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How Fair is Fair Trade? – How Blockchain Can be Used in Food Trade

 2018-10-23 By: Elroy Yao

Every coffee drinker likes their coffee differently. Some prefer it black, with milk, sugar or with other combination of ingredients. However, a large and growing number of coffee drinkers also care about how they are sourced and how they are grown. It is no secret that many people today would like their coffee ethically sourced. Ethically sourced coffee usually means consumers will pay slightly more to obtain to help the producers in various ways; including: improving education, labor practices, and more. The question that needs to be asked then is how do consumers know their coffee actually is ethically sourced? How do they know the coffee producers are not painting the grim reality with sunshine and lies?


Keeping track of coffee from the day it is planted to the day it is brewed is impractical when done by humans, if not completely impossible. In addition, the supply chain of coffee also involves a large number of organizations, across multiple countries and continents. As a result, using a technology that can track, record, and secure information is indispensable.


Blockchain Secures & Verifies


There are many aspects to ethically sourced coffee, but one of the most important is indeed, the labor aspect. Many sources reported that the key aspect of ethical coffee is removing worker exploitation in the coffee plantations.


IBM's solution to this issue is digitizing the information and then incorporating the information into blockchain. This will ensure the laborer can get a fair contract and payments; thereby reducing worker exploitation.


Blockchain can also be used to record the origin of the product. This will be especially necessary if the vendors charge a premium for it. This is done to verify whether the product actually deserves the higher price demanded and whether the producer deserves to claim to be ethically sourced. Tracking sources and all the steps the produce go through is also useful for safety purposes. If crops were infected and needs to be destroyed, source tracking can ensure that only the infected crops are destroyed. This essentially reduces unnecessary sunk cost and chances of shortage.


Is it Truly Necessary?


Coffee production involves many highly traditional industries that are generally considered low-tech. This makes digitization or blockchain implementation seem excessive, but for the hundred billion dollar market of coffee; this might be a long overdue improvement.


Starting with the plantation owners, blockchain can be used to secure proof of ownership that is immutable. Then when they hired laborers, digitize their data, and include the in the blockchain, laborers can ensure they are paid fairly and not exploited. Distributors can confirm whether the producers are blacklisted for any reason and deny their business to make sure plantations adhere to the regulations set in place. Coffee roasters & retailers can check whether the produce is from a troubled area; whether they are possibly infected, etc.


However, it is important to note that blockchain is great at securing data & information, but cannot take independent action. This means without any human intervention & rule enforcement, blockchain by itself will not be useful for punitive measures. Of course, if transactions are done digitally via blockchain, the industry players can be more compliant to the rule as they cannot or will not be paid otherwise.


Conclusion


Trade in classical commodities such as coffee often relies on traditional trade systems or measures. Often times, it is difficult or even impossible to monitor both movements of the product and truthfulness of the information given regarding the product. Ordinary consumers who are not experts might not be able to even doubt the information given from the vendors, but blockchain can be used to reduce information imbalance between corporate players and individuals. In the end, blockchain can or will become a necessary addition to commodity trading.


See More Blockchain Applications in InnoVEX 2019


Blockchain was one of the main topics of InnoVEX 2018 and has seen a diverse application in many industries; not only security and fintech. Blockchain will also be an important aspect in InnoVEX 2019 which will also have a dedicated Theme Pavilion on blockchain. On October 31 2018, InnoVEX will hold a back-to-back Saloon networking events for both AI and Blockchain. Register now:


From Blockchain to Everything (October 31 2018 15:00-17:00 GMT+8)

Heading to the Future with AI (October 31 2018 17:30-20:00 GMT+8)

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