- Blockchain has the potential to provide companies with a deeper insight into their supply chain operations.
- But technology can be difficult to scale, as it often involves collaborating with a huge amount of partners, all with varying degrees of technological capabilities.
- This is especially true in industries like agriculture, where farmers have very different IT budgets than major companies like Bayer.
- On Wednesday, Bayer and BlockApps launched TraceHarvest Network, a blockchain-based initiative to track specialty crops from seed to sale.
- Although Bayer declined to disclose the amount of investment in the effort, the company said it “is investing more in blockchain than most of our open innovation initiatives” due to the value it is producing.
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All cultivators are not created equal. At least, that was the mindset Bayer and other agricultural giants had – until now.
While many farmers are able to grow standard soy crops, companies like Bayer often release specific seeds that can produce higher yields or healthier end products. These crops require increased supervision from a supplier like Bayer, including site visits to observe the sowing of seeds, for example, to ensure that farmers adhere to the most stringent cultivation protocols. That’s why Bayer and others need to restrict access to these special products.
But as with many other operations, emerging technology is changing this paradigm. On Wednesday, Bayer and software provider BlockApps opened a blockchain-based effort that had been in production for the past several years to the public to track those items from seed to sale.
For farmers, that means being able to get a deeper insight into the growing needs of those premium seeds. For buyers, it means a greater ability to work with producers early in the process to get the exact end product they want, such as healthier soy. And for companies like Bayer, it means the ability to track the starting seeds all the way to the final store shelf.
Known as the TraceHarvest Network, the project is a prime example of the impact a large-scale blockchain-based project can provide. While businesses have begun exploring how to implement the technology, many are still running small pilot programs designed to help shed light on the long-term value they can produce. So TraceHarvest Network could serve as a key example not only for the agricultural industry, but also for American companies.
Among companies now, “there is a certain degree of inevitability in blockchain,” said BlockApps CEO Kieren James-Lubin. “What they are looking for are really good business cases and great examples that can indicate the success of the technology in large-scale manufacturing.”
And for farms like Bayer in particular, blockchain allows its customers to better meet end-consumer demands, all by tracking the progression of products to a level of detail that wasn’t previously available.
“Traceability is what enables all sorts of other opportunities for farmers,” Michael Pareles, head of digital strategy and growth at Bayer Crop Science, told Business Insider. “Having a technology, albeit emerging, that promises a lot to enable actors to work together to help farmers meet the needs of society; it was a breeze.”
“You can’t impose too much on growers”
But the journey to release TraceHarvest Network to the public shows just how cumbersome the blockchain’s efforts are to scale.
Supply chains have emerged as a key initial area of implementation, given the sheer amount of transactions and steps that must take place. Each entity in that chain, however, is dealing with very different IT capabilities.
In the case of TraceHarvest Network, BlockApps and partners like Bayer have had to scale the project so as not to overload farmers who have less sophisticated technology infrastructure. Some, for example, still use paper ledgers to keep track of operations.
“You can’t impose too much on growers,” said James-Lubin of BlockApp. “You’re asking them to make a real bet to prove this, where other large companies have IT budgets and have already taken industry-wide initiatives.”
The other big question is what impact TraceHarvest Network will have now that it goes public and whether BlockApps will be able to get a more significant buy-in from the agricultural sector. And because the startup provides the underlying software, it is the “direct financial beneficiary” of any additional customers.
“We should be able to get a larger share of the industry on this system in a low cost and reasonable amount of time,” said James-Lubin. “The barrier to entry has certainly dropped dramatically and should … reduce skepticism and hopefully get more people to join this initiative.”
Although Bayer declined to disclose the amount of investment in the effort, the company said it “is investing more in blockchain than most of our open innovation initiatives due to the value TraceHarvest has brought to us and ours. clients”.
As the industry’s first blockchain initiative in the agricultural sector to track products from seed to sale, both Bayer and BlockApps hope it will become the industry standard. And for Bayer, it’s just part of a larger effort around blockchain adoption. The company, for example, is working with Chinese tech giant Alibaba to provide greater transparency in the movement of products in the country.
“We are really focused on the kind of new opportunities and business models that traceability could provide, both for us and for our customers,” Pareles said.
