Brazil’s chocolate industry embraces blockchain to control cocoa production

RIO DE JANEIRO, BRAZIL – Companies in Brazil and abroad now use blockchain technology to control cocoa beans and prevent social and environmental damage in their production chain.

Producers and members of the chocolate production chain have sought in blockchain technology (which created bitcoin), a way to guarantee the origin of their main raw material, cocoa, which in some locations is linked to slave labor or slave-like conditions.

Although Brazil is a large cocoa producer, most of the supply used in the world comes from only two countries: Ghana and Ivory Coast supply an industry worth over US$10 billion annually.

According to expert Katie Rapley, before the beans are sold, cocoa winds its way through a convoluted supply chain, as most farmers are unable to transport the fruit directly to the port, forcing them to use middlemen.

“The middleman buys cocoa from farmers and moves it closer to the port. Along the way, the cocoa could be sold to cooperatives of different sizes or third parties before finally reaching the port. There, cocoa is sold to exporters, who resell it to traders, and these effectively control the market,” she explains.

Thus, the cocoa supply chain systematically keeps farmers in poverty, as they have no control over prices, she says. “Many farmers live in poverty and have to resort to extreme measures to feed their families. Many grow cocoa illegally in protected forest areas. As a result, Ivory Coast has lost 85% of its protected forests since 1990,” she noted.

Blockchain is currently in use

According to Rapley, the cocoa industry also relies on slavery and child labor. “Farmers are poor and cocoa cultivation demands a lot of labor. Even today, on-farm cocoa harvesting and processing methods have not evolved. Surprisingly, farmers still harvest cocoa using only a machete. Farmers have no money to invest in machines or more sustainable cultivation practices. Unfortunately, this results in slavery, deforestation, and systematic poverty,” she says.

To change this, Dutch company Tony’s Chocolonely is using blockchain technology to track every grain lot. To short-cut the supply chain, Tony’s pays an additional 40% of the producer’s price. Because Tony’s knows from which farmers their grain comes, they can overpay to reward those farmers using sustainable and safe business practices.

Blockchain technology assigns a unique number to each grain lot, which are tracked throughout the entire production chain. According to the company, it will still take between 3 and 5 years before the use of blockchain technology in its “Beantracker” project will make commercial operations viable.

DP World, which recently joined TradeLens, a platform developed by Maersk and IBM, is another member of the chocolate industry using blockchain technology. “The power of TradeLens lies in its collective intelligence: it is designed to optimize trade flows using vast amounts of data from the entire global supply chain ecosystem.

This means that a chocolate bar manufacturer, for example, can see the status of every truck, pallet, box or container in a single, easy-to-use interface and make operational decisions based on that information,” the company highlights.

Brazil has initiatives with the technology

Rural producers working in southern Bahia are also adopting blockchain technology to track and certify their cocoa production.

The group comprising IG Sul da Bahia, Cooperativas Associadas (among them the Cooperativa de Serviços Sustentáveis da Bahia, Cooperativa de Pequenos Produtores de Cacau, Mandioca e Banana do Centro da Região Cacaueira, and Cooperativa da Agricultura Familiar e Economia Solidária da Bacia do Rio Salgado e Adjacências) and the Centro de Inovação do Cacau (CIC) are the entities participating in the initiative.

With support from the Bahia state government, the Bahia Produtiva/SDR-CAR program seeks to bring more professional qualification to producers too.

The IG Sul da Bahia has also established a regulation to standardize cocoa production in Brazil, and will now track the production with blockchain technology through a partnership with Bleu Empreendimentos Digitais.

Moreover, the government of Bahia, through the Centelha Program of the Bahia Foundation for Research Support (FAPESB), will allocate resources for the project “IoTCocoa – Sistema de auxílio a produção de cacau gourmet”, which, among other things, seeks to use blockchain allied to the Internet of Things (IoT) to fight fungal pests on cocoa trees.

Thus, the project intends to use IoT and blockchain to control and monitor these events, in order to catalog valuable information from the process for improvement, conduct research and assist the resumption of production in the region and the development of “premium cocoa” in Brazil.

Source: Exame