August 2018 | Agriculture

Emerging Opportunities for

the Application of Blockchain
in the Agri-food Industry

Mischa Tripoli
Josef Schmidhuber

Issue Paper
August 2018 l Agriculture

Emerging Opportunities for

the Application of Blockchain
in the Agri-food Industry

Mischa Tripoli
Economist, Trade and Markets Division, FAO

Josef Schmidhuber
Deputy Director, Trade and Markets Division, FAO

Issue Paper
ii

Published by
Food and Agriculture Organization of the United Nations
and
International Centre for Trade and Sustainable Development (ICTSD)
International Environment House 2
7 Chemin de Balexert, 1219 Geneva, Switzerland
Tel: +41 22 917 8492 Fax: +41 22 917 8093
ictsd@ictsd.ch www.ictsd.org
Publisher and Chief Executive: Ricardo Meléndez-Ortiz
Senior Programme Manager, Agriculture: Jonathan Hepburn

Citation: Tripoli, M. & Schmidhuber, J. 2018. Emerging Opportunities for the Application of
Blockchain in the Agri-food Industry. FAO and ICTSD: Rome and Geneva. Licence: CC BY-NC-SA
3.0 IGO

The designations employed and the presentation of material in this information product do
not imply the expression of any opinion whatsoever on the part of the Food and Agriculture
Organization of the United Nations (FAO) or International Centre for Trade and Sustainable
Development (ICTSD) concerning the legal or development status of any country, territory, city
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preference to others of a similar nature that are not mentioned.

The views expressed in this information product are those of the authors and do not necessarily
reflect the views or policies of FAO or ICTSD.

ISSN 1817-356X
Copyright: © FAO,2018

Some rights reserved. This work is made available under the Creative Commons Attribution-
NonCommercial-ShareAlike 3.0 IGO licence (CC BY-NC-SA 3.0 IGO; https://creativecommons.
org/licenses/by-nc-sa/3.0/igo).

Acknowledgements

The authors would like to acknowledge and thank Christopher Emsden of the Food and Agriculture
Organization for his contributions to this publication. His input and intellectual curiosity have
enriched this paper. Their appreciation is also extended to the ICTSD team as well as Heike
Baumüller and Abhishek Sharma involved in the review of this paper.

ICTSD is grateful for the generous support from its core donors including the UK Department for
International Development (DFID); the Swedish International Development Cooperation Agency
(SIDA); the Ministry of Foreign Affairs of Denmark (Danida); and the Netherlands Directorate-
General of Development Cooperation (DGIS).

ICTSD welcomes feedback on this publication. This can be sent to Jonathan Hepburn
(jhepburn@ictsd.ch) or to Fabrice Lehmann, ICTSD’s Executive Editor (flehmann@ictsd.ch). The
paper’s co-author Mischa Tripoli (Mischa.Tripoli@fao.org) can also be contacted.
 Agriculture iii

CONTENTS

ABBREVIATIONS vi
LIST OF FIGURES iv
FOREWORD v
EXECUTIVE SUMMARY vi
1. INTRODUCTION 1
2. UNDERSTANDING DISTRIBUTED LEDGER TECHNOLOGIES 3
3. APPLICATIONS FOR DISTRIBUTED LEDGER TECHNOLOGIES
IN THE FOOD AND AGRICULTURE SECTOR 6
3.1 Current Trends in the Food and Agriculture Industry 6
3.2 Agricultural Supply Chains 7
3.3 Land Registries 16
3.4 International Agreements Related to Agriculture 17

4. PUBLIC POLICY IMPLICATIONS FOR FOOD SECURITY

AND RURAL DEVELOPMENT 18
4.1 Enhancing Trade Facilitation and Food Security through Efficient
Institutions, Traceability and Market Transparency 18
4.2 Strengthening Rural Development Outcomes for Inclusive Economic Growth 19

5. THE WAY FORWARD FOR DISTRIBUTED LEDGER TECHNOLOGIES 21

5.1 Challenges and Risks for Distributed Ledger Technologies 21
5.2 The Way Forward for the Public Sector 23

6. CONCLUSIONS 25
REFERENCES 27
iv

ABBREVIATIONS
B2B business-to-business

CCA central competent authority

DLT distributed ledger technology

FAO Food and Agriculture Organization

IoT Internet of Things

MSME micro-, small- and medium-sized enterprise

OTC over-the-counter

RFID radio frequency identification

SDG Sustainable Development Goal

SPS sanitary and phytosanitary

TRIPS Trade-Related Aspects of Intellectual Property Rights

UN United Nations

WFP World Food Programme

WSIS World Summit for the Information Society

WTO World Trade Organization

LIST OF FIGURES
Figure 1: Traditional centralised ledger and a distributed ledger

Figure 2: Agricultural supply chain on distributed ledger technology

 Agriculture v

FOREWORD
Distributed ledger technologies (DLTs) have the potential to transform the global food system by
introducing important efficiency gains along value chains, and improving trust, transparency and
traceability. While large actors are likely to make fast and significant inroads in exploiting DLTs,
small farmers and processors also stand to reap significant benefits, provided the technology is made
accessible to them. This raises the question of how an enabling environment can be created for
smallholders to harness these new technologies, and, at a broader scale, for DLTs, so that these
contribute to improving the functioning of global food and agricultural markets.

This paper, by Mischa Tripoli and Josef Schmidhuber, seeks to make an initial contribution to the
emerging public debate on this issue by providing an overview of DLTs and their application in food
and agriculture, examining public policy implications for food security and rural development and
identifying some potential challenges, risks and the way forward.

Ricardo Meléndez-Ortiz Boubaker Ben-Belhassen

Chief Executive, ICTSD Director, Trade and Markets Division, FAO
vi

EXECUTIVE SUMMARY

Distributed ledger technologies (DLTs) and smart contracts provide a unique opportunity to bring
greater efficiency, transparency and traceability to the exchange of value and information in
the agriculture sector. This paper aims to facilitate a better understanding of the opportunities,
benefits and applications of DLTs in agri-foods. It also identifies technical limits and possible
institutional barriers to their adoption.

By utilising digital records, cryptography and the disintermediation of transaction processing and
data storage, DLTs can improve both agricultural supply chains and rural development interventions
in a number of ways. First, the ability of the technology to trace a product’s provenance, carry
detailed attributes for the product in each transaction and ensure its authenticity brings vast
improvements in traceability with positive impact on food safety, quality and sustainability.
Second, the disintermediation of transactions in agricultural supply chains and the use of smart
contracts enable frictionless and real-time payments for agricultural financial services, which can
reduce transaction costs, decrease risk for buyers and sellers and increase cash flow and working
capital for farmers and sellers which is usually tied up in complex and paper-heavy settlement
processes. More efficient supply chains and agricultural financial services lead to greater financial
inclusion and stronger business development. Third, DLTs allow users to build digital identities with
their recorded digital and physical assets. The vast amount of data generated from transactions in
agricultural supply chains provides more accurate market information and data for supply chain
actors and the public sector, which can be used to inform production and marketing decisions,
prove a farmer’s track record to access credit and strengthen the enabling environment with
better informed policies. Physical assets registered on the distributed ledger, such as land titles,
can be used as collateral to access financing. DLTs are a secure, fast and immutable method to
register land titles, providing greater legal clarity to land tenure systems.

In addition, DLTs also have the potential to improve the implementation and monitoring of
international agreements related to agriculture, such as World Trade Organization agreements
and provisions relevant for agriculture, as well as the Paris Agreement on Climate Change. DLTs
can bring greater transparency and accountability to compliance with such agreements.

There are a number of technical, regulatory, institutional, infrastructure and capacity development-
related challenges to be addressed before reaching maturity in order to ensure the scalability
and accessibility of the technology. Scalability, interoperability and product authenticity through
product-process links are important factors for widespread adoption of DLTs in agricultural supply
chains. DLTs are not a panacea for the agriculture sector, but the technology provides great
potential if the challenges for adoption can be overcome.

As DLTs continue to develop, the international community has an important role to play in
contributing to the creation of an enabling environment that ensures that the productivity gains
generated from DLTs can be shared by all market participants, including smallholder farmers,
processors as well as micro-, small- and medium-sized enterprises. Governments together with
intergovernmental organisations can lead this effort by contributing to technical dialogue on
DLTs; providing policy guidance on the use of DLTs in agriculture through intergovernmental
working groups and multi-stakeholder platforms; developing regulations and standards; enhancing
public and private partnerships; and providing outreach to improve infrastructure and digital
skills in rural areas. The technology has huge potential to address many of the challenges that
disadvantaged market players face by allowing them to participate in integrated supply chains,
in addition to improving rural development interventions and being an impetus to achieve the
Sustainable Development Goals.
 Agriculture 1

1. INTRODUCTION

All around the globe, regardless of the level of enormous potential to enhance efficiency,
economic development, humans are constantly transparency and traceability across the global
transferring value. The transfer of value is a economy. DLTs can be programmed to record
fundamental human activity enabling people not just economic transactions, but also other
to trade goods and services, and accumulate types of information that is of value and
productive capital and savings for their well- importance to humankind, such as: birth and
being. In order to lower uncertainty during death certificates, marriage licenses, deeds
the exchange of value, institutions are used to and titles of ownership, educational degrees or
ensure trust and mitigate risk between buyers anything else that can be represented in code
and sellers. The institutions that intermediate (Tapscott and Tapscott 2016).
the exchange of value use centralised
electronic ledgers to track assets and store Throughout the global economy, governments,
data. Since those intermediaries often rely on private institutions and technology start-
manual inputs and may be vulnerable to fraud, ups are exploring the possible applications
value transfers tend to impose a high cost on for DLTs. Over the last four years, more than
buyers and sellers, which drastically increases US$5 billion have been invested in these
the burdens of doing business. High transaction technologies (CoinDesk 2018). The financial
costs are a major deterrent to economic services sector is one major area where the
development. In addition, cash transactions technology is being tested and implemented for
(in both the formal and informal economy) payments and trading securities. Blockchain-
lack traceability, which ultimately hinders based payments have considerable potential
the ability of micro-, small- and medium-sized not only for retail banking, but also for
enterprises (MSMEs), particularly in developing agricultural value chains and the development
countries, to access credit and new markets sector in cash-based assistance schemes,
and to grow. remittances and procurement. For example,
the World Food Programme (WFP) piloted cash
Distributed ledger technologies (DLTs)1 transfers programmes using a blockchain-based
introduce a new method to accounting for technology to record supermarket transactions
value transfers that minimises uncertainty and in a Syrian refugee camp. The pilot programmes
disintermediates the exchange of value with a were believed to provide substantial financial
decentralised and shared ledger, functioning savings for WFP, by eliminating financial
as a digital institution of trust. DLTs offer a intermediaries, their associated transaction
secure system of recording transactions in fees and the time spent by WFP accountants
a digital database that removes third-party on compiling data and reports from banks
intermediaries, reduces transaction costs, and stores, which is no longer needed with
enables faster and even real-time transactions, automated record-keeping from the blockchain
assures immutable data entries and provides (Bacchi 2017). The potential applications of DLTs
access to the database for all participants in to simplify workflows and improve efficiency in
the network. After being first introduced as the development industry are enormous. The
the electronic cash system for Bitcoin2 in 2008, private sector is already partnering with the
blockchain and other DLTs have demonstrated United Nations (UN) to explore applications

1 For the purpose of this paper, the terms distributed ledger technologies (DLTs) and blockchain are interchangeable.
It is important to note that blockchain has become a colloquial name for all types of DLTs. However, blockchain is
actually one type of DLT. See section 2 for a further explanation.
2 Bitcoin is a digital currency that uses the DLT called blockchain to transfer funds between parties without a central
authority.
2

to improve the effectiveness of its work and trade finance and promote inclusive trade,
strengthen efficiency in the UN system (Bacchi increase access to agricultural financial
2017). services, generate smarter market information
and provide greater legal certainty to
The agricultural sector is no different. There land-tenure systems. The agri-food and
are numerous transparency and efficiency technology industries are already exploring
issues in agricultural supply chains, which such applications. In fact, a consortium
ultimately put farmers and consumers at a of major food companies (Dole, Driscoll,
disadvantage. Transactions in agricultural Golden State Foods, Kroger, McCormick and
supply chains are inherently risky and complex, Company, Nestlé, Tyson Foods and Walmart)
thus relying on a number of intermediaries; are collaborating with IBM to use distributed
while more conscious consumers have poor ledger solutions to make their food supply
transparency on where their food comes chains more transparent, more traceable and
from and how it is produced. Ultimately, to streamline payments. Previously, IBM and
strengthening the linkages between farms, Walmart used blockchain-based technologies
markets and consumers can generate greater to track a package of mangoes along its exact
income growth and job creation (FAO 2017). path from retail shelf to farm in a matter
The potential for DLTs to increase efficiency, of seconds (Wass 2017b). This paper aims
transparency and trust throughout agricultural to facilitate a better understanding of the
supply chains and empower all market players opportunities, benefits and applications of
is real. The technology has the potential to DLTs in the agriculture sector. It also identifies
simplify and integrate agricultural supply technical and financial constraints in adopting
chains, enhance food safety, reduce risk in the DLTs in food and agriculture.
 Agriculture 3

2. UNDERSTANDING DISTRIBUTED LEDGER TECHNOLOGIES

Distributed ledger technologies are an evolving transactions timely and costly. In addition, the
technology and transaction system that has centralised model limits access to data and
many applications. It was first introduced as the control of it for buyers and sellers. DLTs do
cryptocurrency system for Bitcoin in 2008.3 DLTs not use any centralised certifying authorities.
can be used to make all types of transactions and Instead, when information is verified on the
store any type of data and information of value. distributed ledger, it is instantly recorded on all
A DLT is a digital database that uses cryptography of the participating computers on the network,
to link and secure transactions or data entries, which ensures every user has access to up-to-date
and disintermediates data processing and data information; there is no single point of failure
storage with a peer-to-peer distributed network and no single institution or actor can control the
of computers that are used to validate and store information. DLTs verify transactions by using
the transaction history and information. DLTs a consensus mechanism to reach agreement
function as a decentralised digital institution to between the participants on the status of a data
ensure trust between buyers and sellers or users, in the network. The consensus mechanism uses
thus providing an improved method to account validators (who are also participants), economic
for value transfers. incentives and consensus algorithms to validate
transactions or data entries in the shared ledger.
The technology has three key features that All users of the DLT can participate in the
are necessary to understand (see figure 1). validation process for transactions. This removes
First, DLTs disintermediate the processing and the need for intermediaries by maintaining the
storage of data entries. Currently, institutions element of trust, while replacing the current
ensure trust through intermediation, where they centralised data model which drastically changes
contract, clear, settle and record transactions the payment-cost structure (Cant et al. 2015).
in a centralised ledger. These intermediaries This method of validating data entries offers
often rely on manual inputs and are susceptible greater cost efficiency, with lower fees and
to error and fraud, making the execution of faster transactions.

Figure 1: Traditional centralised ledger and a distributed ledger

Clearinghouse

Centralised ledger Distributed ledger

Source: Author

3 There is a spectrum of DLTs, each with a different degree of decentralisation. It ranges from permissionless ledgers
(like the Bitcoin blockchain) that are censorship resistant, do not have any legal accountability and where users have
equal rights to permissioned ledgers that are censored, have legal liability and where users may not have equal rights.
4

Second, DLTs use cryptography to ensure access, where actors in the network are
immutability and security for data entries. anonymous and do not need to have any
Each data entry is recorded with a timestamp previous relationship with the ledger. Public
and a cryptographic fingerprint of that record, or permissionless DLTs are censor-proof and
called a hash, that links each record to one fully decentralised systems. Participation in
another, and is then stored securely across the network is open to anyone in the world,
the distributed network of computers. Hashes which means anyone can make transactions,
are the basis of security and immutability for view the ledger’s entire transaction history and
distributed ledgers, which make it impossible participate in the consensus mechanism. The
to modify an entry without noticeably affecting advantage of public DLTs is that no individual
all of the entries in the ledger. This makes or entity is able to control the information on
fraudulent activity in the distributed ledger the ledger and, therefore, the system is neutral.
immediately visible to all of the other users. The two most well-known public DLTs are the
Bitcoin blockchain and Ethereum; the latter is
Third, the immutability of records and the a generalised transaction ledger that allows
disintermediation of data storage, through anyone to programme decentralised software
a shared ledger, make every transaction or applications using smart contracts and executes
record in a distributed ledger traceable and them on its DLT. The disadvantage of public DLTs
transparent. In theory, all participants of is that there may be some malicious actors in the
the distributed ledger have access to the full network, since the participants are unknown.
transaction history registered on the database. Therefore, there may be applications where
Depending on the purpose and the rules of the some types of information are too sensitive to
DLT, users have the ability to control which be shared in a fully open ledger, such as for
types of transaction details are shared, and financial institutions.
with whom. The information stored on the
ledger is protected by encryption and managed A private DLT is a closed ledger with permis-
with private and public keys.4 Together, these sioned access, where users are identified
keys allow users to protect and control who can and transactions are validated and processed
access their information on DLTs and when. For by actors that are already known by the
example, if a farmer wants to share their credit ledger. By requiring the identity of actors
history that is registered on the distributed to be known in the private or permissioned
ledger with a lender such as a bank, then they distributed ledger, there is an additional
could use the bank’s public key to encrypt and layer of security that limits malicious
send the data to the bank; the bank would actors, as they can be penalised and ejected
use its corresponding private key to decrypt from the network.5 Instead of anonymous
and read the information. In addition, the bank participants, permissioned distributed ledgers
could verify that the data actually belongs to use already authenticated legal entities to
the farmer by using the farmer’s public key. validate transactions (Swanson 2015). Using
Ultimately, access to data in the DLT can be authenticated validators to provide consensus
shared or private, depending on the rules of in the network does not mean they can control
the DLT (which are based on the purpose of the the approval of transactions. In fact, there is a
platform) and the users’ choices. trade-off for permissioned distributed ledgers
where censorship-resistance is sacrificed for
Currently, there are two main types of DLTs: legal accountability, while still operating
public and private (Jayachandran 2017). A without intermediaries. It is precisely the
public DLT is an open ledger with permissionless legal accountability that makes permissioned

4 In asymmetric encryption, each user has a private and public key that correspond to one another. The private key is
confidential and similar to a password. The public key is like an email address and is available to users in the network.
5 For more details on the benefits of permissioned distributed ledgers, see Swanson (2015).
 Agriculture 5

distributed ledgers more attractive for global contractual agreements, which are usually
capital markets, tangible assets, supply chains in the form of physical contracts. Physical
and smart contracts (Swanson 2015). contracts depend on centralised authorities
to clear and settle transactions, which are
The anonymity of participants in public DLTs costly, time consuming and plagued by error
and the identity of users in private DLTs make and fraud. Since DLTs have a high degree of
the process for verifying the transactions security and immutability, they provide a sound
quite different in open and closed systems. technological platform for smart contracts.
There are many different types of consensus Smart contracts are computer programs
algorithms that are used for public and private that automatically execute when predefined
DLTs. Each algorithm has advantages and conditions are met. Smart contracts are
disadvantages, which should be understood designed to automate much of the contractual
and used according to the specific application. process. The performance, monitoring and
For example, one of the best-known public DLTs enforcement of contractual agreements are
is the Bitcoin blockchain, which uses a consensus done autonomously, without any central
algorithm called proof-of-work. The proof-of- authority or human involvement. Contract
work algorithm is costly in terms of resources and automation could provide huge savings for
time, and therefore is not an optimal consensus businesses in transaction fees and legal costs,
mechanism for business blockchain networks while meeting contractual obligations in real-
(Hyperledger 2017). The Ethereum public DLT time (Shadab 2014; Cant et al. 2016). These
is transitioning to the proof-of-stake algorithm, efficiency gains have the potential to uproot
which is more efficient as it eliminates mining the traditional contractual infrastructure
and the expensive computational resources and eliminate the need for centralised
used in the proof-of-work algorithm. Private intermediaries.
DLTs employ two main groups of consensus
algorithms: lottery-based and voting-based. The areas for potential applications of distri-
Lottery-based algorithms are advantageous in buted ledgers are immense. The efficiency
terms of scalability but result in a longer time gains from executing transactions and
to finality, while voting-based algorithms are contracts through distributed ledgers have
advantageous in terms of speed and finality but huge implications for the financial industry, but
lack scalability (Hyperledger 2017). also for other sectors throughout the economy.
Seemingly every sector of the economy is
Another potential efficiency gain for the global trying to understand how this technology is
economy is the ability of DLTs to implement applicable and could be beneficial, and what
smart contracts. Commerce operates through the challenges for implementing it are.
6

3. APPLICATIONS FOR DISTRIBUTED LEDGER TECHNOLOGIES IN THE

FOOD AND AGRICULTURE SECTOR

3.1. Current Trends in the Food and (FAO 2014). In these regions, agriculture is
Agriculture Industry marked by low labour productivity and low
capital intensity. This is in stark contrast with
Similar to other sectors of the economy, the predominantly large-scale farming in high-
agriculture and transactions in agricultural and upper-middle income countries, typically
supply chains have never fully undergone a characterised by high labour productivity and
digital transformation. World agriculture is high capital intensity.
facing numerous challenges. The agri-food
industry must: Globally, both food production and retail
channels are changing. There is a growing
• meet the food demands of a growing reliance on global supply chains and
population; large-scale distribution systems, such as
supermarkets. Food systems are becoming
• adjust to changing consumer preferences more capital-intensive, vertically integrated
in low- and middle-income countries from and concentrated in fewer hands. In some
cereal-based products towards higher instances, there is the integration of primary
consumption of animal, fruit and vegetable production, processing and distribution; the
products; automation of large-scale processing; and
higher capital and knowledge intensities (FAO
• promote more environmentally sustainable 2017). For low- and middle income countries,
agricultural practices and decrease envi- the changing agri-food value chains increase
ronmental footprints; barriers for small-scale producers and agro-
processors to participate in local, national and
• reduce supply chain costs;
global markets. Many small-scale operators
• maintain high-quality sanitary and phyto- struggle to participate in integrated value
sanitary (SPS) standards; chains, due to the lack of access to financing,
issues of market accessibility and transport,
• sustain profitable farming operations; and and of complying with the range of standards
on quality, traceability and certification (FAO
• raise incomes of small-scale food producers. 2017). By strengthening the linkages between
farmers, markets and consumers, agricultural
Globally, the agriculture sector is a major value chains can generate greater income
source of employment, which absorbs roughly growth and job creation.
30 percent of the global workforce (World
Bank 2018b). For many low- and lower-middle- Agricultural supply chains are risky and
income countries, the sector is an important complex, as agricultural production depends
source of income for the rural populations and on difficult-to-control factors (weather, pests
a major driver of economic growth. and diseases), agricultural supply chains lack
traceability and the settlement of transactions
Food systems and agricultural practices around is slow and often labour-intensive. Transactions
the world are diverse and range from modern, in agricultural supply chains are overrun with
large-scale distribution systems channels to intermediaries and dogged by inefficiencies,
traditional food chains. Agriculture in low- and while the actors that are able to consistently
lower-middle income countries is characterised access global supply channels are often large-
by a majority of small farms, with three quarters scale producers and agro-processors with a
and two thirds, respectively, of all farmland strong reputation. Agricultural supply chains
managed in farms of less than five hectares need more inclusivity for disadvantaged market
 Agriculture 7

players, in order to boost their economic that records, tracks, monitors and transacts
development and contribute to the demand for physical and digital assets. DLTs enable higher-
greater food supplies by a growing population. quality transactions and enhanced traceability.
DLTs have the ability to reduce risk and The technology can integrate and manage
increase efficiency in the agri-food industry by each process and transaction throughout the
providing transparency and traceability and by agricultural supply chain in real time. Each
eliminating intermediaries in agricultural value transaction that is processed on the distributed
chains. In addition, by reducing uncertainty and ledger can carry transaction details and
enabling trust among market players, DLTs and specific attributes for the product which can
smart contracts also provide a real opportunity be added by supply chain actors. Supply chain
for more inclusive market participation for actors can identify and examine the product’s
smallholders and MSMEs. movement along every step in the supply chain
from the agricultural and livestock inputs and
3.2. Agricultural Supply Chains practices (fertilisers, fodder, water practices,
veterinary services, etc.) used on the farm to
3.2.1 Agricultural supply chains management
the transportation and storage conditions and
details as the product moves to the retailer and
Agricultural supply chains have substantial
consumer. The DLT stores immutable records
inefficiencies, which impact all actors in
that are transparent and, in theory, accessible
the chain from producers to consumers. It is
estimated that the cost of operating supply to any user with the software. This technology
chains makes up two thirds of the final cost has the potential to create vast efficiency gains
of goods (Niforos 2017b), while seven percent for each actor in the supply chain.
of the global value of trade is absorbed by the
Ensuring immutable product–process links
costs of documents alone.6 The challenges for
supply chains include: the lack of transparency DLTs provide a platform for traceability in
due to inconsistent or unavailable data; high agriculture supply chains to track provenance
proportion of manual labour and paper work;
and ensure authenticity of agricultural
lack of interoperability; and limited information
products. Regulatory control will be easier
on the traceability of the product (Lierow et
with DLTs as the product can be traced along
al. 2017). Both private and public sectors want
every registered movement in the supply
to reduce the high cost of moving goods along
chain, and this allows for legal accountability
supply chains, and the World Trade Organization
for fraudulent behaviour regarding a product’s
(WTO) Trade Facilitation Agreement introduces
authenticity. However, for transactions to
measures to cut costs, avoid delays and reduce
be fully tamper-proof, an immutable link
uncertainty (OECD et al. 2014).
between the DLT (process) and the real-world
At the same time, the private sector is always product needs to be established. The basic
looking for technological advances to make challenge is that while the transaction data
their supply chains more cost effective and to can be traced by the cryptographic fingerprint
increase competitiveness. Already supply chains attached to each transaction, the movement
are being digitised with technologies such as of the physical product along a supply chain
cloud computing, artificial intelligence and the from farm to consumer needs to be ensured
Internet of Things (IoT). However, DLTs have the through such an immutable product-process
greatest potential to increase efficiency and link. Several options exist to establish these.
transparency in agricultural supply chains. They include the well-known QR code on the
product’s packaging, the more advanced radio
The application of DLTs in agricultural supply frequency identification (RFID) chips and,
chains would provide a digital database more recently and most promisingly, so-called

6 See www.tradefacilitation.org.
8

crypto-anchors. QR codes are already used For example, when looking at the supply chain
in markets and require regulators to monitor for poultry (figure 2), we can see the real
product authenticity. IBM recently developed potential of an integrated supply chain on a DLT.
crypto-anchors as a means to ensure product With growing demand for more transparency and
authenticity for DLTs. Crypto-anchors are information on the origin of products, supply
tamper-proof digital fingerprints that are chain actors would use a mobile application and
embedded into products in the form of edible a QR code on the product to trace its origin and
ink using optical code or tiny computers, movements along each step of the supply chain.
and linked to the DLT to prove a product’s The consumer would scan the QR code on the
authenticity. Crypto-anchors are highly packaging of the chicken to reveal the product
secure, unclonable, smaller than a grain information. In order to have product traceability,
of salt and cost less than US$0.10 cents to the chain would start with the producer, who
manufacture (IBM 2018a). In the case where would keep records of all information on inputs
a crypto-anchor cannot be embedded directly (such as feed and medicines), animal health,
into a product, IBM also recently developed location, breed, age, sex, cost of production
a technology using mobile sensors (or a cell and any other technical information needed
phone) outfitted with a special optical device for domestic or export markets. Each time the
and artificial intelligence algorithms to learn chicken would be moved between supply chain
and identify the optical structure, the DNA actors, the transaction would be recorded and
sequencing and other features of certain verified by the DLT. Other information that
objects in minutes (IBM 2018a). For example, would be recorded is time (slaughter date, time
in the near future, a retailer or customs agent in transit, expiration dates) as well as export-
could use a sensor on a mobile phone to verify related certifications (such as health and country
the authenticity of a tomato’s provenance. of origin certifications). These details and their
The low cost and seemingly simple usability traceability would bring large efficiency gains
make crypto-anchors a potential scalable and to supply chain management, food safety and
useful tool to ensure authenticity. product sustainability.

Figure 2: Agricultural supply chain on distributed ledger technology

Supplier Producer Processor Distributor Customs Retailer Consumer

Agriculture and Chicken is Gov. inspected Stores and trans- In case of int’l Runs machine Scan QR code
livestock inputs tagged with facility gets data ports poultry pro- trade, receives learning-based via app
are sold to pro- RFID chip, on chicken, pre- ducts from digital certifica- fore casting
ducer and regi- proving free pares poultry suppliers to retai- tions Gets full infor-
stered on DLT range products and lers, restaurants Adapts orders mation on the
adds QR code to and importers Uploads data on and promos poultry product
Breeder enters Uploads data on packaging holding times, accordingly such as where
data on egg and Uploads data on
feed, veterinary testing resultis and where
pullet quality shipment and
reports, facility Uploads data on and customs- Uploads data on and how it was
and conditions, delivery details,
conditions, storage and clearing details delivery details, produced, pro-
sanitation and storage and
sanitation and slaughter condi- inventory metrics cessed and
transportation transport condi-
food safety tions, food safety Allows entry for and sanitation transported
details tions, and ware-
measures, other compliance, lot products and measures.
house and vehicle
certifications number, custom duties
food safety and
and farm certifications are automatically Provides app for
sanitation
location and QR codes dispersed by end-consumers
measures
smart contract
Source: Author
 Agriculture 9

Currently, there is an influx of start-ups in the free status. In addition, the CCA should be
food and beverage sector that aim to transition able to easily, quickly and confidently issue
agricultural supply chains onto DLTs. INS is an export certifications. Virtually all of the
e-commerce platform that aims to disrupt the required information associated with the
concentration of power in the grocery market product will be in the DLT and certifications
by using DLTs to connect manufacturers could even be automated. CCAs will still play
directly to consumers through the integration an important role in monitoring and inspecting
of data. Globally, approximately 60 percent of farms and processing facilities’ compliance
the grocery market is dominated by the top with international SPS standards.
five retailers, which can lead to unfair trading
practices for farmers and manufacturers, and In the case of an outbreak of an animal or plant
high prices for consumers (Michail 2017). By disease, contaminated agri-food products or
bypassing grocery retailers, manufacturers food fraud, DLTs will also enable businesses and
could save money on the business-to-business regulators to trace and pinpoint contaminated
(B2B) marketing directed at retailers, which or fraudulent products more quickly and less
will save consumers 20–30 percent for products wastefully. Both food fraud and foodborne
bought on the INS platform (Michail 2017). INS diseases are extremely costly in economic
is envisaged to give small food enterprises terms, and environmentally in terms of wasted
increased market opportunities. Ambrosus is a resources. Food fraud is estimated to cost the
Swiss tech firm that aims to use a DLT, smart global food industry US$40 billion each year
contracts and high-tech sensors to trace food (PWC 2016), and the estimates of foodborne
and pharmaceutical supply chains. Ripe is diseases in the US alone are roughly US$55
another company that is using DLTs, scanners billion annually (Scharff 2015). Currently,
and specialised sensors to provide agricultural neither firms, governments nor consumers
supply chain actors with better data on crop are able to capture a product’s movement
production to yield higher-quality produce along the entire supply chain, since often
(Massa 2017). Provenance, a UK start-up, governments only require firms to record data
successfully launched a pilot project to track on a product’s movement one step forward
tuna fishing on DLTs. The company aims to and one step backward. This can make it more
curb illegal fishing and fake certifications, by difficult to track contaminated or fraudulent
registering each catch on the blockchain and products to the exact farm or plant that might
selling the fish with a blockchain ID in order to have caused the outbreak. DLTs can quickly
ensure traceability. trace contaminated products to their source,
allowing faulty items to be removed from
3.2.2 The future of food safety stores to minimise both illness and financial
losses.
By enabling transparency and recording every
detail of the production and processing of The food and beverage industry is currently
agricultural goods, the ability to ensure experimenting with deploying the DLTs into
compliance with food and sustainability global food supply chains. A consortium of
standards will be improved. Data will be large food suppliers, including Dole, Driscoll’s,
available on the quality (freshness, safety, Golden State Foods, Kroger, McCormick and
geographic indications), safety (health, risk Company, Nestlé, Tyson Foods and Walmart, is
management) and sustainability (organic, fair- collaborating with IBM to test their DLT and
trade) of products. DLTs will help businesses identify new areas where the technology can
and governments’ central competent benefit food ecosystems (Wass 2017b). The
authorities (CCA) to track and monitor non- collaboration is based on a successful pilot
compliance with international standards and project that IBM carried out with Walmart on
improve their ability to control plant and how DLTs can solve food safety problems and
animal diseases in order to maintain disease- trace contaminated products to their source.
10

The results from the pilot project showed include multiple copies of agreements between
that, when tracking a package of mangoes the shipper’s banks and receiver’s banks,
from the supermarket to the farm where they as well as agreements on the value of the
were grown, it took six days, 18 hours and 26 shipment and how it is loaded. Through these
minutes with traditional methods, whereas complex and inefficient transaction systems,
with the DLT it took just a couple of seconds to financial intermediaries lock up billions of
identify the exact origin and the path the fruit dollars as they process the transactions. For
followed to the retail shelves (Wass 2017b). example, the payment terms in Australia’s
grain sector range from two to five weeks, and
Similar projects are underway in Asia these terms pose counterparty credit risk to
with two of China’s largest e-commerce growers (Fintech Australia 2016). Naturally,
companies, with the objective to combat such long periods have negative impacts on
food fraud. Alibaba is launching an initiative sellers’ cash flow, working capital and ability
with PricewaterhouseCoopers, Blackmores to manage their business.
and Australia Post to develop and implement
blockchain-based technologies into their Trade finance digital platforms using DLTs
supply chains to eliminate food fraud. can reduce costs, reduce risks for sellers
Similarly, JD.com, China’s second largest and banks and bring greater efficiency gains
e-commerce company, is working with Kerchin, to supply chains. DLTs use smart contracts to
a Mongolia-based beef manufacturer, to track auto-execute the settlement of payments in
the production and delivery of frozen beef real time, by first valuing the delivery, then
(Huang 2017). verifying the buyer has sufficient funds and
lastly securing the funds in the buyer’s name
3.2.3 Greater efficiency for trade finance pending delivery. Once the physical delivery
is made, the title for the grain is transferred
Trade finance plays a vital role in global to the buyer as the payment is simultaneously
trade. Roughly US$18 trillion of annual trade settled from the reserved funds (Fintech
transactions involve some form of trade finance, Australia 2016). Real-time approvals and
while the total size of the trade finance market payments in trade finance would eliminate
is more than US$10 trillion annually (Auboin the counterparty risk that sellers face and
2015). Financial institutions bridge the gap in free up working capital. In addition there are
the exchange between buyers and sellers with huge efficiency gains through the workflow
some form of finance, such as credit, insurance automation and digitisation of documents.
and guarantees. There is substantial risk when All information (related to agreements and
two companies send high-value and large certifications) that is traditionally stored on
shipments domestically or internationally, paper would be stored on a single digital ledger,
such as a load of rice. The potential risks are which is quickly accessible to all parties. Banks
related to the transaction between the two would no longer need intermediaries to assume
parties (i.e. the time difference between risk. Lastly, DLTs could also improve the ability
when sellers or exporters want to be paid of regulators and authorities to collect taxes
and when buyers or importers will release and customs duties. The technology brings a
the payment), possible alteration or loss of high level of accountability, traceability and
goods during transportation and fluctuations in verifiability to the transaction.
exchange rates. Trade finance mitigates these
risks for sellers and buyers (or exporters and DLTs can also increase access to trade
importers), which is a fundamental aspect of finance. Trade finance has been unable to
being able to trade goods. meet demand, particularly from MSMEs and
emerging economies, resulting in a loss in
The current methods of trade finance are economic growth. In 2017, the global trade
cumbersome, time-consuming and rely heavily finance gap is estimated to be approximately
on paper to conduct transactions. Transactions US$1.5 trillion (DiCaprio et al. 2017). Access to
 Agriculture 11

trade finance often depends on reputation and and French banks (ING, ABN Ambro and Société
being an established player in supply chains, Générale), partnered with Louis Dreyfus Co.
which ultimately is a disadvantage to MSMEs. (one of the biggest agri-food traders), to ship
Since DLTs reduce the risk for banks, they have a cargo of soybeans from the US to China using
a greater incentive to be more inclusive and a DLT. It is said to be one of the first fully
also extend their services to MSMEs. fledged agricultural commodity transactions
using the technology, which reduced the time
Currently, a number of trade finance appli- spent on document and data processing to a
cations using blockchain-based technologies fifth through digitising documents for the deal
target MSMEs and locations where trade (including sales contracts, letter of credit,
financing is unavailable. Seven major European government inspections and certifications)
banks are collaborating on the development (Bloomberg 2018). Another initiative, including
and commercialisation of a permissioned DLT a group of international banks (Barclays,
trade finance platform for SMEs, hosted by Standard Chartered and BNP Paribas), large
IBM and powered by Hyperledger Fabric 1.0 corporations (Unilever, Sainsbury’s and Sappi)
(Wass 2017a). 7 The platform, called Digital and fintech start-ups, has launched a project
Trade Chain, is designed to manage open to use DLTs to track physical supply chains
account trade transactions for domestic and unlock access to financing for sustainable
and international trade for European SMEs. sourcing (Wass 2017c). The first pilot plans
Its goals are to provide a single platform to test the technology to track tea and tea
for trade deals, provide easy access to packaging materials from farmers in Malawi to
financing and reduce transaction costs for the corporations. This pilot is one of the first
businesses. In addition, a US-based company, initiatives to combine supply chain tracking
Skuchain, has developed a DLT to reduce with trade financing.
friction in trade finance and global supply
chains. The venture aims to make financing 3.2.4 Agricultural value chain financial
available to SMEs and to emerging markets services: payments, insurance, credit
where it was not previously accessible. and derivatives
Skuchain’s blockchain technology provides
a “collaborative commerce platform” that Other types of financial services, like payment
combines payments (letter of credit or wire services, insurance and credit, also play an
transfer), finance (operating loans or short- important role in helping agricultural supply
term trade loans) and visibility (integration chain actors to reduce risk, improve crop
with back-office systems such as “Systems yields, manage liquidity and maximise returns.
Applications and Products in Data Processing” DLTs have the potential to reduce friction
or an “Enterprise Resource Planning” system) costs and increase access to agricultural value
(Allison 2016). One potential application of chain finance particularly for smallholders and
Skuchain’s blockchain is with WFP, as they MSMEs. According to Capgemini Consulting,
are currently exploring options to finance distributed ledger-based smart contracts are
the procurement of food in East Africa estimated to save consumers up to US$16 billion
(Besnainou 2017). annually on banking and insurance fees (Maity
2016), and certainly savings from reduced
There are many other applications in trade friction costs generated by DLTs will also apply
finance and supply chain management that to agricultural financial services. Greater
are in the process of testing their proof of efficiency in supply chains and agricultural
concept, with the intention to pilot and scale financial services can lead to greater financial
thereafter. One example is a group of Dutch inclusion and stronger business development.

7 The banks include: Deutshce Bank, HSBC, KBC, Natixis, Rabobank, Société Générale and UniCredit.
12

Payments that DLTs could reduce banks’ infrastructure

costs for payments, securities and regulatory
Financial transactions, such as payments compliance by US$15–20 billion a year by 2022
to and from farmers, traders, processors (Belinky et al. 2015). In 2013, BitPesa launched
and exporters for goods and services, or a DLT-enabled payment service that serves
loan disbursements and repayments, are African and international businesses to make
the most common type of agricultural value payments to and from Africa and facilitates
chain services. For many agricultural value approximately US$20 million of transactions a
chain actors, financial transactions are month (Aglionby 2018). In September 2016, a
overwhelmingly cash-based. The process of group of some of the largest banks in the world
handling, delivering and collecting cash is created the first interbank group to facilitate
slow and expensive and is subject to risks real-time global payments using DLTs, in this
such as theft and loss (Mattern and Ramirez case using the Ripple blockchain (Treacher
2017). Digital payment services have already 2016).9 Other financial institutions have begun
proven to reduce costs and risks from cash- using the Ripple blockchain to facilitate
based transactions, while also generating data instantaneous remittance payments (Ripple
on value chain actors’ cash flows which can 2017). Similarly Nasdaq and Citigroup recently
be used to assess credit risk. For example, launched a new integrated payment solution
the digital payment venture called M-Pesa to enhance liquidity in private securities and
has already shown that mobile money can for global payments by using a DLT powered
provide a simple way of transferring money, by Chain.com (Nasdaq 2017). These examples
which leads to greater access and utilisation of from retail banking indicate the real potential
financial services for more successful business of the technology, which can also be applied
development. There are now more than 30 in agricultural finance. DLTs have the potential
million M-Pesa users in 10 Africa countries to provide even greater financial inclusion
(Krishnakumar 2017). However, DLTs present for MSMEs and low-income countries, and to
an even greater opportunity for frictionless enable agricultural value chain actors to save
and real-time payment services. and invest more in their businesses.

A number of financial institutions are testing Agricultural insurance

proof of concepts and already using DLTs for
payments.8 For many firms, their interest in Agricultural insurance is a risk management
DLTs stems from the opportunities to reduce tool to help stabilise farm income and
friction and costs (Tapscott and Tapscott investment in the event of losses, due to
2017). Digital payments are still relatively natural disasters or low market prices. These
slow and expensive and use a centralised tools cushion the shock of income losses to
data model. Bypassing existing intermediaries help farmers initiate crop production after a
with DLTs can provide significant savings for bad agricultural year and spread the losses
both consumers and financial institutions. over time to enable continued investments in
A report by Santander InnoVentures claims agriculture. Agricultural insurance products

8 Financial institutions have made significant investments in DLTs. Visa, Nasdaq, Citi and other industry players invested
US$30 million in Chain.com, a blockchain developer platform (Shin 2015). Ripple, an enterprise blockchain solution for
global payments, is backed by Santander InnoVentures and other major financial institutions (Elison 2016). Another
major blockchain technology called Ethereum launched an initiative in 2017 (to improve standardisation and scalability
of its blockchain technology for enterprises) with 116 members, headlined by JP Morgan Chase, Intel and Microsoft
(Shin 2017). Distributed ledger solutions are being developed for a range of financial services such as moving value
through payments and remittances, trading value in financial assets, and insurance. The benefits of distributed
ledgers for financial services will certainly trickle down to financial institutions focusing on agriculture value chains.
9 Including Bank of America Merrill Lynch, Santander, UniCredit, Standard Chartered, Westpac Banking Corporation and
Royal Bank of Canada.
 Agriculture 13

are often unavailable in developing countries supply chain actors. By eliminating the need for
and in particular for smallholder farmers. For human intervention to assess insurance claims,
smallholders, this is due to the high costs of the process becomes simple, transparent and
verifying loss claims in geographically dispersed efficient. Smart contracts would remove the
areas, the relatively small size of individual risks of fraudulent claims and corruption from
policies and the limited understanding of insurance providers, as the terms of insurance
insurance providers of the agricultural risks policies would be unable to be tampered with
for smallholders (Mattern and Ramirez 2017). once agreed upon. Even data collected at
For farmers that have access to agricultural weather stations could be registered on a DLT
insurance, policies are paper-heavy and to ensure its integrity. The automation from
rely on substantial manual labour to verify smart contracts would drastically reduce the
claims, which ultimately increases the cost of cost of insurance policies for both consumers
insurance. and insurance providers. The reduced costs
and risk for insurance providers would allow
Digital technologies provide the possibility to them to provide insurance to more farmers. For
address some of these challenges by enhancing farmers, the disbursement of pay-outs would
actuarial estimates and reducing the cost of be virtually instant. The data captured by the
delivering and monitoring insurance products. DLT throughout the whole supply chain would
In the case of weather-indexed crop insurance, allow farmers and insurance providers to better
for instance, mobile phones allow consumers assess risk and provide more accurate insurance
to be geotagged, which (in combination with policies to reflect the farmers’ situation.
automated weather stations and satellite
imaging) eliminates the need for insurance A few companies are utilising DLTs to roll out
providers to conduct in-field loss assessments agricultural insurance products. A Swiss-based
(Mattern and Ramirez 2017). In combination blockchain start-up company called Etherisc
with smart contracts implemented by a DLT, is building a platform that uses DLTs to bring
insurance claims and pay-outs would become crop insurance to developing countries, in
completely digitised and automated. For particularly in Africa (Krishnakumar 2017).
example, a smart contract could be used to Autonomous insurance network, Aigang, and a
issue and auto-execute the settlement of a drone imaging business called Skyglyph have
weather-indexed crop insurance policy for a partnered to develop an autonomous crop
farmer. First, the insurance provider would insurance product using drone hardware, GIS
develop a digital contract of the insurance software, the blockchain and smart contracts
policy for the farmer. In the event of a weather (Staras 2017).
shock such as flooding that destroys the
farmer’s crops, an automatic payment would Agricultural credit products
be released to the farmer on the blockchain,
if the actual quantity of rainfall indicated The main impediments for financial institutions
by the meteorological station surpasses the to provide MSMEs with credit products are the
predefined measurement of rainfall and time cost of servicing remote areas, the lack of data
period in the smart contract, bypassing the to assess the creditworthiness of applicants or
need for administrative tasks and verification of collateral (Mattern and Ramirez 2017). The
by insurance companies. This example would integration of agricultural supply chains into
hold true for other weather indexes that DLTs could provide financial institutions with
serve as a sound proxy for crop loss, where rich data on the operations of farmers and
other parameters, like temperature, wind and other value chain actors which is needed to
sunshine, among others, could be measured. provide numerous financial services, such as
direct credit or warehouse receipts. By moving
Smart contract-enabled agricultural insurance to a DLT system, a small-scale farmer or agro-
on a DLT would provide better insurance processor will be able to build a digital identity
coverage for a greater number of farmers and which records their physical assets, such as
14

immutable land titling that can be utilised as 2017). DLTs could provide the necessary data
collateral (see section 3.3 below), and digital for MSMEs and financial institutions, but
assets, such as their economic activity (credit ultimately the technology will eliminate the
history, quality and quantity of agricultural need for invoice discounting altogether, as it is
products, etc.) and other production factors a type of financing derived from inefficiencies
like weather information to determine their and friction in supply chains. By utilising smart
creditworthiness. This rich data and overall contracts to automate payment processes,
transparency can enable financial institutions DLTs eliminate the need for intermediaries and
to increase financial services for MSMEs in allow for the disbursement of payment upon
agricultural supply chains. the receipt of goods, which will provide real-
time payment and increase the working capital
Warehouse receipts allow farmers to access of farmers, MSMEs and all supply chain actors.
post-harvest financing by using their stored
crops as collateral. When market prices are For supply chain actors that already have
low at the end of a crop season and farmers the track record of being creditworthy to
need liquidity, they often store their crops access agricultural loans, DLTs will provide
in a warehouse for a fee. This allows farmers them mainly with lower transaction fees and
to secure financing, which in turn frees them simplified loan processing and repayment
to find the best market opportunity for their options. Financial institutions should be able
harvest (Varangis and Larson 1996). Warehouse to expand coverage to provide more credit
receipt systems usually require verifiable products to a larger quantity of agricultural
data on the quality and quantity of the crops value chain actors, particularly smallholders
being stored, which are not often available and MSMEs.
for smallholders in developing countries
Agricultural derivatives
(Mattern and Ramirez 2017). By using DLTs
to implement the warehouse receipt system, Agricultural markets are inherently volatile;
farmers would easily be able to provide the farm incomes and prices are vulnerable to
necessary data about their crops to prove their exogenous shocks. Some agricultural producers
creditworthiness to financial institutions in use derivatives (futures contracts or option
order to secure a loan. contracts) as a risk management tool to
hedge price risk and fix a future price for the
DLTs would eliminate the need for some types
harvest. DLTs have the potential to be applied
of financing, like invoice discounting. Due to
to agriculture derivative markets in the near
logistical challenges, liquidity constraints
future.
and heavy friction in transactions, it can take
weeks for traders and processors to make Currently, securities trading is another area of
payments to farmers for their produce or pay financial services that is being transferred onto
service providers like transporters. This delay distributed ledgers. Most of the blockchain
can entice farmers to breach contractual innovations for securities focus on the over-
agreements and sell their produce to another the-counter (OTC) markets, because they
buyer for an immediate payment, often at a have less transparency and regulation than
lower price due to the immediate need for exchanges, and also depend on timely manual
liquidity (a practice known as side-selling). input and paperwork. Nasdaq, in collaboration
Invoice discounting is the practice of using with Chain.com, has been a leader in the
accounts receivable as collateral to receive development of DLTs for securities trading.
a loan, in order to ensure suppliers are paid In 2015, they launched the first DLT-based
on time and to reduce side-selling. Currently, platform called Linq for private securities
the main challenge for MSMEs to access invoice trading in the OTC market. Nasdaq Linq has
discounting loans is the lack of formal records proven to be successful and will help reduce
on their operations (Mattern and Ramirez processing time (from three days to less
 Agriculture 15

than 10 minutes), settlement risk exposure, on the DLT for official statistics. Other supply
capital costs and administrative burden in chain actors, such as farmers, will be able
OTC trading (Nasdaq 2015). Other blockchain to access data on prices, demand in retail
companies are also focusing on OTC markets, markets and current supply levels in specific
like Clearmatics, who are developing a markets. This allows producers and other
clearing and settlement platform that brings supply chain actors to incorporate better
together custodians, dealers, trading venues, analytics into their operations, helping them
buy-side firms and data providers onto a single better understand and react to consumer
platform. Clearmatics’ platform can settle preferences. Greater access to accurate
securities trades and automate the valuation data could bring huge efficiency gains for
and margining of derivatives and other all actors, but in particular for agricultural
financial contracts, using DLTs (Swanson 2015). producers and processors in locations where
Producers that use agricultural derivatives will market transparency is currently weak.
likely experience greater efficiency and lower Ultimately, this should allow supply chain
trading costs from DLTs in the future. actors to increase sales and reduce food loss
and waste through more profitable business
3.2.5 Smarter and more accessible data and practices and efficient supply chains.
market information
DLT platforms have the potential to create
DLTs allow users to build digital identities with monetisation opportunities with the vast
their recorded digital and physical assets. DLTs amount of transaction data. First, the
generate a vast amount of data from the high- accumulation of detailed data on every
quality transactions in agricultural supply transaction in the DLT will build a reputation
chains and agricultural financial services. and a track record for all supply chain
DLTs store every recorded transaction, which actors. Second, the DLT enables greater
can provide supply chain actors with detailed trust, accountability and predictability
records of their operations, financial service between market players. Agricultural supply
activities and more accurate and better- chain actors can now do business without
quality market information. The improved intermediaries brokering trust, knowing that
access to data is enabled by the fact that data each participant has a transparent track
entries are digital and immutable, and that in record and that the ledger and smart contract
theory every network participant has a copy will execute payment only once contractual
of the ledger’s transaction history. However, agreements are met. Smallholders, MSMEs
confidential data may be encrypted, in which and other disadvantaged market players too
case it could only be decrypted and shared will now have a track record and a system
with others by the user or owner of that that allows them to engage in new market
data. Ultimately, DLTs provide an additional opportunities, as the risk for both parties
information source for data and statistics in in a transaction will be greatly reduced. In
the agricultural sector, as well as a platform to addition, for MSMEs who struggle to access
improve market transparency in agricultural financing, the abundance of data can provide
supply chains and markets. them with the financial evidence regarding
their operations to obtain and access financial
The enhanced market information can be used services. Lastly, since DLTs can communicate
by supply chain actors to inform production up supply chains, there are incentives for
and marketing decisions, and agricultural farmers to use more costly farming methods
and related policies. They would likely to produce higher-quality goods, which
include governments, intergovernmental can be monetised through traceability
organisations and possibly even data centres and transparency. This could open more
that would analyse the data for businesses, in opportunities for farmers in the specialised
addition to potentially using the data stored market segment.
16

Lastly, governance and institutions play an data in DLTs provides these technologies with
important role in creating a strong enabling a sound platform to generate, use and store
environment with policies and programmes reliable and secure data.
that facilitate business development in
agricultural supply chains. More accurate and 3.3 Land Registries
accessible data through DLTs can strengthen the
Secure and formal property rights are crucial
ability of governments and intergovernmental
to the livelihoods and economic development
organisations (like FAO) to analyse markets,
of humans worldwide. However, there are still
market players and agricultural and related
policies, in order to develop more informed major challenges to accessing and maintaining
policies. Particularly in areas where data secure and formal property rights around
or the accuracy of that data is presently the world. It is estimated that 70 percent of
lacking, there will be the ability to create people lack access to proper land titling or
smarter policies from smarter data. These demarcation worldwide (Heider and Connelly
areas could include: production capacity and 2016). Land registries are typically operated
market participation by geographical location by the state, and therefore their performance
and segments of the population, agricultural level depends on the level of corruption,
input data, price data, trade flows, consumer organisation and overall functioning of
preferences, agricultural finance, government national institutions. In addition, land registry
subsidies, taxes and customs duties. systems are low-tech and largely inefficient.
They typically depend on paper documents,
3.2.6 The future of agricultural supply chains handwritten signatures and manual labour
to register land titles. Errors and fraud can
DLTs have the potential to serve as a be common practice, which result in costly
foundational technology that integrates disputes.
other emerging digital technologies into its
platform to continuously improve agricultural DLTs are able to address many of the
supply chain management. These other digital shortcomings in traditional land registries.
technologies, like artificial intelligence, IoT, First, DLTs provide a secure, fast and
big data and 3D printing, could all contribute immutable method to register land titles,
to form a more efficient and informed which will promote confidence in the
agricultural supply chain. For example, the reliability of the system. The immutable and
IoT uses devices and sensors to collect data traceable transaction history protects farmers
on the conditions and characteristics of and land owners against corruption and fraud
production, processing, movement and storage and helps resolve future disputes once the
of agricultural products throughout the supply land is registered. By restoring confidence in
chain. The rich data generated from the IoT land registries, land owners will engage and
could enrich transaction details that are gain access to formal land titles which will
registered on the DLT in agricultural supply unlock potentially large amounts of capital.
chains. The large amounts of data could fuel Formal land titles and new capital will allow
data-driven decision making in agricultural land owners to use the land as collateral to
supply chains. Big data management uses gain access to credit markets. Second, the
analytics to develop digestible information digitisation of land registries through DLTs
and to inform decision making. Artificial can reduce financial costs and time spent on
intelligence using machine learning and other registering land titles, since it eliminates the
analytics tools can facilitate predictive and paper and manual labour-based system.
data-driven decision making. Food companies
will be able to use 3D printing to develop Numerous countries have already begun
specialised packaging for food products with implementing projects to transfer land
smart tracing sensors to track food products registries onto DLTs. Bitland is working with
in the DLT. The immutability and security of the Land Administration Project and national
 Agriculture 17

authorities in Ghana to survey land and record scientific evidence for adopted measures and
title deeds on its blockchain. Initiatives providing specific geographical locations where
have tried to solve the land dispute problem disease outbreaks or non-compliance is found
in Ghana for more than 17 years (Aitken for SPS monitoring. Third, the high degree of
2016), and Bitland believes blockchain-based traceability from DLTs will improve the ability
applications are the solution. Similar projects to enforce the rules of origin to ensure food
have been implemented by BenBen in Ghana, safety and that the accurate customs duty
Bitfury in Georgia, Factom in Honduras, is applied to the good in question. Fourth,
ChromaWay in Sweden to name a few. One of the traceability and transparency of DLTs
the main challenges for these projects is first also provide a strong platform to monitor
to clarify land ownership in order to register intellectual property rights and geographic
the land on the blockchain. The process of indications under the WTO Trade-Related
clarifying property rights can be subject Aspects of Intellectual Property Rights (TRIPS)
to corruption and disputes and remains an agreement. Overall, DLTs have the potential to
obstacle for land registries. bring greater accountability and transparency
to compliance with international trade rules
3.4 International Agreements on agriculture.
Related to Agriculture
3.4.2 Climate change
3.4.1 WTO agreements on agriculture
The negative impacts of climate change on
DLTs also have a potential to improve the agricultural production and the challenges
implementation and monitoring of WTO to food security are well documented
agreements and key provisions relevant for (FAO 2016). DLTs can contribute to climate
agricultural trade. First, as mentioned above, change mitigation in two ways. First, DLTs
smart contracts can automatically disperse are a sound platform for reporting and
customs duties upon acceptance of goods at monitoring country commitments in the
customs, and DLTs can store accurate data on Paris Agreement on Climate Change, such as
tariff rates. This will bring greater transparency Nationally Determined Commitments, the
and accountability to country-specific tariff global stocktake, internationally transferred
commitments, and improved tariff data. mitigation outcomes, climate finance and
Second, the enhanced traceability and green finance. Second, carbon credits markets
transparency will improve the ability to enforce could benefit from using DLTs as a marketplace
compliance with the WTO SPS Agreement. to trade credits. DLTs would reduce friction
The high-quality transaction details in and bring a more transparent and efficient
agricultural supply chains and uploaded digital approach to carbon accounting and offsetting
certifications should include the SPS measures (IBM 2018b). In conclusion, both of these
adopted throughout the supply chain. This will DLT applications can benefit from greater
provide easily verifiable proof on compliance transparency, efficiency and accountability in
with international standards, supporting climate change mitigation.
18

4. PUBLIC POLICY IMPLICATIONS FOR FOOD SECURITY AND

RURAL DEVELOPMENT

Public policies aim to create an effective institutions. Through the disintermediation

enabling environment that facilitates of transactions, DLTs replace inefficient
inclusive economic growth in the agriculture verification, contractual and settlement
sector, promotes rural development and processes provided by institutions to execute
ensures food security. In addition, sound transactions. This eliminates the need for
public policies are central to achieve the some forms of institutions to intermediate
Sustainable Development Goals (SDGs), transactions in agricultural supply chains,
which are of particular importance for which are costly in general and typically even
developing countries. The application of DLTs more so in developing countries. In addition,
in agricultural supply chains, land registries smart contracts strengthen the institutional
and financial services can help the public infrastructure by reducing the number of
sector achieve their public policy goals for parties involved and by removing the need
food security and rural development, and be for some types of institutions that currently
an impetus to meet the SDGs. safeguard the contractual process. Smart
contracts and DLTs automate the contractual
4.1 Enhancing Trade Facilitation and Food process in real-time and provide savings for
Security through Efficient Institutions, supply chain actors in transaction fees and
Traceability and Market Transparency legal costs.

The WTO Trade Facilitation Agreement Ultimately, lower transaction costs enabled
highlights the common goal for national by DLTs and smart contracts can support policy
policies to cut costs, avoid delays and reduce goals to increase productivity and efficiency
uncertainty in agricultural trade. Enhanced in agricultural supply chains, resulting in
trade facilitation can play a key role in lower operational costs and higher incomes
achieving SDG 2 to end hunger and improve for smallholders, MSMEs and other actors,
food security. By facilitating domestic and and lower food prices for consumers. The
international trade through efficient and efficiencies that are generated by these
transparent agricultural supply chains, technologies can strengthen rural incomes
DLTs and smart contracts make substantial and thus improve food security. In addition,
contributions to improve trade facilitation: the technologies can enhance accountability
they provide a more efficient and effective and transparency in government transactions,
institutional infrastructure for transactions such as subsidy programmes, taxes (VAT,
in agricultural supply chains, enhance customs tariffs, etc.), environmental
traceability and transparency for food safety programmes, social protection, government-
and quality and improve market transparency. led development programmes and inter-
national agreements, among others.
Institutional infrastructure plays an
important role in facilitating the free A common public policy goal in the
flow of goods, services, investments and agriculture sector is to ensure the safety
labour in the agricultural sector. The lack and quality of agricultural products both in
of effective institutional infrastructure trade and domestic production. DLTs provide
is a key factor that causes trade barriers a platform for enhanced traceability and
and low productivity in many developing transparency for food safety and compliance
countries. DLTs serve as a digital institution with SPS standards. The ability of DLTs to
of trust that provides a more transparent and trace a product’s provenance, carry detailed
efficient system for transactions and record- attributes in each transaction and ensure its
keeping than traditional private and public traceability offers huge improvements for food
 Agriculture 19

safety; the ability to respond more quickly to Remittances are a form of social protection
disease outbreaks and contaminated agri-food that positively contributes to economic growth
products; environmental and sustainability as well as to achieving the SDGs in a number
certifications; combating food fraud; and of areas (Ponsot et al. 2017). Remittances
potentially reducing friction at the border. generally help poor and vulnerable populations
reduce poverty, access better health,
Market transparency and enhanced market nutrition, education opportunities, improved
information are recognised as key factors to housing and sanitation, entrepreneurship,
strengthen food security around the world. financial inclusion and reduce inequality,
DLTs provide a platform for this utilising particularly in rural areas. Remittance
the vast amount of data generated from payments are typically affected by high
transactions in agricultural supply chains. transfer fees, volatile currency exchange
Apart from the huge efficiency gains for rates and inconvenient physical locations
agricultural supply chain actors, greater of collection access points for some rural
access to more accurate market information populations. By providing a real-time cross-
can strengthen the global food system and border payment outlet with low transaction
reduce the incidence and impact of price fees, DLTs can enhance access to social
surges that are a major threat to food security. safety net payments like remittances and
The combination of lower transaction and directly contribute to achieving SDG 10.C by
legal fees, automated contractual processes providing substantial savings in transaction
with real-time settlement and enhanced costs for recipients. 10 DLT-enabled remittance
traceability and transparency for food safety payments provide cost efficiency in the process
and markets can improve trade facilitation. of establishing a digital identity that is used
as part of “Know Your Consumer” verifiability,
4.2 Strengthening Rural Development and by providing a digital fiat for currency
Outcomes for Inclusive Economic conversion (Niforos 2017a). In addition, smart
Growth contracts can automatically deliver the funds
to the beneficiary’s financial institution and
The promotion of inclusive economic growth
notify the appropriate regulator. Ultimately,
and increased incomes for micro-, small- and
the efficiency gains from DLTs for remittance
medium-sized agricultural supply chain actors
payments can contribute greatly to social
are key for rural development policy agendas.
protection programmes for rural development.
DLTs offer greater economic and financial
inclusion for disadvantaged market players, Secure and formal land rights—at the core
like smallholders and MSMEs. Transparency, of rural development policy and covered
digital records and enhanced trust through throughout the SDGs—are a critical component
DLTs and smart contracts enable disadvantaged of achieving economic development and food
market players to build a digital identity security, particularly in rural areas. The lack
and track record, which can prove their of reliable land registries can drive conflict,
creditworthiness to access financial services corruption and poverty. The secure, fast and
and lead to new market opportunities since immutable method to register land titles
the risk of doing business with MSMEs will be using DLTs provides greater legal clarity to
considerably less by eliminating uncertainty land tenure systems. The immutable and
with smart contracts. These new market traceable transaction history protects farmers
opportunities and access to financial services and landowners against corruption and fraud,
can lead to greater economic growth for helps resolve disputes once the land is
smallholders and MSMEs. registered, unlocks large amounts of capital

10 SDG 10.C states: “By 2030, reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate
remittance corridors with costs higher than 5 per cent.” See https://sustainabledevelopment.un.org/.
20

and allows farmers and other businesses in services for credit, savings and insurance,
rural areas to utilise this precious asset to its which ultimately limits growth. DLTs can help
fullest. women overcome their comparatively low
access to formal identification for financial
Lastly, DLTs can also provide positive outcomes inclusion (World Bank 2018a) with a cost-
for women’s inclusion in agricultural supply efficient digital identity, and provide entry
chains, in access to financial services points to formal roles and remuneration in
and land ownership. Similar to other agricultural supply chains (Niforos 2017b). In
disadvantaged market players like MSMEs, addition, DLTs can provide women with secure
women, both individually and as business land titles and protect their ownership in the
owners, lack sufficient access to financial case of disputed land.
 Agriculture 21

5. THE WAY FORWARD FOR DISTRIBUTED LEDGER TECHNOLOGIES

5.1 Challenges and Risks for Distributed In addition, data accessibility for DLTs is a key
Ledger Technologies challenge that requires special attention as
the technology continues to be developed.
As DLTs continue to evolve, there are a Access to data in DLTs can be private or
number of technical, regulatory, institutional, shared, depending on the rules of the DLT that
infrastructure and capacity development are based on, the purpose of the platform, as
related challenges to be addressed before well as the preferences of the users. There
reaching maturity in order to ensure the are many different types of permissioned
scalability and accessibility of the technology. DLTs, which have varying approaches to data
DLTs are not a panacea for the agri-food accessibility. These approaches are evolving
sector, but the technology provides great and the best methods for data protection and
potential if the challenges to its widespread transparency in DLTs are still being developed
adoption can be overcome. and tested. Certainly, transactions include
some types of confidential information, such
5.1.1 Technical challenges
as personal data, that are not suitable for
public knowledge. However, for example, in
On the technical side, the evolution of DLTs
a transaction between a farmer and a trader,
has led to the development of both public
should the price paid for a tonne of wheat be
and private DLTs, which both use different
hidden and protected or disclosed and shared?
consensus algorithms to validate data entries.
The decentralisation of transactions in DLTs
Current development efforts are implementing
gives users ownership and control over their
a wide range of different consensus mechanisms
data and the choice of whom to share it with,
and types of DLTs. As discussed in section 2
but the DLTs for agricultural supply chains
above, each algorithm has advantages and
should be developed with core principles
disadvantages, which should be understood
built in to ensure market transparency and
and the most suitable one adopted according
inclusivity. As transparency is a key feature
to the specific application. For example, for
of DLTs for agricultural markets and supply
public DLTs using the proof-of-work consensus
chains, there should be careful consideration
algorithm, its high energy consumption,
of the types of data that should be protected
poor cost efficiency and transaction speed
and disclosed, and lastly of how DLTs can
pose challenges to its scalability. While for
be developed to incentivise data sharing by
permissioned DLTs, lottery- or voting-based
supply chain actors. Since DLTs offer huge
consensus algorithms have better scalability
potential for enhanced market transparency,
and transaction finality, but there is a trade-off
it is important that key data is actually
in terms of anonymity and identity. Ultimately,
accessible.
understanding the technicalities of each DLT will
determine the technology’s success and impact
5.1.2 Institutional challenges
on the ground. This highlights the importance
of open-source platforms and of transparency On an institutional and regulatory level,
in technology communities to share code and another huge challenge is merging the current
technical approaches to DLT development. complex legal frameworks—that govern
In addition, current ventures are using both rights of ownership and possession along
public and private ledgers, which will require supply chains and across borders—with DLTs
interoperability between ledger types. Data and smart contracts. First, the technology
portability between different ledgers requires industry, in collaboration with the agri-food
clear standards on data protection to determine industry, must develop best practices and
how data should be stored and shared between standards for distributed ledger and contract
public and private DLTs. structures across international borders and
22

jurisdictions (Casey and Wong 2017). In countries (ITU 2016). This indicates that in
addition, both private and public sectors need order for DLTs to be accessible to people in
to be prepared to ease the transition from developing countries, internet services need
existing legacy systems to distributed ledger to become more accessible, particularly in
systems. This will require industry plans and Africa, parts of Asia and Pacific and Arab
procedures to facilitate the coexistence of States which have the lowest percentage of
different systems during the transition period internet users (ITU 2016).
and beyond. A set of common standards that
facilitate interoperability across DLTs and The use of public and private keys for data
legacy systems will be important to help encryption in DLTs may present a challenge for
the technology reach scale. The appropriate DLT adoption in some developing countries.
governance structures at the international, The lack the public-key infrastructure in
regional and national levels will need to some developing countries poses an obstacle
be developed to establish the necessary to the use of DLTs (Zambrano 2017). Public-
regulatory frameworks and standards for key infrastructure is a set of rules, policies
DLTs, as well as perhaps even to participate in and procedures for the secure electronic
DLTs for global supply chains and international transfer of information, which is the system
trade. A number of international bodies could that is currently used to manage asymmetric
adopt such a governance role in agricultural encryption and ensure ownership of key
supply chains, international trade and rural pairs. Either alternative solutions need to
development, such as the World Summit on be developed and adopted, or the public-key
the Information Society, 11 the World Trade infrastructure needs to be developed in those
Organization and the World Economic Forum. developing countries where it is lacking.

The success of DLTs will largely depend on its The complexity of DLTs represents a potential
acceptance and promotion by the public sector. challenge for widespread understanding of the
As a technology that promotes transparency, technology, which could hinder adoption in
immutability, traceability and efficiency, the short term. The process of integrating all
actions (such as transactions and records) actors in agricultural supply chains onto DLTs
made by governments and institutions will will be challenging and will take time. It is
be evident to the DLT network participants unrealistic to expect that all participants will
and potentially the public. DLTs will bring adopt the technology initially, as there will
an increased level of accountability for likely be hesitation and resistance from some
governments that should not be resisted, as actors. In addition, some will lack the skills
it could delay and potentially even minimise and knowledge required. For market players,
adoption of this overall beneficial technology. utilising the technology should involve using
an application on a mobile device. However,
5.1.3 Infrastructure and capacity accessing data and developing applications
development challenges require digital skills, which companies will
need. The lack of such digital skills will be
DLTs can only be applied as long as an internet an obstacle for adoption, especially for
connection is available, which can still be MSMEs. Ultimately, this could lead to greater
a challenge in some developing countries. marginalisation for MSMEs at least initially,
Recent data from 2016 shows that roughly or until they increase their capacity in this
four billion people did not have access to the area. Strong awareness-raising and capacity
internet, most of whom are in developing development programmes by governments,

11 The World Summit for the Information Society (WSIS) is a multi-stakeholder platform facilitating the implementation
of the WSIS Action Lines for advancing ICTs for sustainable development (WSIS 2018).
 Agriculture 23

intergovernmental organisations and deve- to improve its understanding of how DLTs

lopment partners will be needed for all can improve transparency, efficiency and
stakeholders. traceability in agricultural supply chains,
and help achieve their policy objectives.
Even if the technology is only partially adopted Building this knowledge base will help enable
in agricultural supply chains, it will still governments’ commitment to develop, utilise
provide substantial benefits. For example, a and promote the technology.
farmer and a supermarket may be connected
on a DLT; however, the trucking company is Second, the public sector needs to contribute
not. During production, the farmer inputs to the development and implementation
details about the food (type, practices, of DLTs to ensure their inclusivity and
harvest date, etc.) and the trucking company accessibility for smallholders and MSMEs
picks up the freshly harvested produce. in agricultural supply chains. This means
The arrival of the food at the supermarket the public sector (both governments and
is the next point visible on the DLT. The intergovernmental organisations) should
supermarket registers the delivery on the DLT, contribute to technical dialogue on research
and the smart contract sends an assertion to and development with the private sector
the farmer that the delivery is completed. (technology firms and agribusinesses), for
Despite the missing transport data, the example, on the data accessibility issue among
supply chain still benefits from the system. others. In addition, governments—together
In the same example, even if the farmer was with intergovernmental organisations focused
not using the DLT and the trucking company on agriculture—should partner to establish
was, the food could still be traced back to the an intergovernmental working group on DLTs
farm from the transportation data assertions. in agriculture to take the lead in providing
However, the points of origin in agricultural policy guidance on their use in agricultural
supply chains are the most important to have supply chains and rural development. Other
on the blockchain, in order to have detailed potential multi-stakeholder platforms whose
production data. scope might be expanded to address the topic
could include the e-agriculture Action Line
5.2 The Way Forward for the Public Sector in the Geneva Plan of Action of the World
Summit for the Information Society (which
Despite DLTs’ rise in popularity over the could also focus on the application of DLTs in
past decade, overall there still remains agriculture), as well as the World Economic
a knowledge gap on the technicalities of Forum’s System Initiative on Shaping the
the technology, its potential applications, Future of Food.
challenges and way forward for many
governments, intergovernmental organisa- Governments will need to develop regulations
tions and supply chain actors. In order and standards for DLTs in general and for supply
to leverage DLTs to develop inclusive chains in particular, in order to transition
agricultural supply chains and achieve public from legacy systems to DLTs. In order to
policy goals for rural development and food enhance public and private sector partnership
security, governments and intergovernmental in DLT development, one strategy that could
organisations need to build their capacity to be effective would be to promote private-
support the development and implementation sector DLT development by establishing a
of the technology in a number of areas. global “regulatory sandbox” 12 for promising
First, the public sector needs to continue use cases in agricultural supply chains and

12 According to the UK’s Financial Conduct Authority, a regulatory sandbox is a safe place where innovators can test their
products and business models without following all legal requirements while under close government supervision for
a predefined period of time (FCA 2015). For a full explanation on why a regulatory sandbox is needed in the context
of DLT development see Maupin (2017b).
24

rural development (Maupin 2017b). This consider leveraging existing knowledge

would provide a platform to test and refine products and developing guidelines for
different technical deployments of DLTs in an inclusive DLTs in agricultural supply chains.
environment where innovators can cooperate Lastly, government, intergovernmental
with national and international regulators organisations and development partners will
to address different cross-border regulatory play a vital role in providing outreach to
concerns and other regulatory issues (Maupin improve infrastructure and digital skills in
2017a). In the future, intergovernmental rural areas. This should include pilot projects
organisations focused on agriculture should in agricultural supply chains.
 Agriculture 25

6. CONCLUSIONS

Distributed ledger technologies provide a capacity development challenges need to be

unique opportunity for the agricultural sector. addressed to ensure the technology achieves
The technological platform introduces a new the benefits it could deliver. It is necessary
digital institution of trust to lower uncertainty to keep improving digital infrastructure and
between buyers and sellers and brings greater skills, particularly in developing countries and
efficiency, transparency and traceability to in rural areas. As DLTs continue to develop and
the exchange of value and information, which evolve, the international community should
is fundamental to the agricultural sector and ensure their development and implementation
the entire global economy. By removing friction is done in an inclusive manner that is beneficial
and intermediaries though a simplified, peer- for the agri-food industry as a whole. The
to-peer transaction network and using smart technology has huge potential to address the
contracts, efficiency gains can be made in challenges that MSMEs face through enabling
agricultural supply chains, agricultural finance their participation in integrated value chains.
and the agriculture sector as a whole. Through
enhanced transparency and higher-quality At the current rate of development,
transaction details, DLTs deliver improvements multinational agri-food companies will
to food safety and quality (such as product most certainly be the first to implement
sustainability) and consumer awareness. The the technology in the agri-food industry. In
vast amount of data from transactions also order to ensure all market players benefit
can strengthen market information and market from the productivity gains generated by
transparency, which could benefit low- and DLTs, it is important that intergovernmental
middle-income countries greatly. Through organisations focused on agriculture take the
the digital and physical assets registered on lead in raising awareness, developing the
DLTs, agricultural supply chain actors have capacity of agricultural stakeholders to adopt
the ability to build a reputation and track DLTs and promoting international cooperation
record in the marketplace needed to increase between the public and private sectors to
access to financial services and new market develop and implement inclusive DLTs in
opportunities, which is particularly beneficial the agriculture sector. Cooperation through
for disadvantaged market players, like public and private sector partnerships will
smallholders, MSMEs and women. Ultimately, likely be the fastest and most efficient way
DLTs can help governments achieve their public to develop DLTs, create the appropriate
policy goals for inclusive economic growth in the regulatory environment and transition from
agriculture sector, rural development and food current legacy systems. Agriculture-focused
security, as well as be a catalyst for sustainable organisations should continue to improve
development and for fulfilling the SDGs. their knowledge base and conceptualise
the types of technical assistance needed to
DLTs also pose a number of challenges to prepare and support agricultural actors and
make the technology accessible and usable governments in playing an active role in
in high-, middle- and low-income countries. blockchain-enabled agricultural value chains.
Currently technology companies, food and As industry leaders continue to innovate
beverage industry leaders and even some and develop DLT solutions, further research
governments are developing and testing is needed to analyse these applications and
concepts and applications to determine its their potential implications for the agriculture
possibilities and limitations in the food and sector in greater depth. Intergovernmental
agriculture sector. In order to realise the full organisations focused on agriculture should
potential of DLTs for food and agriculture, the also explore possible applications of DLTs to
technical, institutional, infrastructure and improve the effectiveness of their operations.
26

History has shown that technological advan- for the international community to ensure
cements that generate productivity gains developing countries and disadvantaged
prevail, regardless of public opinion. DLTs market players also benefit from these gains
will continue to be adopted throughout generated by DLTs. It is necessary for the
the global economy, shaping the future agri-food industry to understand and prepare
of agriculture, as long as the productivity for these opportunities and forthcoming
gains are real. Therefore, it is imperative changes.
 Agriculture 27

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www.ictsd.org


Other selected publications from ICTSD’s Programme on Agricultural Trade and Sustainable
Development include:
• Achieving Sustainable Development Goal 2: Which Policies for Trade and Markets?
ICTSD, 2018
• Achieving Progress in Multilateral Trade Negotiations on Agriculture
ICTSD, 2018
• How Can the Argentinian G20 Presidency Support Trade’s Contribution to a Sustainable
Food Future?
ICTSD, 2018
• What Could WTO Talks on Agricultural Domestic Support Mean for Least Developed
Countries?
ICTSD, 2017
• Negotiating Global Rules on Agricultural Domestic Support: Options for the WTO’s Buenos
Aires Ministerial Conference
ICTSD, 2017
• Domestic Support to Agriculture and Trade: Implications for Multilateral Reform
Jared Greenville, 2017
• How China’s Farm Policy Reforms Could Affect Trade and Markets: A Focus on Grains and
Cotton
Wusheng Yu, 2017
• Public Stockholding for Food Security Purposes: Options for a Permanent Solution
ICTSD, 2016
• Comparing Safeguard Measures in Recent Regional and Bilateral Trade Agreements
Willemien Viljoen, 2016
• Trade, Food Security, and the 2030 Agenda
Eugenio Díaz-Bonilla & Jonathan Hepburn, 2016
• Evaluating Nairobi: What Does the Outcome Mean for Trade in Food and Farm Goods?
ICTSD, 2016
• Agriculture and Food Security: New Challenges and Options for International Policy
Stefan Tangermann, 2016

About ICTSD
The International Centre for Trade and Sustainable Development (ICTSD) is an independent think-
and-do-tank, engaged in the provision of information, research and analysis, and policy and
multistakeholder dialogue, as a not-for-profit organisation based in Geneva, Switzerland; with offices
in Beijing and Brussels, and global operations. Established in 1996, ICTSD’s mission is to ensure that
trade and investment policy and frameworks advance sustainable development in the global economy.

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