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Blockchain for AgriFood Online Course Module 3 3.6 Limitations of Blockchain’s Use in AgriFood
  • So far, this module has focused primarily on how to use Blockchain technology within the agrifood sector and the potential advantages associated with this technology
  • However, it is also important to bear in mind that Blockchain technology also has certain limitations and disadvantages - crucially, Blockchain is not a universally applicable solution

SELF-LED EXERCISE

  1. Select a Random Agrifood Product:
    1. Choose an agrifood product that interests you.
  2. Choose a Supply Chain Actor Persona:
    1. Select a persona from the supply chain, such as a provider, producer, processor, distributor, or retailer.
  3. Identify a Problem for Your Chosen Persona:
    1. Think of a specific problem that your chosen persona might face.
    1. Example: Imagine you are the manager of a meat processing plant trying to reduce instances of contamination.
  4. Use the World Economic Forum’s Decision Tree:
    1. Answer the 11 questions provided in the World Economic Forum’s decision tree to determine whether blockchain is the right solution to the problem you are facing.
  5. Analyse Your Results:
    1. Reflect on your answers to understand how blockchain could or could not solve the identified problem.
  6. Document Your Findings:
    1. Write a brief summary explaining your selected product, persona, problem, and the results of your decision tree analysis.
  • Adoption challenges
  • Complex blockchain ledger interfaces - not user friendly for mainstream adoption
    • Relatively high levels of digitalization and digital infrastructure (e.g. reliable internet connection, mobile network coverage) as a prerequisite for successful blockchain adoption; particularly problematic for farmers in the developing world
    • Lack of technical expertise/digital literacy among farmers; potential distrust, reluctance or resistance
    • Infrastructure and upskilling requirements = high upfront costs
    • Current examples of Blockchain in agrifood are still in the early stages of implementation, making it difficult to assess the long-term profitability 
  • Potential for error and manipulation
  • Information on the Blockchain is immutable but not infallible: Blockchain does not have a way of verifying whether the information initially inputted is accurate - room for fraud and error
    • Past errors entered into the Blockchain cannot be corrected due to Blockchain’s immutability
    • Blockchain itself is not capable of ensuring the security of products during transit - e.g. genuine products being swapped out during transit for inferior products - solution: use Blockchain in conjunction wit IoT/sensor monitoring
    • Disadvantage: Blockchain data may be encrypted, but IoT devices are more vulnerable to tampering, hacking or malfunction - this can undermine the integrity and accuracy of the Blockchain data
  • Lack of regulation
    • Blockchain as a new technology - legislation has yet to catch up with technological developments
    • E.g. code-only smart contracts are not legally enforceable
    • Cross-border blockchain transactions and question surrounding jurisdiction
    • Blockchain and data privacy?
  • Limited interoperability
    • Different Blockchain systems created by different companies may not be interoperable
    • Blockchains and other IT systems may also not be interoperable
    • Particularly problematic in the context of the agrifood sector - many different actors in global supply chain all using potentially different management systems
    • Integration may be costly and complex
    • Need for a unified technology standard
  • Environmental concerns
    • High computational power required = high levels of energy usage
  • Lack of motivation?
    • Producers may not want full transparency - loss of competitive edge, reputational damage
    • Consumer demand alone may be insufficient as a driver for change
    • Lack of policy based motivations e.g. taxation
    • Benefits for farmers may vary depending on farm size - disincentivize smallholder farmers
    • Blockchain associated with cryptocurrency, volatile reputation
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