Decentralise food chains

Kushankur Dey/Jiten Ghelani | Updated on June 24, 2021

Blockchain tech can drive this sustainable model

The Covid-19 pandemic has compelled us to rethink the significance of global value chains (GVCs) in the context of sustainable agri-food systems.

The underpinnings of GVC are dovetailed with the interconnectedness between the buyers and processors of developed countries and suppliers and producers of developing countries. While such a governance model relies on the lead firm’s economic gain, investment and efficiency, it has ignored the social and environmental dimensions of sustainability.

So, the focus of agriculture and food policy needs to be shifted from global and centralised to local and decentralised food chains by aggregating the small food hubs, connecting them to micro-food entrepreneurs, and bringing the food production network to regional farm communities.

During pandemic, a short food chain is likely to emerge in a circular economy, and the external market relationship can partly dictate consumption. However, the production, distribution, and consumption appear to be tightly interwoven and that can rejuvenate and strengthen producer and local trader driven value chains.

Blockchain tech can promote an alternative yet sustainable model that can institutionalise the functioning of tech-driven local agri-food chains.

Shared platforms

The blockchain technology market size in agriculture and food supply chain is projected to grow at a CAGR of 48.1 per cent to reach $948 million by 2025. In Europe, blockchain start-ups have created shared platforms for producers and consumers, data infrastructure for traceability and food safety , and open networks for food cooperatives.

Start-ups in emerging markets have also created blockchain platforms to increase small-scale farmer incomes by connecting smallholder producers to buyers and downstream partners and increasing trust and transparency in the supply chain. Technology giants including IBM, Microsoft, and Cisco have initiated the technology-enabled agri-value chain pilots in India with a few processor and producer companies.

India has registered several hundred agri-tech and a few blockchain start-ups, and they can rope in agri-value actors to strengthen and sustain such regional food economies. The adoption of blockchain technology and IoT is necessary for precision farming and to improve the backward and forward linkages in digital agri-value chains. Blockchain can connect the native producer groups with consumers by eliminating intermediaries and democratise the food networks (Scholz, 2014).

The integration of blockchain, IoT, and machine learning modules can bring sustainability to local agri-food value chains by improving traceability in the supply chain and scalability.

Agro-ICT and blockchain start-ups need to promote platform cooperatives to catalyse the rollout of local food chain networks. In this regard, smart contracts can facilitate, verify, execute, and enforce the compliance mechanisms for an immutable transaction underlying the distributed ledger technology. Artificial Intelligence and machine learning modules can improve scalability and bring interoperability in the layer-based architecture. While the identification and capacity building of food chain cooperatives and entrepreneurs are important to technology adoption, connecting them with a shared ‘plug and play’ platform entails systematic and scalable techno-managerial interventions.

India’s farm gate infrastructure is yet to witness adequate investment to improve productivity, reduce post-harvest losses and preserve product quality from farm-gate to consumption centres. Critical barriers to investing in farm infrastructure needs to be relaxed and capacity utilisation of processing units should be augmented.

Creating an enabling environment and risk-sharing mechanisms for co-investing in necessary utility-based infrastructure such as blockchain technology, IoT network, storage, cold chain, and logistics can reduce losses and enhance farmers’ bargaining power and institutionalise their market access.

Dey is Chairman of CFAM, IIM Lucknow, and Ghelani is the CEO of Promethean Power. Views are personal

Published on June 24, 2021

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