automation
http://www.industrysourcing.com July 2019 FoodPacific Manufacturing Journal^35
“Contract farming is one of the conditions where we use
the blockchain to verify whether all the terms mentioned in the
agreement are being met such as purchase price, trade volume,
transportation method, among other provisions,” Cheth said.
BlocRice, through an application (app), allows the farmers to
see key information about their supply chain and electronically
verify if their contract conditions are being met.
Oxfam explained that “the web-based application focuses on
transparency and traceability and enables all parties to digitally
facilitate, verify and enforce the negotiation and performance of
a contract. All stakeholders involved can access information on
the supply chain in their shared database, from planting up to the
manufacture of rice products.”
Cashless payment
BlocRice has introduced cashless payments to the farmers.
Issuing payments through the farmer’s individual account enables
electronic verification of payment by the buyer to a farmer. The
blockchain is updated every time a cashless payment is made.
“We let them know that blockchain is cashless. They already
know how the bank system works today compared to 10 years ago.
It’s better now since most of them have bank loans so they have
bank accounts,” said Cheth. “We don’t force them to open a bank
account but we encourage them to open one since they can receive
their payments through their accounts.”
According to Oxfam, BlocRice farmers received about US$ 0.24
per kilo with an additional U$$ 0.05 premium. “The premium worked
out nearly US$100 for most of the BlocRice farmers, who each
produced an average of just a bit less than two tons of white rice.”
Value for consumers
With BlocRice, consumers can also trace the end product. They
will know if the farmers have been paid correctly for their rice.
Oxfam said that “the consumers are enabled to make an
informed and conscious choice for rice that complies with social
conditions and fair production standards.”
Challenges and lessons learned
But rolling out the programme had its fair share of challenges.
“Of the 50 participants, only 38 farmers decided to sell their
paddy rice to the cooperative because of the drought that occurred
during the third quarter of 2018. Some farmers decided to keep
rice for their family consumption rather than sell, thus affecting the
contract,” said Cheth.
Cheth added that out of
the 38 farmers only 32 elected
to receive payment through
the bank, as the rest still
preferred to receive in cash.
But for the cooperative’s
perspective they are happy
about it because it greatly
reduced their risk as they
carry less cash when they pay
the farmers.
Literacy was a big
concern as well. “There
are some data elements in
the BlocRice app that every
individual farmer needs
to confirm and to click. Some farmers can’t read or write and we
learned this issue halfway through the programme,” Cheth said. “So
when we refine the application we will consider putting in more
visuals or even audio and to automate some things to make sure it’s
easy for them, and if possible they need to type only numbers.”
Moreover, access to the BlocRice application became an issue
because only few farmers owned smart phones.
“Out of the 50 farmers only about 30% have smart phones and
mostly these are of the low-end kind,” Cheth said. Oxfam invested
in quality smart phones for the cooperative where farmers can use
the phones to register or to complete their data.
“With the use of 3G technology and smart phones, farmers
need to top up and sometimes they don’t have the means to do so.
Sometimes I bring my router and have it topped up. I gather the
farmers so that they can use their phones,” Cheth said.
Cheth explained that BlocRice being web-based for now gives
them the flexibility to adjust until all fixes in the application are
addressed. The next step will be the launch of a mobile app. “We
expect that in the future, it will become a mobile app so farmers can
update their data even if they are offline, and then simply push out
the date once they are online.”Promoting fair trade
“We expect to bring traceability, transparency, financial literacy
and best practices to contract farming in Cambodia,” said Kann
Kunthy, managing director of Phnom Penh-based rice exporter
AMRU Rice, in a separate interview with Nikkei Asian Review.
“Promoting fair trade could improve the image of Cambodian
rice and help expand exports, especially to Western markets. Foreign
retailers will be able to access the BlocRice system to trace where
the rice comes from and to monitor whether their trading partners
are treating local farmers fairly,” added Kunthy in the interview.
According to studies, exports of Cambodian rice are on the rise
for the last 20 years because of the preferential tariff exemption from
the European Union under the Everything But Arms scheme. In 2017,
of the 600,000 tons shipped abroad, about 50% went to the EU.
“BlocRice has worked well and there is a very good potential
for scale up to thousands of farmers. Cashew nuts, black pepper
and cassava can be the next agricultural commodities to apply
blockchain technology,” Cheth said.Farmers record the number of paddy rice bags before transporting to the
company’s warehouse. (Photo: Oxfam)BlocRice allows
farmers to see key
information about
their supply chain and
electronically verify if
their contract conditions
are being met.