STiR coffee and tea magazine

52 STiR coffee and tea / Issue 2, 2018 (April / May) Source: IBM Blockchain for Dummies Append-only distributed system of record shared across business network Shared Ledger Permissions Ensuring appropriate visibility; transactions are secure, authenticated and verifiable Business terms embedded in transaction database and executed with transactions Smart Contract Consensus All parties agree to network verified transaction company (PLC), returns to shareholders which are non-negotiable. All these are realities of business, no one sug- gests that they can be avoided but the communica- tion of them as requisites of the transaction from grower to teapot builds acknowledgment and trust which are the foundations of true partnership. If that is all that blockchain can do for the tea indus- try then the writer would argue that that is em- phatic and enough to make the industry healthier and more efficient. Inherent benefits Consider the impact to a farmer who gains insight to the costs of business that shifts his focus from one of blame for the precipitous nature of his en- terprise to one of acceptance that he must effect change, identify his model's shortcomings and rectify them. Imagine the retailer with the ability to see the downstream impact of his, at first blush, respon- sible procurement practices. It is unconscionable that, armed with a definitive sustainable price for the Farmer that that would not be his negotiation floor; if not he risks brand health, equity, and pub- lic outcry. Blockchain enables access to all partners in a supply chain at the same instant; offering relevant aspects to all, aiding simultaneous recognition of needs up and down the contract flow. Potential remedial action for identified needs could include: 1. Immediate floor pricing being employed by the retailer and demanded of their supply chain. 2. Scrutiny applied to all contract service costs within the supply chain to look for inefficiencies 3. An investigation into farmer comparative yields and costs with a view to optimizing perfor- mance to change the equation. The initiative for this type of partnership is hard to encourage in a marketplace where market support is not guaranteed but support becomes a reality as one is invited into a blockchain consor- tium; the membership is in itself an investment to work together and investment (in all forms) is at- tracted to commitments. From the point of view of verified sustainable agriculture (the business of certificates), there is also potential merit. Rather than an expensive and convoluted series of usage and premium docu- mentation, the whole transaction and collection process could be conducted seamlessly through blockchain. Imagine a social premium being delivered di- rectly to source, in fact to a farmer (not neces- sarily prescribing this) as soon as a till transaction for a product was registered; this requires other technologies developed over time but smart con- tracts can do this and could transform premium payment schemes to an efficient, trustworthy vehicle for change. Further and to comfort the naysayers, smart contracts could be designed to halt payments to farmers/producers that do not meet criteria required; this could be the posting of an audit result by a third-party or the registration of intermediate surprise audits (to ensure compliance between registered audits) but are rarely carried out. Let's also consider the value of blockchain access for FDA clearance and FSMA compliance; the ability for all product information, origin, test data (LIMS), routing and supply chain partner information to be available, in real time, and with proven immutability, must be relished by an authority with such a large mandate. The ability, too, in the event of a mandatory recall to be able to identify all uses of a food lot within seconds from a single source should relieve the administrative burden on both government and industry. The downside Before we shout yippee and contact our nearest blockchain provider, let's consider the downside of such a tool and, in particular, that of consortia BC design which is like a private club, you have to be invited to join and that brings us back to age-old discussions about two-tier industries and the possibility that Producers may be steered down focused routes to market which could limit their ultimate potential in favor of dependable frequency of trade or be left out entirely. The success lies, in where along the supply chain, the blockchain consortia is built and with what primary purpose. The subject of consortia design, with a specific focus on the where and the how, will be covered in a future article. Blockchains don't eliminate trust but they minimize the amount of trust required from any single actor in the system by distributing trust among dif- ferent actors in the system via an economic game that incentivizes actors to cooperate with the rules defined by the game. In a centralized system, we rely on a single third-party to act as an interme- diary, such as a bank when the buyer pays the vendor, however, in a decentral- ized system, our trust is placed elsewhere, namely in public-key cryptography and a consensus mechanism. We need to think carefully, as an industry, how we deploy this wunder- kind, it could deliver us from energy expenditure on generic trust and task in order that we can focus on delivering tea, the hero crop, to the world. John owns NMTeaB from which he divulged the secrets of his 35 years in tea and sustainability.

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