Why the Blockchain of Spices and not the Database of Spices?
Why blockchain over database? Just as a strong building must have a good foundation, a strong food supply chain must rest on empowered and engaged farmers. Currently as a spice moves down the supply chain, it changes hands over a dozen times. With the current GS1 food safety standard, each level only needs to have one level up and down of transaction history. Trying to determine the origin of a jar of spice can take weeks, if the records exit at all.
With a blockchain, every transaction is recorded in a common database and secured from editing or tampering. Not only does blockchain allow for a verified transaction history, it’s unique properties also allow farmers to be rewarded for earth conscious behaviors. With the ability to trace a product back to the farm, the system can utilize smart contracts to reward individual farmers for growing higher quality products.
Blockchains create trust in two ways — first by the nature of the ledger itself, and second by the use of smart contracts to reward good behavior in the physical world. The power of distributed ledgers is that no one individual authority has full control over the data. Both conventional databases and blockchain can allow for time stamped entries and identity verification. However, with a conventional database, administrators have Read/Write/Delete/Append rights, and in a blockchain the record can only be Read or Appended. This ensures that when a transaction occurs between two parties, neither party (or a 3rd party) can go back and change what occurred. This is crucial in supply chains, where an edit reclassifying a bag of cardamom from regular to organic can suddenly add 25% or more to its value.
The second powerful feature of the blockchain is “smart contracts.” A smart contract is a set of auto-executing code, so when condition A is met, action X occurs. Within a supply chain, this can be used to efficiently and autonomously monitor the chain. For example, if a farmer attempts to place 100 50kg sacks of organic turmeric on the chain, the smart contract references his field and notes that at 1 acre, the field can’t produce more than 4 tons of turmeric — raising an audit flag and preventing the entry. Similarly, if the product on arrival in the US meets a superior grade, the system can identify the farmer who put the cardamom on chain and reward him with a 10% bonus above spot price.
Moving to a blockchain based system also increases efficiency and reduces information silos. Currently it takes over 300 pieces of paper issues by 20–30 different entities to move a cargo of spices from Kumily Kerala to Elizabeth New Jersey. By pieces of paper, we are talking physical paper, not just electronic documents — the various bills of sale, certifications, bills of lading, customs documents, etc. This paper trail is a leading vulnerability of the spice supply chain. It becomes easy for “chemical” farms to record their products as organic, testing certificates be forged, and manifests to be falsified.
Creating the blockchain of spices will allow consumers to know their food, distributers to reduce risk and paperwork, and farmers to be rewarded for their efforts. TerraChitha will provide blockchain solutions enabling all of this to occur.