better food supply chain with blockchain?

Margo Potma

When it comes to food, our demands are high. We want good quality food, sustainably grown, locally sourced, fairly traded and if possible, a bit affordable. But reality is tough: beautiful stories are told and promises are made up to make you buy cheap products, institutions have lost their credibility, farmers are being exploited and nature is being destroyed for large scale production. Our current system seems quite crooked. We are willing to make our contribution to a fair and sustainable food system, but who and what can we trust in a world in which everything seems to be questionable? To restore trust, we need to open up the system, create transparency in our food chains and shift to honest and participatory models.

Osacoop in Costa Rica is a cooperative of farmers producing cacao, palm oil and bamboo in one of the most biodiverse areas on the planet, the Osa Peninsula. The farms were established in the late 1950s, and the production of cacao recently made its comeback. A particular challenge is posed by the highly biodiverse ecosystem the farms are part of. Strong conservation policies dominate farmers practices, while market prices for cacao are very low. This makes it difficult for farmers living in forested areas to generate a substantial income out of agricultural activities, while, for most of them, this is the only means to make a living. Different production practices are needed so that they can produce for higher value markets. Therefore fundamentally different trade relations are needed. In particular, direct trade has strong potency to help producers connect to markets and consumers that appreciate their high-value and eco-friendly cacao system.

In considering ways to improve economic interactions and impacts, trust is an essential element. In our current supply chains, a range of intermediaries serves to guarantee trust and exert control over the functioning of the system. However, because of the lack of transparency, no one really knows who is involved in the supply chain. In general we only know whom we buy from and sell to. Therefore it is almost impossible to trace the product from farmer to consumer, and to know under which circumstances, by which agreements, via which suppliers and for what price the product is being produced and transported.

In the last couple of years, blockchain is increasingly being proposed as the solution to make anything valid, providing transparency, inclusiveness and accountability, to generate truly fair products. This can be done by synchronizing the flows of resources through the chain of both materials and cash. With blockchain, intermediaries become superfluous and trust in other people as we know it is no longer necessary, or so the thinking goes. The data stored in the blockchain exposes every step being made in the supply chain. To guarantee a fully transparent chain, every actor involved in the chain needs to cooperate and confirm the data, generating trust. Blockchain can also be used to make risk analyses, like Moyee Coffee does. They are the first fair chain blockchain coffee company, using blockchain to create demonstrable impact and distribute a fair share of the profits over their supply chain, realising inclusive business models with positive impact.

'With blockchain we go from story telling, to story doing, to story proving.'
- Guido van Staveren van Dijk of Moyee Coffee

However, while blockchain seems to facilitate one aspect of the fair chain, a significant bundle of additional technologies - sensors, applications and so on - is needed to make the tool perform and provide the promised trust. Food chains are not only data driven and blockchain itself is not a quality sensor. Any quality information communicated via a blockchain originates from sources and procedures of which the trustworthiness should be established separately. More doubt arises - can we really have faith in technical security, knowing that all encryptions someday can be cracked? And if we trust a blockchain, does that mean we also trust the architect of the blockchain? Who controls the data before it is put into the blockchain mechanism? If false information is added to the chain, it does not matter how many computers validate the information: the added information remains false. Blockchain cannot make the data accurate or make the people entering the data trustworthy.

So it comes down to the question: do we really want to restore our trust with the help of technologies? Or is it possible to change food supply chains by developing a social variant in the form of direct trade? Indeed, there is still a need for trustworthy people to make a system trustworthy. A key role for this lies in the inclusion of community organisation, instead of eliminating trust in society by using software.

A different take on rebuilding trust in the trade chain

A re-emerging concept is that of the commons, through which transparent food chains can be created based on high trust models. Commons are generally referred to as shared resources managed by a community for the benefit of all. This approach adapts well to the growing trend of producers, entrepreneurs and consumers who want more drastic changes in all parts of the food chain, resulting in new, direct food chains in which human relationships and factors such as trust, reciprocity and transparency determine its success. The focus is more on the quality of life and collective action instead of merely on economic growth.

Direct trade is a form of sourcing in which direct relationships between the farmers and processors are built. Because of the direct relationships, direct trade goes further than Fairtrade and organic certified systems, which make use of bulk cacao for their products. Direct trade models are well placed to embrace commons principles, providing improved production and consumption systems with more authority for, and knowledge accumulation among, small producers and consumers at both ends of the chain.

How could the Osa cooperative benefit from such a solution? Where most direct food chains concern regional products, in which consumers know (in person) who the producers and other actors of the food chain are, transparency is now also being demanded for exotic products - like coffee and cacao. Long-distance food chains can be made more direct and transparent too. Through a South-North structure, equality between actors in the chain is guaranteed, providing a harmonious consultation structure and an organizational framework. The structure of direct trade is in line with traceability and transparency in the supply chain, where traceability systems can demonstrate and communicate the activities in the chain from original resources to end products, guaranteeing fair prices in each phase of the supply chain. In this way, it is possible to provide a resilient system with stable incomes for farmers, allowing them to focus on traceability, sustainable production, and knowledge accumulation through direct sourcing. By changing the organizational structure of food supply chains we can create long term change and grow trust, instead of being blinded by the flashiness of new technologies in our current system.

Waag, The Cacao Museum and Cross-Cultural Bridges work together to develop the concept of a South-North commons in the cacao chain under the title Bean to Bar Coop. With this coop we want to raise awareness for transparency in the cacao chain. Keep an eye on our website to follow its developments!

Next week, week I’ll release a more in-depth study on the questions of trust, cooperation and blockchain in the cacao case in Costa Rica.

Over de auteur

  • Margo Potma werkte bij Waag als stagiair digitale sociale innovatie.