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IBM Research Teams up With Agritech Firm to Boost African Agribusiness with Blockchain

IBM Research has teamed up with U.S.-based agritech firm Hello Tractor to boost the African agriculture industry with blockchain.

IBM Research has teamed up with United States-based agriculture tech firm Hello Tractor to boost the African agriculture industry with blockchain. The partnership was described in a Dec. 11 blog post on IBM’s official website.

According to the post, the IBM Research division in Kenya is working with Hello Tractor’s developers in order to apply various tools and technologies, including blockchain, to the Hello Tractor mobile platform that enables farmers to access tractor services on demand.

Specifically, IBM Research scientists will incorporate blockchain and the Internet of Things (IoT) technologies to Hello Tractor’s tool platform. IBM Research also intends to integrate the platform with its own cloud solution IBM Cloud, as well as Watson Decision Platform for Agriculture, a jointly developed agribusiness tool based on artificial intelligence (AI).

The new jointly developed platform will reportedly represent an “agriculture digital wallet” featuring a blockchain-based AI platform that will provide a high level of transparency of  instantly shared data between all parties involved in a certain agribusiness value chain.

In particular, the pilot is expected to address to a wide range of processes in the agriculture industry, such as crop yield prediction by farmers, fleet utilization management and predictive maintenance, and compilation of credit portfolio for farmers and tractor owners by banks, as well as investment and regulation processes by governments.

According to IBM, less than 20 percent of crops are managed by tractors and other machinery in sub-Saharan Africa to date, while food demand is constantly increasing due to population growth averaging 11 million per year. Moreover, around 50 percent of farmers face significant harvest losses each year, which is caused by poor planting practices.

Last week, Overstock.com’s blockchain venture wing Medici Ventures bought $2.5 million in equity in agricultural blockchain project GrainChain, which enables supply chain parties to track the distribution process of harvests.

Earlier this year, the Ethiopian government signed a MOU with crypto startup Cardano (ADA) in order to apply blockchain technology to the country’s agritech industry.

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Major Players Use Blockchain to Streamline Agribusiness’ Creaking Supply Chain

Agriculture is proving to be one of the most promising sectors for the growth and implementation of blockchain technologies. The mammoth industry suffers from a number of endemic issues. Agricultural trade relies on complex relationships between farmers and retailers, as well as convoluted supply chain procedures which can complicate payments and product providence. As demand for agricultural trade becomes increasingly international, suppliers and innovators alike are looking to bring the trade into the twenty first century by capitalising on blockchain’s distributed ledger technology.

What blockchain can do for transparency and traceability

One of blockchain’s most commonly promoted attributes is transparency. GlobalData’s How Britain Shops survey reveals that consumers are increasingly concerned with the quality of the food they purchase from retailers. In a time where knowledge about food and nutrition is rapidly expanding, blockchain gives shoppers the ability to track the origins of store stock, helping them to guarantee purchasing a safe, quality product. Retailers and manufacturers are able to benefit from preventing flawed products from ever hitting the shelves by tracing information for individual items back to the farm where they were produced. Although this technology is in its early stages, the French retailer Carrefour has implemented blockchain to display information about their free-range chickens, the Retail Insight World reports. Customers have access to a plethora of data about their fateful chicken of choice, including the time it was laid, the hatchery and the name of the farmer.

The benefits, however, are not limited to the consumer alone. In recent years, a number of incidents regarding the quality and providence of products shook consumer faith in food suppliers, such as in 2013, when products advertised as containing beef were actually revealed to contain horse meat. Suppliers, however, appear to be learning from past industry mistakes. Kelly Registration Systems, the software unit for Kelly Products, a US based agribusiness company, announced the launch of their blockchain based platform to increase transparency in the United States meat industry.  Stuart Edmondson, chief technology officer at Kelly Registration Systems told Systems told the Verdict:

“Utilising blockchain technology for our new tracking system gives producers the opportunity to streamline their protein tracking and make it extremely accessible and transparent.”

Through radio frequency identification (RFID), customers will have access to a wealth of information, such as breed, sire, sex, vaccination details, hormones or antibiotic treatments along with data surrounding the animal’s growth, meaning it’s not only Carrefour’s chickens whose life trajectories are going public. Although this system has only been launched on a small scale, CEO Keith Kelly said the company plans to include other suppliers and expand across the region.

In 2017, food giants NESTLE, Unilever, Walmart Inc and Dole partnered with IBM to develop a blockchain system called Food Trust, based on the idea that partners and competitors should maintain a single-record keeping system. According to Nestle’s global head of supply chain, Chris Tyas, the companies agreed that blockchain can help improve safety measures on the condition that industry leaders collaborate. Failure to do so would create vast quantities of unmanageable data due to the many parties involved in the food industry supply chain. IBM is also set to release a mobile app to permit farmers to enter information into the Food Trust database, the Wall Street Journal reports.

This initiative also comes under the auspices of building consumer trust and eliminating the chances of contamination and product misinformation as a result of traceability. Scandals surrounding food supply result in lengthy investigations, such as the fatal 2017 salmonella outbreak that stemmed from a contaminated papaya farm in Mexico.The transparent, instantly available nature of Blockchain technology can reduce the investigation process to a matter of seconds, potentially halting the current precautionary measures of mass product recall and the culling of huge swathes of livestock.

Governments open the door to blockchain

The Sustainable Sugar Project has received a grant of A$2.25 million from the Australian government, Foodnavigator-Asia reports July 30.

Led by the Queensland Cane Growers Organization, the project will also use blockchain technology to track the origins of their supplies back to Australia in an industry wide effort to improve sustainability and traceability.

Minister for Agriculture David Littleproud stated that large buyers could end up paying more in the future for sustainable sugar as customer preference for sustainable products increases:

“This technology would provide assurances around the sustainability of our sugar and ensure cane farmers using sustainable practices can attract a premium for their product.”

Meanwhile, on the other side of the world, The Agricultural Bank of China (ABC) has issued its first loan on blockchain, Financial News reported July 31. ABC is the world’s fourth-largest bank by assets and is one of China’s “Big Four” lenders.

The ABC’s first loan issued on blockchain is worth around $300,000 and is backed by agricultural land in the Guizhou province.

The bank plans to “buil[d] blocks with local people, pilot land and resources bureaus, and agriculture and animal husbandry bureaus” through blockchain”.

One other avenue for future development is the creation of a transparent land registry. Blockchain technology is also being used by the bank to prevent clients applying for loans from different banks while using the same land as collateral.

Australian Supply Chain Innovation Piques Investor Interest

Square Peg Capital has invested $5.5 million into Australian blockchain startup Agridigital. The startup has built a private blockchain to improve supply chain finance, with over 1300 users and 1.6 million tonnes of grain transacted since December 2016, along with $360 million in grower payments. Square Peg Capital hopes to expand the system into the United States.

Square Peg Capital partner Tony Holt said:

“At the moment supply chains are archaic, and the opportunity for a distributed supply chain with multiple participants lends itself extraordinarily well to distributed ledger technology, but also any form of material improvement.”

According to Business Monitor Online, blockchain could also reduce the time it takes for farmers to receive payment, along with payment uncertainty. The technology has helped traders match payments with title transfers by linking them, thereby avoiding any threat of counter-party risk (i.e. the risk that the other party involved in the financial contract will default on their contractual agreement).

In the words of Adrian Turner, CEO of The Commonwealth Scientific and Industrial Research Organisation’s (CSIRO) specialist Data61 unit, blockchain has the potential to:

“Not just to integrate information exchange and improve operational efficiencies across a diverse industry, but also to improve supply chain quality, facilitate provenance of branded goods and reduce cost of regulatory approvals.”

Data61 provides a useful example of how the supply chain system could be improved through blockchain:

Diagram from CSIRO’s Data61 unit, illustrating how blockchain could revolutionise supply routes.

“The additional financing costs that suppliers incur because they aren’t being paid promptly work their way back into higher prices for consumers.” V.G. Narayanan, Chief of the accounting practice unit at Harvard Business School told the New York Times.

The use of blockchain seems set to improve efficiency in agribusiness, not only improving transparency and cutting out the middle man, but also leading to potential reductions in cost.

Several successful deals have now been carried out using blockchain, including the shipping of 17 tonnes of almonds from Australia to Germany, underpinned by the use of smart contracts and a geotracking Internet of Things (IoT) to deliver end-to-end movement of the produce.

60,000 tonnes of US soybean were sold to the Chinese government in 2017 via the use of the Easy Trading Connect blockchain prototype, Business Monitor Online reported. According to participants, the time spent processing documents thanks to the use of electronic smart documents was reduced fivefold.

The Jury is Still Out Over a Blockchain Solution

In spite of the many positive developments and promising applications of blockchain in agribusiness and food supply sectors, a number of perceived weaknesses in the technology have been pointed out.

CSIRO’s Data61 listed a number of concerns in a 2017 report. Data 61 stated that information placed into a blockchain that cannot be changed elevates the risk of “toxic data” being locked into the system. The unit also highlighted that this same flaw could lead to sensitive metadata being compromised. Though the blockchain itself might be immutable, IoT devices are not impervious to manipulation.

Data 61 also said that blockchain could be more expensive than current systems if used to carry out “smart contracts” due to the well known energy consumption of blockchain technology. The unit also expressed concern over whether blockchain was suitable for such large information databases and stressed that the technology cannot yet be implemented in isolation from other existing cloud-based or in-house systems.

While there are many benefits of transparency in terms of reducing costs and improving customer confidence, blockchain presents opportunities for previously hidden instances of poor animal welfare, sub-par producing processes and use of chemicals and pesticides to backfire for producers of low-cost products, Business Monitor Online reports. The research organisation also said that the technology is still too immature to be put in place for at least three to five years, emphasising that most trials have been limited in scope and are not capable of dealing with the intensity and global reach of 21st century agribusiness.

Concerns have also been voiced regarding the technology’s reliance on all parties to be actively involved in the supply chain for it to work, meaning that if the input of data breaks down somewhere from farmer to customer, blockchain could fail to live up to its questionable reputation as an all encompassing solution to agribusiness’ woes.

In spite of warning about the dangers of potential oversupply of competing platforms that could cause confusion if developers do not coordinate along with the current absence of overarching regulation, Data 61 CEO Adrian Turner said blockchain technology has vast economic potential and is “here to stay”.

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Blockchain's Impact on Food and Farming, Explained

Is it possible to track where food comes from?

Several companies have launched services allowing shoppers to see a product’s journey from farm to fork, but they often depend on retailers agreeing to be transparent.

When you pop into a store to buy fresh fruit, vegetables or meat, it’s common for the packaging to reveal which country it is from. Some upmarket brands go further by offering stories about the farm and the conditions where the food was cultivated.

Tracking an item step-by-step through the manufacturing process can be hard — and, sometimes, even manufacturers and retailers themselves aren’t sure about a product’s journey.

This is part of the reason why recent food safety scares have been so widespread: it’s been difficult — nearly impossible — to track where problems begin. However, integrating blockchain into the food chain could mean issues are detected instantly.

Food safety scares! Remind me?

There have been several in recent years… how long have you got?

In 2018, a deadly E. coli outbreak was connected to romaine lettuce that was grown in Arizona. The outbreak affected 35 states across the U.S., with five people dying and a total of almost 200 cases reported.

In 2013, a horsemeat scandal gripped Europe — and products advertised as beef were actually found to contain… yep, you guessed it, horse. It made its way into some of the continent’s biggest supermarkets. They blamed their suppliers, who in turn blamed their suppliers. The furore shook confidence and left some people refusing to buy meat all together.

Blockchain could play a big role in clamping down on food fraud because every component in a finished product would become easier to identify — speeding up recalls and also allowing consumers to find information they can trust about an item, seconds after picking it up off the shelf.

How would that work? Any examples?

Smart agriculture solutions — which boost productivity and address food demand — are thriving, and it is predicted that this industry could be worth up to $26.76 billion by 2020.

Farmers who are already using blockchain describe it as a “game changer, just like the internet.” For example, one meat company says the seemingly insignificant statistics blockchain provides, such as when pigs arrive at a factory, can have a massive effect on the final product they deliver to customers. They show blockchain results in a “detailed passport” where consumers can be assured that the meat they are consuming met strict hygiene and well-being standards — with any issues arising in the production process being identified in as little as 30 seconds.

Meanwhile, the government of Kerala is planning to introduce blockchain in the grocery supply process, with the hope of ensuring that the system will be used whenever food is being delivered to stores across the country. It is hoped this will help deliver products to millions of people on a daily basis more efficiently, as well as provide a form of “crop insurance” to ensure that farmers can be compensated quickly whenever unforeseen circumstances affect their yield.

Certification of fruit and vegetables could also be enhanced through blockchain — ensuring that information isn’t lost and streamlining the manpower needed to confirm a product’s provenance. Every shipment of fruit and vegetables is accompanied by paper certificates showing where the food has come from, validating its quality and declaring it free of disease. In Belgium, work has begun to digitize some of these certificates so they are placed on a blockchain instead.

Food safety’s great, but what about food prices? They’re constantly rising.

Blockchain could eliminate paper-based processes and cut costs, with these savings passed on to you.

Getting rid of middlemen would minimize transaction fees, and decentralization would also make it easier for smaller farms to compete with larger corporations.

For example, blockchain concepts such as PavoCoin are entering the fray — giving smaller farmers access to attainable financial services, such as the ability to pre-sell crops via smart contracts, helping them to improve the quality and quantity of their harvests, and providing consumers with greater amounts of information about the food they are buying. The company says, farmers in Stockton and in Dixon, California, have recently started using the system. A third installation is planned in Merced soon.

Optimizing farming would empower farmers of all scales with the information, resources and security they need to have higher yields, more lucrative crops. This would drive prices down for the average consumer and increase accessibility to higher quality goods. Higher yields also pump more money into the agricultural ecosystem, increasing the availability of farmed goods.

But wouldn’t farmers be out of pocket from lower prices?

On the contrary, smart contracts could ensure they are paid fairly for their hard work without delay — and smaller farms would have a larger market for selling their fresh produce.

Blockchain empowerment has the potential to shift farmers, who do the hardest work, from being price takers to price setters, forcing downstream cost reductions.

Blockchain would also allow premium brands to stand out from the crowd — and justify why their free range or organic produce is worth the extra money. This is because the provenance of their goods can be easily traced, giving consumers confidence that they are getting added value from a high-end product.

The agricultural sector would also find it easier to figure out how much their crops are worth by comparing the money being offered by a distributor to the sums paid to their rivals in earlier purchases, giving all farmers the opportunity to earn the money they deserve.

Is there any way to get fresh food on store shelves faster?

Inefficiencies in the supply chain can often mean delays before produce is ready for sale, but automated processes through blockchain could speed things along nicely.

There could also be less chance of food going to waste because agricultural businesses and retailers would be able to gauge the demand for certain products and adjust supply accordingly. This spare capacity can then be devoted to other crops — eliminating food waste.

Blockchain’s ability to tackle food waste, and the power that smart contracts can have in ensuring farmers get paid fairly and don’t go out of business, could help the world cater to rising levels of demand — helping eradicate food safety issues, poverty and political instability.

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Commodity Merchant Louis Dreyfus Trials Blockchain for Soybean Trade

Louis Dreyfus, a major commodities trading company, has announced that it has piloted a blockchain-based transaction system developed by a group of financial institutions including ING.

In addition to Louis Dreyfus, one of the world’s largest commodities traders, the test involved Shandong Bohi Industry Co., Ltd (Bohi) and financial institutions ING, Societe Generale and ABN Amro. The Easy Trade Connect (ETC) platform, as previously reported by CoinDesk, grew out of efforts at ING and has been subject to testing by firms like Mercuria.

Yet instead of oil, the latest test focused on agricultural products such as soybeans, of which Bohi is a significant trader. According to the companies that took part, the test involved a shipment of soybeans from the U.S. to China, with all of the relevant documentation (including the sales contract and the letter of credit) existing within the platform.

Shipping firms Russell Marine Group and Blue Water Shipping also took part, according to today’s announcement.

“Distributed ledger technologies have been evolving rapidly, bringing more efficiency and security to our transactions, and immense expected benefits for our customers and everyone along the supply chain as a result,” Gonzalo Ramírez Martiarena, Louis Dreyfus’ CEO, said in a statement.

In remarks, Martiarena suggested that the company would play a role in future developments around the project, including on the standardization front.

“The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level,” he was quoted as saying.

Soybean farm image via Shutterstock

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