The basic idea of Blockchain technology is that it is possible to ensure the integrity and consistency of various types of databases, hence the role of trusted third parties (certification bodies, auditors, notaries, banks, etc.) become redundant.
Blockchain can be used to form reliable and transparent records that are capable of storing useful information for users in a verifiable and immutable manner. Will Blockchain be a disruptive technology for the future or simply a source of false hope? Known through cryptocurrencies, Blockchain is currently being tested in many fields, including the agri-food sector. The article presents an overview of the benefits as well as limitations of the application of Blockchain in the agri-food industry .
From being amazed at the potentials of Blockchain…
According to the research results of Juniper Research “ Blockchain: Key Vertical Opportunities, Trends & Challenges 2019-2030”, Blockchain and IoT are poised to revolutionize the food industry. Blockchain could reduce food fraud by as much as $31 billion by 2024, through monitoring of distributed food products throughout the supply chain. Specifically, Blockchain technology brings “added value to products with trust attributes due to increased transparency and assurance”. This can provide manufacturers with a significant advantage, due to better access to global markets and direct contact between producers and consumers. Since there will be no need for intermediaries, Blockchain will provide consumers with fairer prices and lower transaction costs.
Due to the improved transparency, the reliability and value of the certificate will increase. Government and standards organizations will have reliable data and a more efficient management process. This is the widespread view proposed by many startups to use Blockchain technology in the agricultural sector.
Blockchain will help fight food fraud, especially the fraudulent labeling of food products. IoT sensors and monitoring applications are used to streamline distribution by improving retailers’ supply chains, enriching the entire food value chain. Product delivery processes will be replaced by automated, smart contracts that will cut costs and risks and improve transaction transparency.
Blockchain application in the food supply chain, reducing the number of intermediaries. In this way, “smart contracts” allow users to pre-program the automatic execution of transactions without any human intervention, subject to predefined criteria (eg. : pay the insurance claim for the harvest after checking the photo sent via smartphone). In this case, Blockchain simplifies administration, reduces claims adjustment fees, and helps resolve claims faster.
In international trade, Blockchain has facilitated commercial transactions with food safety assurance and phytosanitary certification requirements, without using the services of third-party certification bodies. . At the end of December 2016, Australian startup AgriDigital made the world’s first direct payment transaction for agricultural commodities (wheat) using Blockchain technology,
help speed up and simplify payments to farmers. AgriDigital (a cloud-based trading platform that allows wheat growers and buyers to manage high volume transactions in contract, delivery, invoice, payment and inventory management) has uses a custom version of the Ethereum Blockchain to speed up transactions. Wheat purchase and payment agreements are designed as “smart contracts” that are executed automatically. The test has allowed AgriDigital to test the scalability and capabilities of Blockchain technology for high volume processing and payments. As another example, at the end of 2017, global trading companies: Louis Dreyfus Co, Shandong Bohi Industry Co, ING, Societe Generale and ABN Amro made the first official agricultural transaction using the Blockchain. Soybean trade from the US to China, with sales contracts, letters of credit and certificates digitized on the Blockchain Easy Trading Connect (ETC) platform. The use of the Blockchain platform has cut the time spent on administration by 5 times.
It is thought that Blockchain to solve all the problems of the world in many fields. This is very interesting from a sociological point of view, because, in fact, it’s just a technology. It is not an all-in-one solution.
In agriculture, another potential application involves the registration of animals, plants or land. Blockchain technology can improve the identification and registration of land, thereby helping to correct often vague and inaccurate land registries. In developing countries, the shortcomings of land registries greatly affect the agricultural economy, as uncertainty about land ownership discourages investment and productive development. Some countries, such as Honduras and Rwanda, are currently applying Blockchain technology in land registration.
Thanks to Blockchain, it is possible to provide reliable information about intangible aspects of products such as environmental impact, guaranteed requirements in farming practice. In general agricultural policy, Blockchain can be used to control payments to farmers for environmental services and perform a number of tasks: planting trees, creating grass strips next to water flows, etc.
Another promising application area is using Blockchain to provide traceability in the agri-food supply chain. In the Netherlands, in December 2017, Wageningen University published the results of an experiment conducted with a private partner to ensure the origin and biological quality of a South African grape. A London-based startup, Provenance , first tested the traceability of tuna caught in Indonesia before expanding its approach to other fish products.
On a large scale, IBM has partnered with US chain Walmart to ensure the traceability of Chinese pork and Mexican mangoes. As the results of the trial are positive, a subsidiary of IBM, IBM Food Trust, is currently working with other major global agri-food companies such as Nestlé, Unilever, Dole, etc.
Blockchain technology is helping them to share information about their products and track them throughout the processing chain (origin, breeding and slaughter of animals, production process, factory data, expiration dates. , storage temperature, etc.). In France, Carrefour conducted its first trial in 2018 by applying Blockchain technology to free chickens in Auvergne, from hatcheries, to feed suppliers, farmers, slaughterhouses . A few months later, the retailer announced that it was joining the IBM Food Trust to increase the number of products certified by the technology.
…to the doubts whether Blockchain is an all-powerful technology?
Despite the huge potential, Blockchain technology is still in the experimental stage. Currently, private companies (retailers, food and logistics companies, etc.) and public agencies (environmental agencies, research institutes) are jointly developing various types of relationships with different works. In any case, while there is still a lot of interest, research shows that interest in Blockchain has been steadily declining in recent years. Blockchain is no longer seen as a “miracle solution”. The current trend is to cautiously analyze the pros and cons of possible applications to Blockchain. The problem now is how to distinguish between situations where blockchains have real added value and situations where traditional systems are already completely complete or even more efficient.
Due to Blockchain technology, there are some technical shortcomings, such as the number of blocks in the chain and the size of the blocks. A block can carry a very limited amount of data, which can only be linked to external information. Therefore, it can only be confirmed that a certain database exists at a particular time, but does not give exact information.
Besides, according to economists at Princeton University in the United States, the process of decentralization of Blockchain is still relatively slow. Experts believe that Blockchain cannot currently compete with the transaction speeds achieved by “credit card” systems (which can execute 7 transactions per second, compared to an average of 2,000 transactions in a single second). a second). In addition, Blockchain technology is very energy-intensive, making it not suitable for the ecological trajectory many countries want, unless Blockchain makes significant progress in processing efficiency.
In agriculture and food industry, Blockchain is currently being tested or is being developed relatively simple and limited. A major obstacle to the development of Blockchain in this industry is the need to establish a link with the physical world. While Blockchain technology can guarantee the integrity of recorded data, this does not mean that it can effectively guarantee the accuracy of what is entered.
In the study conducted by Wageningen University, together with the Dutch Institute of Knowledge TNO, on the pilot study “Blockchain for Agriculture and Food”. Research has also shown many opportunities for the application of this new technology in the food supply chain, as well as the problem of ensuring accuracy as determined by the stakeholders in the experiment.
According to TNO senior scientist Christopher Brewster, in this era, data is key – but it’s all about ensuring transparency. However, in reality, no one wants complete transparency. Although Blockchain promises to deliver accurate and instantaneous information, that is one of the “crazy” of the new technology. Blockchain has become a hype in many areas of business, especially in finance and insurance, Brewster explained, “ It is thought that Blockchain is to solve all the world’s problems in many areas. . This is very interesting from a sociological point of view, because, in fact, it’s just a technology. It is not an all-around solution .”
Experimental research shows that an agency like Ecocert provides certifications for organic production. If a grape buyer wants to check if the fruit is organic, he must call the supplier in South Africa, who can email a scanned copy of the certificate or a pdf. However, this will not guarantee 100% reliability. The researchers point to two problems: the certification may no longer be valid, but the supplier continues to sell organic products; or a manufacturer can sell its own product, but use the certificate to sell the same products from another supplier with the same certificate.
Blockchain does not prevent fraud along the chain of geographical origin or guarantee pesticide-free agricultural practices. Therefore, the researchers concluded that using blockchain alone will not eliminate frauds, but they can help reduce the frequency of frauds. The addition of other technologies, also under development, could facilitate the exchange between the physical and digital worlds: connected objects, connecting blockchains with sensors in the physical world. precision agriculture, barcodes on certified products, etc.
The future begins with the diversification of initiatives
Currently, we are seeing the diversification of pilot programs in food and agriculture involving a wide range of stakeholders, formats and protocols. The result is a fragmented landscape that does not allow different applications to communicate with each other. Diversification is common as new technologies emerge and before a standard is born. For many observers, blockchain may initially remain a technology used internally by companies, on a small scale. The implementation of Blockchain technology can take decades, before it is used on a large scale, like Internet protocols that appeared in 1973 and took about twenty years to become the norm. Not to mention the costs this technology will lead to widespread adoption.
At this stage, the main area that governments are interested in is the introduction of Blockchain technology into the food and agriculture industries and Blockchain’s contribution can help with product traceability and implementation of control. . It is important to note that achieving the full potential of Blockchain technology requires attention to support two key aspects of a successful transition: Blockchain business transformation skills and expertise. Whatever the future, as Blockchain develops, their use in public administrations will likely revolutionize some of the traditional approaches and practices on control and auditing. , certification and standardization of food and agricultural products.
In the future, further development of Blockchain technology will certainly have an impact on the way in which the agri-food economy works and the government will have to monitor this process. Firstly, to avoid the risks associated with this new technology (underground economy, tax evasion, etc.). But above all, a new legal and regulatory framework must be put in place. Blockchain technology can cause the market to move in an unforeseen direction, with new traceability and production process proposals, thereby stimulating competition.
On the other hand, it could lead to a merger between the food industry and the digital sector, thereby reinforcing the existing competitive advantage and dominant position. So which way will the future go, will definitely depend on the development of Blockchain.
Source: ictvietnam.vn