As Australia transitions from becoming Asia’s food bowl to its delicatessen, one thing will be key: traceability — and that means blockchain.
Those in the agriculture sector have long been excited about the prospect of a rising middle class in Asia, on the theory that they’ll demand higher-quality agricultural products to feed an increasing population.
From the export of beef, wine, to macadamias, Australia has been able to harness a competitive advantage in agriculture to great benefit.
Exports to Asia increased 115 percent to $31 billion in the 20 years to 2018, and accounted for over half of total agriculture exports.
On the back of a great reputation in providing clean and fresh agricultural products, it was expected that Asia would continue to drive great value in the sector: but that’s far from guaranteed.
Especially when agricultural rivals such as New Zealand, Canada, and the US continue to spruik their green credentials as well.
It’s those who not only spruik their products as clean which will win, it’s those who can prove it: and that’s where Australia is shifting its focus.
According to a white paper done by the Australian government [PDF], traceability is flagged as a key competitive advantage, should we be able to come up with the solution.
“Trading partners want better assurance that Australia’s produce is high-quality, safe and free of pests, diseases and weeds,” the report reads.
“Our trading partners increasingly expect robust traceability systems to verify product integrity at all steps along the supply chain. Modern, responsive traceability systems are likely to become a compulsory importing country requirement in the future.”
Blockchain shaping as key to Australia’s agricultural future
While several attempts have been made to implement track and trace solutions in the past, at best it’s been piecemeal.
An ASX-listed technology play, Security Matters (ASX: SMX) has been hard at work proving its ‘track and trace’ technology with a variety of partners around the world — and it’s had its eye on Australia.
“I think what’s been happening, particularly in Australia, is that there’s been a real desire to create methods to mark and trace in order to create liability,” SMX CEO Haggai Alon told Star Investing.
“There’s also been a desire to have technology that can be used end-to-end, from growing and manufacturing to marketing.
“We’re seeing big players in the industry move in that direction, and outline that vision.”
He’s not wrong.
Speaking at a conference put on by The Economist in late 2017, Graincorp CEO Mark Palmquist lamented the lack of an end-to-end solution.
“We need to find ways to track identity and have that traceability….the way it’s been done in the past is a very cumbersome, physical process that is extremely costly,” he said.
“Is blockchain a good way to have this verifiable system in place? Is it internet of things, sensors that travel but can’t be tampered with?”
Alon and SMX are betting on it.
In recent months SMX has been able to tie up trial deals with the likes of agricultural giants Hazeera Seeds and Ambar.
Along with its proprietary track-and-trace solution which marks products without altering them, SMX is building out a verification solution using blockchain technology.
By being an all-in-one provider, it’s hoping to keep costs down for supply chain participants.
“I think those in the supply chain are excited about our technology because it’s one technology, one method, one service provider — whereas previously those track and trace solutions were disconnected and they had to use multiple technologies,” Alon said.
“This is why at the end of the day it hasn’t really been done. It’s complex and therefore more expensive.”
Having a traceability solution in place is vital if Australia wants to capitalise on the changing Asian tastes.
Not just about safety, but marketability
Palmquist said that the game in Asia had fundamentally changed.
“In the past, it’s all been about trying to find ways to move tremendous amounts of grain,” he said.
“What we’re finding now is that the consumer is absolutely changing, and part of it is that the world is getting wealthier with bigger middle classes.”
For example, he said what Japanese consumers wanted from buckwheat noodles had changed in recent years.
“The real value to the consumer is right when it’s being steamed at home — what’s the smell which is imparted in the room. What does the colour of the water look like?,” Palmquist said.
“When the noodle is being steamed, what’s the quality and the density of the noodle?”
The problem is that information isn’t currently being captured in the supply chain — but if Australian agricultural operators can find a way to capture that information at the supply source, track it, and then verify the product’s authenticity they could have a marketing leg-up.
“I think consumers want to have a greater understanding of the manufacturing process, and regulators are looking to create a full ecosystem without blind spots,” Alon said.
“I also think the growers are starting to understand that demand, and want to get an eye on their hard work.”
It’s why blockchain-led solutions like SMX are attracting attention in agricultural circles.
Operators know that only by capturing and verifying information will they be able to prove their products’ value to the end consumer.
It’s why Australia could go from being built on the sheep’s back to being built on the blockchain’s back.
This content is produced by Star Investing in commercial partnership with Security Matters. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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