32 ANNUAL DIRECTORY 2018 Conceptually, blockchain makes a lot of sense but the potential of it in the agri sector is not something that has been widely considered. Yet the shift towards this technology is progressing quickly and it might be here quicker than we think, with a number of companies already trialling the technology. As a digital platform, ‘blockchain’ facilitates the transfer of physical commodities right along the supply chain, whereby all transactions are recorded on a shared ledger. This shared ledger, essentially a record book, records all the financial transactions, as well as any data or information that is associated with transferring the physical commodity along the supply chain – from farmer to consumer. All those involved in the transaction would have their own copy of the ledger, and each time a transaction is made, a new record (or block) is created and added to the blockchain. For it to work, input suppliers, farmers, port authorities, banks, logistical providers and processors, all need to participate in a common interface and enter their digital information in the same blockchain. Blockchain offers huge possibilities, given consumers are increasingly demanding high-quality and safe products – as well as visibility of the supply chain. The two major benefits blockchain delivers are transparency and provenance, but the secure nature of blockchain also removes counterparty risk – or the “will I get paid?” element - BLOCK WHAT?! There’s a lot of excitement and talk about ‘blockchain’ but yet little is known about what it actually is, and how this digitised technology could be implemented in the food and agri supply chain. Rabobank agricultural analyst Wes Lefroy looks at the shift towards a digitised supply chain and why it holds great promise for farmers through to the consumer. from the transaction. With blockchain facilitating traceability, it is set to drastically simplify the process of verifying product origin, quality attributes and production practices. For example, farmers will have much greater understanding of changing consumer preferences, giving them direct feedback into the demand for the different products they are producing. And in turn, consumers will have greater verification of how the product was grown, with input data and production location verifiable. For blockchain to ‘take off’, it requires involvement from all the stakeholders along the supply chain. This is particularly pertinent for farmers, as the provenance story is diluted, without high-quality information about production inputs and origin. At home and abroad, the shift towards a digitised supply chain is progressing quickly. Earlier this year Fonterra was invited to partner with Alibaba to develop a platform focused on strengthening the supply chain, which will involve the development of blockchain technology. And since then, we have seen some major grain handlers in Australia testing the application of this technology, with blockchain pilots also taking place in the US for other commodities such as pork and mangoes. While there are still barriers to wide-scale adoption, such as calculating a proper distribution of costs and benefits, there is no doubt that it holds promise and is the way of the future.
FT-Annual Directory 2018-eMag
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