Sourcing That Mango: Blockchain Brings Transparency To Food Supplies
The information storage technology can safeguard entire transaction histories and allow firms and consumers to see where food ingredients came from — and fast.
BUENOS AIRES— It was the central subject of a farming conference this month in Argentina: How can blockchain help the agriculture sector? Blockchain is a data structure where information is kept in linked blocks, each of which contains the cryptographic hash of the previous block. This means any change of information in one block would alter data in subsequent blocks.
Luis Macias of Grainchain Inc., and Martin Hagelstrom of IBM, explained that their respective firms are testing some of the benefits the technology can have in supporting food supplies.
Macias says blockchain "helps us decentralize processes." Grainchain, a UK-based "ag-tech" platform for commodities trading that uses blockchain, offers users the possibility to make well-protected contracts between buyer and seller and ease the process of signature between people who don't know each other. "It is a very efficient ecosystem that allows you to qualify each transaction," says Macias, the company's founder. "Users can be certain they will receive the grain or will be paid."
Macias says that when a "buyer goes out looking to buy, our system shows him all available variables automatically, and the user can modify the variable as he or she wants. A trust fund is created in a bank, in a currency of the buyer's choice. All the money is in that fund and payment is only made when the buyer has received the grains."
They went from requiring six days to barely two seconds.
Trust and transparency are the key words in understanding blockchain's benefits, but also efficiency and easier traceability. Hagelstrom says blockchain allows for interaction between various participants inside a business network. "It allows for a single version of the truth. If there is only a single register that can be seen in real time, the process becomes more efficient and cheaper," he explained. The system IBM is creating, he said, is designed to register every step of a product's supply chain.
IBM's first experiences were with mangos in Mexico. They went from requiring six days to barely two seconds, to determine the origin of every product offered on Walmart shelves. Hagelstrom cites two benefits: "traceability and certificate management." He said many firms were now incorporating blockchain, and this could help create a crucial network effect. "As technology, it is ideal when there are many participants, when there's an ecosystem. It can help generate trust," he says.
Hagelstrom is optimistic on the technology's increasing use in Argentina, beginning with "something small, then showing results and growing from there." Firms, he said, could "join these networks within five years or start helping to build them today. All the information already exists and each actor in the chain gives it to the next or previous actor in the chain. Right now we're standardizing the information and making it available for the entire chain and the consumer."
