February 25, 2019

Blockchain could shake up the industry, if certain things happen first

By Barney Bernstein, Senior Associate

Blockchain is touted as a revolutionary technology that will disrupt industries—notably banking and healthcare…and perhaps even politics. What about agriculture? 

What began as the digital payment platform for cryptocurrency, blockchain technology is now being applied for purposes beyond just financial transactions. Of special interest to agriculture is that it’s showing promise as an information ledger; a possible game-changer for product traceability. There’s discussion these days about how blockchain could disrupt the industry and work out kinks in the ag value chain. I do believe there is great promise for this. But as an industry we have some hurdles to clear before we get up to disruption-level status.

Blockchain technology uses blocks of data linked together to record and verify digital transactions. These blocks, each containing tremendous amounts of information that together tell a complete life history of a product, whether that’s a head of romaine lettuce or a carton of strawberries. Each record is a permanent snapshot of a moment in time along the supply chain. Original data from the grower gets appended to each transaction and stays with it through the rest of the chain. So, the buyer will be able to trace every step of the way from grower to packer and shipper and finally to the grocery store where it is purchased. Records are kept securely on the web, not on someone’s computer, and saved in multiple networked locations so it’s visible to all and unable to be modified.

The technology and its alluring promises are grabbing attention—a smarter and more sustainable food system, greater transparency, more efficient flow of information, safer transactions, and so much more data packed into the whole chain—what’s not to get on board with?

We’ll soon find out if blockchain is really all it’s cracked up to be in the ag and food industry with global behemoths ADM, Bunge, Cargill and Louis Dreyfus announcing a new initiative to digitize commodity trading that includes using blockchain. Cargill already was among the first to dabble in blockchain, using the technology to track turkeys, a program they started in 2017 and expanded the following year after overwhelming interest from producers. Walmart is making bold moves as well, issuing a mandate to leafy greens growers on the heels of last year’s romaine lettuce crisis that they must implement blockchain technology to remain a supplier. This move would enable tracing a head of lettuce back to a specific field in 2.2 seconds, as opposed to seven DAYS as it would take today.  Smithfield Foods also recently announced participation in a consortium to drive additional transparency and traceability in the food industry through blockchain technology.

With names like Smithfield, Walmart and the ABCDs of grain trading putting the technology into play, it’s sure to continue gaining momentum as a force in the industry and certainly could earn the title of disruptor. But are we ready?
The thing about revolutionary change is there’s got to be an appetite for it and the right processes must be in place to make it work. It’s like buying the expensive workout gear before you have a workout habit in place. Spiffy shoes aren’t going make you a runner. You need to become a runner first and then buy the shoes to improve your running.

In the case of blockchain, the technology will not magically create effective processes. The processes and workflows must exist first, and the technology can make them better.

Making Room for Blockchain

Right now, as an industry we aren’t universally equipped to feed the blockchain with all the data it needs to be useful. One major missing piece is having the right people, because that’s what will enable us to extract the most benefit from what these technologies have to offer. It’s not the technology that will make the system a success; it is people using the technology the right way that will make the system a success. We need qualified and motivated people with the right knowledge and level of discipline to accurately record the data and put it into play.

Blockchain doesn’t come prepackaged with processes and workflows. It may offer a more efficient and generally better way to keep track of data, but if the processes and workflows don’t already exist to capitalize on the data collected … well, then blockchain is just an expensive, incompatible plug-in.

Or on the other hand, putting automated systems in place that can collect the data passively would be a way to acquire data for putting into the blockchain. The technology takes care of how you collect the data. What agribusinesses need to figure out is the before and after—what data is needed, and what will be done with it once obtained?

Of course, all the above requires time and money, and as an industry we need to be willing to make the investments necessary to “prepare space” for Blockchain to be a good fit.

At Entira, we have expertise in the processes and can help you evaluate what your business can implement to become more efficient. In terms of integrating blockchain technologies, Entira can help companies determine what architecture is needed in terms of processes and workflows – whether you’re wanting to create systems to passively collect the data or put qualified people in place to execute those workflows. Let the technology get the data, then let the humans make sense of it.

Who’s Ready for Blockchain?

Many fresh market companies are feeling the pressure and are preparing to incorporate blockchain. It’s not as natural a transition for commodity markets for the reasons we outlined in the previous article on traceability—the way grain is comingled during transport and storage and the fact that there’s a lesser sense of urgency for having transparency all the way back to the farm level are two primary reasons. But while don’t see this to the field level in commodities, we do expect to see it in smaller niche markets like organic, sweet corn, popcorn or edamame beans. The expanding indoor farming market also presents more opportunity for blockchain integration than open field operations.

Whether it’s being driven by food safety concerns or consumer inquisitiveness or a combination thereof, clearly the traditional model of tracing one step forward and one step back will no longer suffice. Is blockchain part of the answer? We’ll have to see how it shakes out as more sectors of the ag and food industries try to determine how blockchain technology fits in.

Will you be ready if blockchain suddenly appears in your purview? Or has it already? Agribusinesses need to have processes in place that allow them to easily adopt blockchain when it comes up; because chances are good that it will.

Entira can help you explore what steps you need to take to get your company blockchain-ready.

If you would like help evaluating your processes and workflows to see how compatible they are with new technologies, contact Barney Bernstein at bbernstein@entira.net or 919.830.6527.