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Brussels Briefing n. 55: Mischa Tripoli "Opportunities and challenges for blockchain in the agri-food industry"


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The Brussels Development Briefing n. 55 on "Opportunities of blockchain for agriculture" organised by CTA, the European Commission/EuropeAid, the ACP Secretariat, Concord and BMZ was held on 15th May 2019 (9h00-13h00) at the ACP Secretariat, Avenue Georges Henri 451, 1200 Brussels, Room C.

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Brussels Briefing n. 55: Mischa Tripoli "Opportunities and challenges for blockchain in the agri-food industry"

  1. 1. Opportunities and challenges for blockchain in the agri-food industry Brussels Policy Briefing n.55—15 May 2019 Mischa Tripoli, Economist, FAO Trade and Markets Division .
  2. 2. Outline • Why is blockchain relevant for food and agriculture? • What are the features and applications? • What is the way forward? .
  3. 3. Why is blockchain relevant for food and agriculture? Existing challenges 1. Lack of transparency and traceability in supply chains • Example: food fraud has financial costs of approximately US$40 billion annually 2. Trade is complex, time-consuming and expensive .
  4. 4. What are the features? New solutions…? • DLTs have unique features… • Brings greater transparency, traceability, efficiency, accountability and trust to the exchange of value and information. .
  5. 5. What are the applications of DLTs in agriculture? • Supply chain management • Food safety • Trade finance • Agricultural financial services • Market information • Land registries • International agreements related to agriculture .
  6. 6. 1. Enhanced traceability and higher quality transactions DLT enabled agricultural supply chain Example poultry supply chain Application of DLTs in agriculture Source: Tripoli & Schmidhuber (2018) .
  7. 7. Product-process links for enhanced traceability Application of DLTs in agriculture QR codes RFID chips Facial recognition Crypto-anchors .
  8. 8. The future of food safety Improves monitoring and compliance with SPS and sustainability standards Faster response to disease outbreaks and contaminated food products Combat food fraud Reduce friction at the border for international trade Application of DLTs in agriculture • Enhanced traceability and detailed product data on provenance, attributes and authenticity • Seed/animal genetics, production techniques and inputs, SPS measures, processing conditions, transport data, sustainability data and certifications. .
  9. 9. 2. Disintermediates transactions in ag supply chains • DLTs and smart contracts provide similar outcomes for trade finance and agricultural financial services (payment services, agricultural insurance, credit and derivatives): Increases efficiency in supply chains Leads to greater access to financial services for smallholders and MSMEs Better facilitates trade with frictionless and real-time payments Which is achieved through: Digitalization of economic activity, contractual processes and payments Auto-execution of contracts Reduced transaction costs Reduced risk for sellers and banks Application of DLTs in agriculture .
  10. 10. More efficient trade finance Application of DLTs in agriculture Single ledger for all trade documentation Instantaneous documentation flows Source (figures): Rabobank. 2018. The impact of blockchain on trade finance. .
  11. 11. 3. Building a digital identity • By recording digital and physical assets on the DLT, users build a digital identity to access financial services and find new market opportunities. Application of DLTs in agriculture • Digital assets, or data, recorded from activity in agricultural supply chains can: Enhance market information and market transparency Provide supply chain actors with detailed records on their operations • Physical assets can be used as collateral to access financial services DLTs provide a secure, fast and immutable method to register land titles .
  12. 12. 4. Monitoring international agreements • DLTs can improve the implementation and monitoring of international agreements through enhanced accountability and transparency, such as: • WTO agreements on agriculture • Customs duties • Compliance with the WTO SPS agreement • Rules of origin • Intellectual property rights and geographic indications • Paris Agreement on Climate Change • Sustainable Development Goals (SDGs): SDG 1.4, SDG 2, SDG 10.C, SDG 13, SDG 15, SDG 17. Application of DLTs in agriculture .
  13. 13. What is the way forward? 1. Improve knowledgebase of public sector on the application of DLTs for food and agriculture 2. Address the numerous technical, regulatory, institutional, infrastructure and capacity development related challenges for widespread adoption 3. Create an enabling environment that ensures the productivity gains generated by DLTs are shared by all market participants, including smallholder farmers, processors and MSMEs. This can be achieved by: Promoting international cooperation through public-private sector partnerships • Contributing to technical dialogue on research and development with private sector • Providing policy guidance on the use of DLTs in supply chains • Developing appropriate regulations and standards (regulatory sandbox) with private sector • Outreach to raise awareness, and improve digital infrastructure and skills (pilot projects in agricultural supply chains) Conclusions .
  14. 14. THANK YOU For more information see our recent publication .