[This article was published in the Hobart Mercury]
Tasmania’s producers are perfectly placed to receive higher export prices by taking advantage of blockchain technology.
Applying blockchain to Tasmanian supply chains will deliver more trustworthy information to consumers, boosting prices of high-quality super-premium exports.
The State Government recently announced Brand Tasmania as a statutory body, tasked with promoting tourism and exports.
Building Tasmania’s brand is important. But this approach must be coupled with a way to ensure consumers trust the legitimacy of products
Supply chains connecting Tasmania to the world don’t just transport physical products like cherries, wild abalone or lobsters. They carry information about those products. As a customer in a Beijing restaurant, how can I know the lobster on my plate is true Southern Rock Lobster, not some cheap knock-off?
I must trust the restaurant owner, who trusts their supplier, who trusts their importer, and so on.
Particularly for high-information premium produce, there is an often-neglected type of supply chain infrastructure, one that carries trusted information between companies and across borders.
Today’s supply chains are riddled with problems. Pieces of paper pass between distributors, exporters, shipping companies and governments. This messy web of communications tries to connect hundreds of parties.
Some information is added along the way, but much is lost or tampered with.
Global food fraud estimates range to tens of billions of dollars a year. This comes from bad actors taking advantage of poor information flows. This has even happened with Tasmanian cherries. Cherries being sold in China and Vietnam were recently outed as fakes, sold in fraudulent “Tasmanian-grown” boxes.
The result is deeply damaging to a premium brand. Eventually prices will fall as premium produce is contaminated with fakes.
After the cherry controversy the industry responded by making more intricate boxes. Gold embossing and unique stickers helped deter fake cherry boxes. But this approach also cut deep into profit margins.
Luckily there’s now an alternative. Blockchain technology can carry detailed transparent information from producer to consumer.
Blockchain was invented in 2008 to power the cryptocurrency bitcoin. The technology enables data to be inputted and stored in a way that doesn’t rely on a central third party. Distributed ledger technologies are important and unique because we constantly use centralised companies and governments to update and hold information about our citizenship, medical records, bank balances, property titles.
Blockchains are different because they store information across a decentralised network. The word blockchain comes from the data structure — blocks of information chained together chronologically using cryptography. Blockchains aren’t stored and updated by a central party, making it extremely difficult to tamper with it. This is perfect for situations like supply chains where many parties need to share information who don’t necessarily know or trust each other.
What does this new distributed ledger technology mean for Tasmanian supply chains? Rather than passing pieces of paper between opaque organisations, a blockchain can act as a new digital infrastructure for supply chain information.
Each product or shipment can be given a blockchain-based digital representation.
As the lobster physically moves, information about it can be added to its blockchain-based record, forming a deeper digital identity.
This begins with the provenance of the product, but extends into its temperature and conditions during transport, such as its time at a distributor or waiting in a port.
Some information will be inputted manually by producers, or even governments as the goods cross borders. Other information will come from Internet of Things (IoT) infrastructure that automatically uploads information such as about location and whether the container has been opened.
For consumers, producers and governments, this new digital infrastructure creates a richer digital identity that can be viewed by all stakeholders.
This viability increases product integrity. Through a simple scan of a QR code, consumers can consult a tamper-proof record of a lobster all the way back to Tasmanian shores. Blockchains can provide the information that consumers are increasingly demand, such as proof of single origin or organic production.
Current supply chain processes are simply too fragmented and expensive to provide trusted information.
Thankfully there is an enormous amount of private investment in building new digital infrastructure using blockchains. IBM and shipping company Maersk have built a product called TradeLens. Australian companies and platforms such as AgriDigital, Agrichain and UCOT are also leading the charge. Given we can only expect more examples in coming months, what steps should Brand Tasmania take?
This experimental technology upgrade will require new trials and tests. New industry consortia will need to be co-ordinated and formed. And regulatory barriers and red tape removed, including at the border.
Only then will we see the full potential of this new blockchain-based digital infrastructure for Tasmanian producers, and the brand value and price premiums that come with it.
Dr Darcy Allen is with the RMIT Blockchain Innovation Hub and the Worldwide Blockchain Innovation Association.