Blockchain Technology and Agriculture

Blockchain Technology and Agriculture

May 12, 2021
Blockchain Technology and Agriculture
Some stakeholders in the technology, agriculture, and food
trust granted and information accessible to different
sector have advocated for the use of blockchain technology
members.
to trace agricultural products as they move through the
supply chain and to verify their authenticity. Many expect
Potential Applications in Agriculture
use of blockchain technology to increase in this sector.
Recent outbreaks of foodborne illness and investigations of
Congress may consider federal investments in blockchain
fraud in the organic food sector have illuminated
technology research, technical assistance, and infrastructure
weaknesses in information about agricultural supply chains.
to support emerging applications of this technology.
Proponents view blockchain technology as a potential
Congress also may face questions regarding the regulation
solution to certain existing concerns, such as the following:
of particular uses of blockchain technology.
 reducing the time it takes to identify the source of
What Is Blockchain Technology?
foodborne illness;
Blockchain is a distributed ledger technology for securely
recording and authenticating information about sequential
 targeting food for removal as opposed to the loss of
events or transactions. It is commonly associated with the
entire stocks; and
financial services sector due to its use in cryptocurrencies,
but it also has potential applications in agriculture.
 ensuring claims made about food (e.g., authenticity of
being organic).
Unlike traditional data systems, blockchain technology does
not rely on a central authority to maintain records or verify
Potential Challenges for Agriculture
transactions on behalf of users. Instead, members of a
While blockchain technology is a potential solution to some
blockchain platform each have access to automatically
issues in agriculture and food supply chains, certain general
updated copies of all transactions. Every transaction is
and sector-specific challenges may impede its utility and
recorded in a new block in the chain. Each block has several
adoption. Another consideration is that in many instances,
pieces of information: the data itself; a hash value, or
solutions that are simpler and less resource-intensive than
alphanumeric string, cryptographically determined by the
blockchain technology may adequately address specific
data; and the hash of the previous block in the chain.
needs. Prospective users may consider whether the potential
benefits of blockchain technology outweigh any limitations
Selected Blockchain Qualities
or costs particular to their situations.
Tamper-Evident. The data in each block in a blockchain has
Infrastructure: Internet Access
a cryptographical y determined hash (an alphanumeric string).
Blockchain requires an internet connection to upload new
Each block contains the hash for the current and prior
data to the blockchain and to maintain updated copies of the
transactions. Altering data inherently alters its hash. Thus,
ledger held by community members. Lack of internet
data tampering is evident when a block’s hash and the next
access, or inconsistent access, in locations where
block’s record of the prior block’s hash do not match.
agricultural products originate and are processed and
Tamper-Resistant. Blockchain community members each
packaged may impede successful use of this technology.
have access to automatical y updated copies of the blockchain.
If the data in one copy is tampered with, it would not match
Standards and Interoperability
the other copies, and the community would not accept that
As with many new and emerging technology applications,
chain as the consensus chain of events.
there are not yet consistent standards and digital platforms
Transparent. Although each member of a blockchain
to facilitate the shared use of blockchain technology by
community may not have permission to read the data in each
multiple users across the agriculture and food sector. All
block, each member has access to a current copy of the
members of a single supply chain must adopt the same
ledger and can view changes and additions to the chain.
standards and platform to participate in a shared
blockchain. Lack of adoption, or adoption of different
Decentralized. Blockchain does not rely on a central
standards and platforms, could exclude some suppliers or
authority to maintain data. Consensus among the community
providers of other services (e.g., packaging, transportation)
serves this role.
from certain supply chains. Sunk costs of initial technology
investments could tie participants to a particular supply
Designers of a blockchain can customize its rules
chain and impede their flexibility to work with other
depending on the level of trust among community members
elements of the food system.
and other variables. For example, the blockchain
community can be public or private, with varying levels of
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Blockchain Technology and Agriculture
Technology: Bridging the Digital-Physical Divide
Certification: USDA National Organic Program
In the example case of cryptocurrency, there is a direct
Misrepresented sourcing of agricultural products is a
relationship between the digital data on the blockchain (i.e.,
concern for suppliers, retailers, and consumers of organic
the currency transactions) and the product (i.e., the
agricultural products. Organic fraud occurs when a product
currency’s value). In agricultural applications, digital data
is presented as being certified but was produced with
in a blockchain represents events associated with a physical
prohibited practices. USDA’s Agricultural Marketing
product. These events must be recorded, by manually
Service (AMS) administers the National Organic Program
recording data or through manual or automated scanning of
(NOP) and has implemented policies in recent years to
digital markers on the product or its packaging (e.g., RFID
better investigate and enforce against fraud. Some have
tags, QR codes). Internet of things (IoT) devices—which
proposed using blockchain technology to verify adherence
wirelessly connect to the internet and can transmit data
to NOP standards throughout organic supply chains. In a
from sensors and other technologies—may be used to
2020 proposed rule on Strengthening Organic Enforcement,
automatically upload relevant data to the blockchain.
AMS anticipated that blockchain technology, referred to as
Designers of blockchain systems for agricultural products
“digital ledger technology,” will play a role in supply chain
may consider these and other options. Manual data entry
traceability and encouraged the development and use of this
could introduce errors that would be immutably recorded in
and other electronic tracking systems for certified organic
the blockchain, and protocols to address such errors may be
products.
required. Various types of digital markers may require
different physical infrastructure or handling methods.
“AMS expects electronic tracking systems, including
digital ledger technology (DLT), wil play an essential
Example Use Cases
role in supply chain traceability” related to USDA’s
Participants in agricultural supply chains have predicted,
enforcement of its certified organic standards. (85
piloted, or adopted the use of blockchain technology to
Federal Register 47536)
achieve goals, which include improving food safety,
authenticating high-value products, and verifying
Congressional Interest
compliance with the terms of certification programs.
Congress has expressed interest in diverse applications of
Selected examples are discussed below.
blockchain technology, including agricultural applications.
In 2018, two subcommittees of the House Committee on
Food Safety: Walmart Leafy Greens
Science, Space, and Technology held the hearing Beyond
Walmart is the leading grocery retailer (by grocery sales)
Bitcoin: Emerging Applications for Blockchain Technology
and the largest purchaser of locally sourced produce in the
(H.Hrg. 115-47). This hearing included testimony from
United States. In 2016, Walmart piloted the use of
Walmart’s vice president for food safety, among other
blockchain to trace fres h mango and pork through its supply
witnesses. Various public and private interests may call on
chain. The mango pilot project demonstrated that, with
Congress to consider regulating the use of blockchain
blockchain, Walmart could trace the source of mangos in a
technology in the agriculture and food sector. The
store in 2.2 seconds, versus seven days with traditional
Congressional Blockchain Caucus, launched during the
methods. In 2018, Walmart launched the Walmart Food
114th Congress, seeks to study and understand the
Traceability Initiative, which requires its suppliers of leafy
implications of blockchain technology and advocates for a
greens to participate in a blockchain network. The initiative
limited regulatory approach.
aims to enable tracing the source of contaminated products
within seconds and to increase the efficiency and precision
Congress also may consider whether to appropriate funds to
of food recalls. For example, the blockchain could assist in
further develop this technology for use in agriculture and
rapidly identifying the source of lettuce contaminated with
food supply chains. Areas of opportunity may include
the bacteria Escherichia coli. Since September 2019, all
investments in rural broadband; research and development
suppliers of leafy greens to Walmart have participated in its
of technologies and infrastructure to record and share
blockchain network.
blockchain data (e.g., IoT devices, digital markers,
software, blockchain design); economic and social science
Premium Sourcing: Beefchain
research on potential blockchain applications; and federal
Consumers often pay a premium for beef from free-range
agency staffing and coordination, if federal programs come
and grass-fed cattle, compared with beef from cattle raised
to require new and specialized knowledge. The House
conventionally. Ranchers who employ these premium
reports accompanying appropriations bills for FY2020
practices may not recoup the full price premium without
(H.Rept. 116-107) and FY2021 (H.Rept. 116-446)
trusted recordkeeping. Beefchain is a private company that
encourage USDA’s National Institute of Food and
has partnered with Wyoming ranchers to enhance the
Agriculture to “coordinate research to reduce the risk of
traceability of their management practices throughout the
foodborne illness through the use of blockchain
supply chain, using a combination of blockchain technology
technology.”
and monitoring with IoT devices. Beefchain aims to allow
ranchers to benefit from premium pricing and assure
For more information on blockchain technology, see CRS
consumers of the authenticity of the beef they purchase.
Report R45116, Blockchain: Background and Policy Issues,
Beefchain is the first blockchain solution approved by the
by Chris Jaikaran.
U.S. Department of Agriculture (USDA) under its Process
Verified Program (PVP).
Genevieve K. Croft, Analyst in Agricultural Policy
IF11829
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Blockchain Technology and Agriculture

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https://crsreports.congress.gov | IF11829 · VERSION 1 · NEW