Using Blockchain for Smallholder Farmer Transparency

With its global reach, Unilever knows it has an important role to play in providing food, and has committed to sourcing all of its raw agricultural materials sustainably.

So how can it do this, while improving the livelihoods of the smallholder farmers it works with and help to make sustainable agriculture mainstream?

According to the FAO, current estimates suggest that less than 10% of smallholders are benefiting from lending, making a dent in crop production.

Enter a new blockchain pilot: the £600,000, year-long project involving fintech startups that are testing blockchain technology to unlock financial incentives in a bid to boost transparency in the tea supply chain for big retailers and manufacturers.

The project will trial a shared data system for tea farmers in Malawi – the world’s second largest producer of tea – that supply both Unilever and Sainsbury’s, and track the materials produced for the tea’s packaging.

One of the main aims is to verify sustainability data that can’t currently be accessed. By gathering said information from farmers, such as quality and price, and making it available to all parties can make the supply much more transparent and traceable.

Bringing this data to financial companies is “key to greening financial flows,” as Andrew Voysey, director of sustainable finance at CISL, puts it.

Such evidence means financial firms can then offer preferential terms or access to credit – which in turn can help smallholders increase investments in their farms to boost productivity without needing to convert more land, according to the University of Cambridge Institute for Sustainability Leadership (CISL), which convened the pilot.

The pilot alone could reach more than 10,000 Malawian tea farmers – and, if scalable, could ultimately benefit the 1.5 billion families who depend on small-scale agriculture worldwide.

The initiative, led by Provenance with support from the likes of Halotrade and the UK’s Department for International Development (DFID), is a win-win. For banks, it checks off compliance with regulations such as the Modern Slavery Act and Bribery Act, attracting sustainably minded investors and clients; for consumer goods companies, fintech is simply cheaper and more reliable when it comes to verifying their products than current certification schemes.

But Provenance is already working with the Soil Association to reinforce the certification scheme – what with firms dropping marks such as Fairtrade in favour of in-house schemes, using tech can helping strengthen the Association’s integrity as well as its relevancy.

And the software firm is working on another commodity – coffee – in a project with the World Bank and Nestlé with a similar focus on smallholder gains, giving them a better deal and increasing access to finance.

This isn’t the first time Unilever or Nestlé has shown an interest in blockchain. Last year, IBM teamed up with the consumer goods giants, along with other major retailers such as Tyson Foods and Walmart, to collaborate on blockchain in a bid to address food safety. The tech can reduce the time to track a product from farm to shelf, from weeks to mere seconds.

The win-win-win nature of blockchain makes it a perfect application to genuinely help smallholder farmers.