26/09/2021

Should Pacific Island agribusinesses pursue blockchain traceability for their agri produce?

This post is inspired by an exchange on a kava industry group chat about traceability using blockchain technology and its application in the lucrative Pacific kava industry. It aims to serve as a resource for potential agribusinesses interested in the use of blockchain technology for track and trace applications within their business.

The question we hope to answer is: Should Pacific Island agribusinesses pursue the use of blockchain technology to track and trace their agriculture products, especially high-value agricultural commodities.And, are there foundational requirements to do this.

Firstly, Traseable Solutions is a Fijian data company that specialises in traceability working in the Pacific agriculture and fisheries sectors where we provide track and trace solutions for seafood, fresh fruits, and vegetables in Fiji and Australia. We have been at the forefront of blockchain traceability across supply chains in the Pacific since 2017. Our founder, Ken Katafono, is an authority on blockchain technology in the Pacific and co-authored the UN Food and Agriculture Organisation’s study, Blockchain Application in Seafood Value Chains in 2020.

Let’s explore.

Is it necessary? And, why would you want to do this?

No, it isn’t necessary.

There are no government-mandated requirements in the Pacific Islands that necessitate the traceability of agricultural produce, yet.

So, why do it?

Firstly, it is good for business to have full accountability from farm to table (or as far along the value chain as possible) of your products. For food and beverage businesses this is important and a digital traceability system can complement your food safety systems, 3rd party certifications, and other processes.

Secondly and more often the case, the promise of a premium price using cool technology (blockchain) that will create a sense of trust in your product. The belief that blockchain technology will underpin future value chains is also a strong driver here too.

Thirdly and less likely, you have a lot of money and it would be cool to do it.

Can implementing blockchain traceability really get you that price premium?

Yes, and No.

Here’s why:

Yes, it potentially could if the stars aligned on a number of things:

  1. You have a customer segment that cares about provenance and believe that blockchain traceability equates to trust and is willing to pay a premium.
  2. You have full control of your value chain i.e. vertical integration. It can be done if you don’t but will be difficult with more value chain actors you need to convince.
  3. The data you record on the blockchain is impeccable and you have existing data systems that can feed it into the blockchain. Remember: garbage in, garbage out.
  4. You have an awesome consumer-facing marketing team that can easily reach and influence your customer segment in 1 above or you have significant capital and/or strategic partnerships to change consumer behaviour to create 1 above.
  5. You have the financing to implement it across your business knowing that you may not get a return for a few years.
  6. You have a technology provider that knows traceability, blockchain, and a lot about your industry and the environment you operate in that isn’t going to charge exorbitant fees.

And No, simply because most Pacific Island agribusinesses don’t have the luxury of all or many of the above.

So, why are the Walmart’s, Carrefours, and Nestles of the world doing it?

Because they can afford to.

Large multinational corporations can afford the R&D spend on technologies like blockchain and the marketing effort behind it. They can also form strategic partnerships with large technology companies to progress this, for e.g. Walmart partnering with IBM.

They are also at a significant advantage because they can mandate its use by their suppliers, which is what Walmart is doing.

In all our research into the use of blockchain traceability from use cases around the World we have not seen many cases of success that have been sustainable. There are many interesting attention-grabbing headline use cases for any commodity you can imagine but when you peel back the layers, very little success to date.

What does that mean for us in the Pacific Islands?

Traceability using technologies like blockchain should always be an aspirational goal for us here in the Pacific Islands. There is no reason why we, too, can’t be on the cutting edge of technology research and adoption.

Each year our land and our ocean is affected by harsher climate conditions, and now our economies have been decimated by the coronavirus pandemic.

We need to produce more efficiently than before and waste less to be food secure and to be able to earn better quality revenue for our islands.

Data and technology can be a great enabler. But, it needs to be implemented intentionally and built upon a strong foundation.

Here is how we think Pacific Island agribusinesses can build that foundation:

  1. Data is power. Cultivate the right culture in your business around data, its importance, and its necessity for decision-making.
  2. Record data across your value chain. Map your value chain and ensure you are accurately and consistently recording key data at each stage.
  3. Move from paper to digital. Invest in digitising your business processes including your food safety system processes, traceability, sourcing, production, storage, and distribution.
  4. Learn from the data. Generate insights from your data and factor this into your operations.
  5. Grow. Once you’re doing all of the above consistently and sustainably, by all means explore other opportunities and even cooler technologies like blockchain, artificial intelligence, augmented reality, etc.

So, should a Pacific Island agribusiness pursue the use of blockchain traceability for their agricultural produce?

If you’re already doing those foundational things in your business and you have the resources and desire, go for it!

If you’re not doing those things, then, in our view, realising any monetary (or otherwise) value from pursuing it is likely to lead to unmet expectations.

Source: Traseable.com