A. Food safety and traceability
Food safety and traceability is a major concern for consumers. The greater transparency that Blockchain provides facilitates prompt identification of contamination sources, thereby saving time, money and possibly lives, in the event of a foodborne disease outbreak. Besides, consumers would have greater knowledge of the sources of their food, the farmers and the processors. This could prevent issues related to false labelling and fraud. San Francisco-based Ripe.io is an example of a company that offers Blockchain based solutions to map the food journey along the supply chain from farmers to distributors and consumers. London-based Provenance also offers similar solutions. In Malaysia’s paddy and rice industry, Blockchain technology could be applied to trace the authenticity of organic rice and artisanal rice such as the Bario rice. Even though geographical indication (GI) is registered for Bario rice, consumers are not fully protected from false labelling. In the case Cooper et al. (1997) as cited in Van Roekel et al. (2002). Geographical indication (GI) is “a sign used on products that have a specific geographical origin and possess qualities or a reputation that are due to that origin”. Definition by World Intellectual Property Organization (WIPO) (n.d.). where GI has been falsely used to deceive the public, any aggrieved party would need to file an action at the High Court (Intellectual Property), which is costly. Besides, this traceability solution is also useful in ensuring the HACCP and Good Manufacturing Practice adherence in milling and product manufacturing.
B. Improving the transparency of payment transactions
For small farmers, securing fair prices as well as being paid on time are issues they face since they depend on intermediaries to market their products. Companies such as Agri-Ledger aim to help farmers retain a bigger share of their crop value by leveraging on Blockchain technology. The four key issues targeted by Agri-Ledger are: trust deficit among players in the agri-food market; lack of audit trail on transactions; paper-based systems that are error-prone; and lack of transparency regarding the market and price information. Australia-based Blockgrain runs on the same premise of increasing supply chain efficiency although their focus is not limited to small farmers. As of late, growing dissatisfaction among paddy farmers and millers was reported in the media. One of the grievances noted was the alleged unfair increase of deduction rates that entails reduced compensation to farmers for their harvest, which is denied by buyers. Blockchain technology, in conjunction with other technologies such as the Internet of Things (IoT), has the potential to bridge the gap in trust between farmers and millers such as in the case mentioned. This may ensure transparency on the deduction rate and other relevant information and ultimately ensure fair payment to everyone along the supply chain.
C. Encourage the adoption of good agricultural practices
Limited capital and incentives are some of the factors that inhibit the adoption of good agricultural practice among farmers. Indigo carries out an initiative to pay farmers a premium for an end-to-end production contract that is based on using certain products, following specific agricultural. Deduction rate is the percentage of the product that is rejected due to impurities. Internet of Things (IoT) is a system of interconnection of electronic devices via the Internet practices, and providing traceability data on the production and movement of the grain. This initiative is built upon three objectives that are to increase farm profitability, to provide access to healthy food and the right information for consumers, and to preserve the environment. Demeter. life conducts a similar initiative through micro investment for farmland in which a community of investors defines the rules of production, hence ensuring quality farming. In 2016, only 2.3% of the total number of farms in Malaysia were registered under MyGAP. This low take-up rate may be explained by the limited incentives and awareness among the farmers to commit to MyGAP certification requirements and lack of consumer awareness regarding farm-level certifications. Having Blockchain to show that a food product uses raw material derived from responsible farming, can provide confidence to the consumers about the purchased product, as well as improve food safety and environmental responsibility.
D. Better market information
Farmers may benefit from greater market access. Companies such as Agri Digital offer seamless communication and connection with all players in the industry, which means farmers can directly connect with consumers to better understand their preferences. Another company, Agri Ledger, aims to build the world’s largest network of small farmers and cooperatives based on Blockchain’s features that allow strangers across boundaries to establish trust and accountability without the need for intermediaries. As an example to show that farmers are reactive to market information, a study investigated farmers’ shift from white rice farming towards fragrant rice farming (of the MRQ74 variety). One of the factors motivating farmers to cultivate the new variety is the expected rise in demand for fragrant rice consumption as well as the high price of fragrant rice in the market64. With the application of Blockchain technology that provides faster and more accurate transmission of market information, farmers may likely respond more effectively. In this respect, Blockchain technology can be applied, for instance, to creating a system that provides information to industry players on the retail prices of different types of rice (including demand for organic rice). This would help farmers make better market decisions and give them greater access to the global market. THANKS.
Precint 11, Putrajaya,
(2 Ramadan 1440H).