Blockchain technology: How to unblock your supply chain
By Gabrielle Stannus
By now, most of you have probably already heard about Bitcoin. This so-called ‘electronic cash’ is now just one of many cryptocurrencies floating on the market. Using blockchain technology, this digital money can be sent from user-to-user on a peer-to-peer (p2p) network without the need for intermediaries such as a central bank. Blockchain technology is now also being taken by businesses seeking to improve supply chain processes at all points from production to consumption. The potential applications of this technology should interest growers and retailers alike.
What is a blockchain?
Blockchains are a form of distributed ledger technology (DLT) in which transactions are recorded in a shared ledger with stored information time-stamped. Each entity has its own copy of the ledger. When a new transaction is made, a new record (or block) is added to the blockchain, and is verified by all the other entities. This provides transparency within the network and allows for secure and real-time interactions between businesses. Transactions on a blockchain can only proceed when all the entities involved agree to the transaction taking place. Each “block” is encrypted so it cannot be deleted, reversed or edited. The distributed ledger exists on multiple computers, often referred to as nodes. In commercial applications, these nodes remain within a private network, accessible only by permitted users, unlike the less regulated cryptocurrencies.
David Thompson, Communications Manager with the Australian Institute of Horticulture, says blockchain technology may soon provide multiple benefits to the nursery and garden industry.
David says: “The value of a horticultural product relates significantly to its provenance and the ability to verify claims of heritage, quality, cleanliness and true to type. If you think of a supply chain as being about aiming to increase the relative value of a product as it goes from production through to retailing, then you understand also how important it is to be able to check those claims about what is done or not done at each level of the supply chain. Did the product really come from the farm it claims? Was its chemical treatment really at that dosage?”
“What blockchain could potentially enable is an addition to the QR code-style scanning technologies where it creates a transparent, clearly-provable set of records throughout the supply chain that a buyer can use to create confidence and therefore maintain the value in the supplier and in the system” adds David.
For growers seeking to reduce their incidence of pest and disease in their nurseries, blockchain technology may be part of the biosecurity solution. “Let's imagine you are paying good money for a product that is claimed to be virus-free, disease-free stock on which rests your ability to grow a future crop worth millions of dollars. How would you have faith that it is true what you are being told? How do you rely on the validity of the supply chain records?” David asks.
David says blockchain technology may provide the means of maintaining those attributes of cleanliness, superb quality backed by clean production, good record-keeping and variety innovation that asks customers to value a good product of known origins. This technology could potentially also help to trace the source of pest and disease outbreaks more quickly, thus improving response rates.
Plant Breeder Rights
Blockchain technology may also provide better protection of Plant Breeders’ Rights (PBR) where the value of a variety is controlled by the limit on its production and propagation. “To enforce and maintain that value, there's an opportunity to use something like blockchain to say that we can categorically prove that this plant has been produced in accordance with PBR, and here is the ledger that shows proof of this particular plant being true to PBR production and variety type” says David.
In addition to plant transactions, other potential horticultural applications include the transfer of import and export certificates, more inclusive development by enabling smaller businesses to access better market and better payments of financing possibilities, and better automation of business processes (e.g. via smart contracts)2. When used in conjunction with QR code-scanning technologies, blockchain technology may even help retailers gain a better understanding of changing consumer preferences helping them to improve their marketing.
Ready for action?
Blockchain technology is still in its infancy in Australia. Whilst agribusiness is getting in on the act, with early players including Rabobank and KPMG Australia, few blockchain applications have gone beyond the ‘Proof of Concept’ phase. But it is coming soon. AgriDigital claim to have completed the world's first sale of wheat on a blockchain by a farmer to a buyer in 20161. So get online now and familiarise yourself with this supply chain innovation. Your business may just thank you for it.
1. Lisk 2018, 'What is Blockchain?', viewed 25 October 2018, https://lisk.io/academy/blockchain-basics/what-is-blockchain
2. Ge, L, Brewster, C, Spek, J, Smeenk, A & Top, J 2017, Blockchain for Agriculture and Food: Findings from the pilot study, Wanginen Economic Research, Wanginen, December 2017, viewed 25 October 2018, https://www.wur.nl/upload_mm/d/c/0/b429c891-ab94-49c8-a309-beb9b6bba4df_2017-112%20Ge_def.pdf
Australian Digital Commerce Association: http://adca.asn.au/
Blockchain Association of Australia: https://blockchain.asn.au/
Passkit: https://blog.passkit.com/10-ways-blockchain-technology-can-be-used-in-businesses/ (4 minute video explaining what blockchain technology is)
Presentation by Emma Weston, CEO AgriDigital, to Hort Connections conference, 17 May 2017, 'Blockchain: What is it and what can it do for fresh produce': https://ausveg.com.au/app/uploads/2017/12/Weston.pdf