The use of blockchain in agricultural supply chains could avert commodity crises caused by market volatility.
Julius Akinyemi, founder and CEO of technology company Unleashing the Wealth in Nations (UWIN), said he expected disputes between buyers and farmers, as exemplified by the recent cashew nut crisis in Tanzania, to increase as the global economy slows.
“A slowing global economy and the US dollar’s relentless march upwards will only put more pressure on already low commodity prices,” he said in a letter to the Financial Times. “The price of crude oil, for example, has fallen by more than 20 per cent since early October.
“Sadly, I expect other commodity markets – especially in the developing world – to experience similar problems to those in Tanzania’s cashew market.”
Tanzania’s president John Magafuli ordered the army to take over the buying and processing of cashew nuts after criticising firms involved in the trade for exploiting farmers.
Magafuli has now set a price of Sh3,300 ($1.43) per kg and shielded farmers from deductions for transport and other administrative costs, according The Citizen newspaper.
“These people [companies] have no good intentions. They are now promising to buy lots of tonnes, but will later set tough conditions that will delay farmers’ dues,” he said.
Cashews are Tanzania’s top foreign exchange earner and brought in around $500m last year. The crop this year is expected to be 275,000 tonnes.
Blockchain’s secure distributed ledger offers the possibility of greater transparency for farmers, companies and other actors in commodity supply chains.
“Over the coming months I see a growing number of disputes over prices between farmers and buyers, which could spill over into civil unrest requiring governments and even the military to intervene, as we have seen in Tanzania,” said Akinyemi.
“To help address this issue, commodity markets need to make greater use of technology such as blockchain to bring greater transparency and efficiency to their operations.”
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