Enhancing Transparency, Traceability, and Efficiency: The Impact of Blockchain Technology on Agriculture Supply Chains
This post is also available in:
This post is also available in:
Ελληνικά (Greek)
Co-author: Dr Gu Pang
Introduction
The agricultural industry serves as the primary source of the world’s food supply, making it crucial for sustaining the estimated 8.5 billion people by 2030 and eradicating extreme poverty. Additionally, agriculture plays a fundamental role in the economy, accounting for 4% of global GDP, with figures reaching up to 25% in some least developing countries [1]. However, agricultural supply chains (ASC) are inherently complex, partly due to the transparency and traceability throughout the chain. Over the past few decades, numerous food epidemics have occurred, heightening consumer concerns regarding the source and quality of food. Consequently, there is an urgent need to establish a trustworthy supply chain for agricultural products. Distributed ledger technologies, such as blockchain, offer a viable solution to address the challenges of traceability, transparency, and efficiency in ASC.
Challenges Facing Agricultural Supply Chains
Waste
One-third of products in the food and agricultural supply chain are either lost or wasted, despite approximately 780 million people still suffering hunger in 2023 [2], [3]. Waste can occur at all stages of the agricultural supply chain, and its impact on the natural environment, the economy, and the health and survival of human society can be profound [4]. Data from the UN indicates that 14% of the produced foods were lost in the post-harvest stage globally due to both quantitative and qualitative loss [1]. Quantitative loss of food reduces the total amount of food available, while qualitative loss reduces the attributes in food (e.g., non-compliance with food standards), making it unconsumable. These statistics highlight the urgency to develop an efficient supply chain for agricultural production and distribution worldwide.
Fraud and Security Issues
Risks associated with poor diet and food quality are the leading causes of illnesses and health crises worldwide [3]. Food insecurity exacerbates diet quality issues and leads to various forms of malnutrition. Some prominent factors contributing to the poor performance of the ASC include low literacy levels and bargaining power among the farmers, high involvement of middlemen, inadequate infrastructure, and disorganized participation in the supply chain [6], [7]. Additionally, challenges such as unforeseen extreme weather events, lengthy transaction settlement times, unsafe sourcing of raw materials, and insufficient financial inclusion for marginalized and impoverished farmers further affect the safety and quality of agricultural products [6].
Greenhouse Gas Emission
The agricultural and food supply chains often exhibit a significant distance between farmers and consumers, resulting in long and scattered distributions. This sector accounts for approximately 30% of greenhouse gas (GHG) emissions [1]. The unsustainable levels of pollution and waste pose a threat to both human health and the planet. Consequently, addressing carbon emissions and food waste is crucial for mitigating climate change and alleviating environmental stress [1].
How Can Blockchain Technologies Help?
Blockchain is a distributed ledger that maintains a continuously growing list of data records created and confirmed by participants in the network’s nodes [5]. Importantly, the digital ledger is immutable, meaning that anyone attempting to corrupt or falsify data within a specific block would disrupt its cryptographic link [8], [10]. Therefore, it is theoretically impossible to alter a single block within the chain since data input into the system cannot be modified. Due to this feature, Blockchain finds applications in various areas of ASC management, such as land management, purchase details, farm equipment usage, pesticide tracking, financial transactions, and other traceability functions [13], [14]. It has been identified as a plausible strategy for addressing agri-supply chain challenges.
Improve Transparency and Traceability of the ASC
Blockchain provides a clear, robust, and real-time audit trail of tracked products, contributing to a more secure and intelligent ASC. Information regarding product origin, types, and sources of additives, as well as allergens, is stored in an immutable manner, enhancing traceability, visibility, and reliability within the ASC. Simultaneously, this information can be shared among farmers, distributors, food processors, and customers across multiple regions and organizations through a collaborative network, eliminating opportunities for fraud. Such information flow among supply chain stakeholders significantly reduces opportunistic behavior as everyone involved can track the product’s journey from the farmer to the retail shelf. This can be achieved through a distributed peer-to-peer (P2P) network, which offers equal market participation opportunities for all marginal and small farmers [6]. The P2P network stores and transfers data using appropriate cryptographic keys without the need for a central server.
Waste Reduction
Blockchain can help cut waste by facilitating collaboration among supply chain participants and enhancing cooperation. A sustainable agriculture value chain requires equal access to information by all participants [2]. can facilitate the identification of potential risks and pressures by providing data on environmental conditions throughout the entire supply chain. Real-time data such as temperature and humidity in cold chain distribution helps prevent foodborne diseases or other food quality issues, thereby contributing to reduced recalls and waste [9], [10]. Additionally, individualized perishability dates provided by BCT help reduce overconsumption and household food waste [5].
Reduce GHG emissions and Transitioning Towards a More Sustainable ASC.
Improved resource planning and transportation, facilitated by increased transparency and visibility, help reduce the environmental impacts of the ASC. Moreover, BCT can disrupt corporate concentration and power imbalances by closing information gaps [8]. Users can find suitable transactions and improve transaction efficiency through the developed consortium blockchain [9], [10]. The blockchain network is also expected to establish digital identities for small farmers and micro-enterprises, enhancing their creditworthiness and access to financial services, thereby promoting enhanced social sustainability [6], [11]. When resources can be attributed more accurately and recalls, waste, and fraud can be reduced or prevented, BCT promotes the transition toward a data-driven ASC that is more transparent, reliable, and sustainable [12], [15].
References
[1] World Bank, (2023) Agriculture and Food, [online] Available at: https://www.worldbank.org/en/
[2] United Nations 2020, The State of Food and Agriculture, (2019) [online] Available at: http://www.fao.org/3/ca6030en/
[3] United Nations, (2021) The world is at a critical juncture, [online] Available at: https://www.fao.org/state-of-
[4] Duque-Acevedo, M., Belmonte-Urena, L. J., Cortes-Garcia, F. J. and Camacho-Ferre, F. (2020) Agricultural waste: Review of the evolution approaches and perspectives on alternative uses, Global Ecology and Conservation, 22, e00902, https://doi.org/10.1016/j.
[5] Demestichas, K., Peppers, N., Alexakis, T. and Adamopoulou, E. (2020) Blockchain in Agriculture Traceability Systems: A Review, Applied Science, 10, 4113, https://doi.org/10.3390/
[6] Sharma, R., Samad, T.A., Charbel, J.C.J and Mauricio, J.Q. (2021) Leveraging blockchain technology for circularity in agricultural supply chains: evidence from a fast-growing economy, Journal of Enterprise Information Management, Ahead of print, https://0-doi-org.pugwash.lib.
[7] Kumar, S., Raut, R.D., Nayal, K., Kraus, S., Yadav, V.S. and Narkhede, B.E. (2021) To identify industry 4.0 and circular economy adoption barriers in the agriculture supply chain by using ISM-ANP, Journal of Cleaner Production, Elsevier, 293, 126023, https://doi.org/10.1016/j.
[8] Antonucci, F., Figorilli, S., Costa, C., Pallottino, F., Raso, L. and Menesatti, P. (2019) A Review on blockchain applications in the agri-food sector, Journal of the Science of Food and Agriculture, 1-29, https://doi.org/10.1002/jsfa.
[9] Montecchi, M., Plangger, K. and Etter, M. (2019) It’s real, trust me! Establishing supply chain provenance using blockchain, Business Horizons, 62(3): 283-293, https://doi.org/10.1016/j.
[10] Rana, R.L., Tricase, C. and De Cesare, L. (2021) Blockchain technology for a sustainable agri-food supply chain, British Food Journal, 123(11): 3471-3485, https://doi.org/10.1108/BFJ-
[11] Yadav, V. S., Singh, A.R., Raut, R. D. and Govindarajan, U.H. (2020) Blockchain technology adoption barriers in the Indian agricultural supply chain: an integrated approach. Resources, Conservation and Recycling, 161, 104877-104892. https://doi.org/10.1016/j.
[12] Mukherjee, A.A., Singh, R.K., Mishra, R. and Bag, S. (2022) Application of blockchain technology for sustainability development in agricultural supply chain: justification framework, Operations Management Research, 15: 46-61, https://doi.org/10.1007/
[13] Li, J. and Wang, X. (2018) Research on the application of blockchain in the traceability system of agricultural products. 2nd IEEE advanced information management, communicates, electronic and automation control conference (IMCEC), 2637-2640
[14] Niu, B.Z., Shen Z.F. and Xie, F.F. (2021) The value of blockchain and agricultural supply chain parties’ participation confronting random bacteria pollution. Journal of cleaner production, 319: 128579, https://doi.org/10.1016/j.
[15] Saurabh, S. and Dey, K. (2021) Blockchain technology adoption, architecture, and sustainable agri-food supply chains, Journal of cleaner production, 284: 124731, https://doi.org/10.1016/j.
