Cultiv@te: Blockchain to Improve Traceability and Livestock Farming Practices for the Ecuadorian Amazon
The Global Centre is working with UNDP-Ecuador under PROAmazonía´s initiative, which jointly with the Ministry of Agriculture & Livestock and the Ministry of Environment and Water, seeks to reduce greenhouse gas emissions from the country’s productive sectors by decreasing deforestation and promoting sustainable management of natural resources.
After a competitive open call for solutions, Cultiv@te — for its Ecuador challenge — has selected Convergence.tech, a Toronto, Canada-based company that uses blockchain technology to power solutions for the environment.
Low productivity, prices and profits for farmers
Meat production represents 43% from the total cattle in Ecuador while the remaining 57% is for Dairy farming. However, cattle farmers face the challenge of low meat prices yet high production costs. Within the supply chain, there is an inequitable distribution of profits, putting farmers at a disadvantage.
A more sustainable approach is needed for the supply chain to become more productive, less harmful to the environment and more profitable for farmers. Therefore, commercial partnerships are essential in order to promote sustainable meat production.
The need for a more traceable and sustainable supply chain
Other challenges also affect the sector. Farmers have to depend on intermediaries who transport the cattle to the slaughterhouses. In some cases, there are even up to three intermediaries which reduces prices received by the cattle farmer. Infrastructure is another problem, 86% of slaughterhouses in Ecuador are municipal, out of which 90% have been classified as unsuitable due to poor hygiene standards.
The absence of a traceability system also poses challenges. In addition to the disparate distribution of profits in the value chain, knowledge about the supply chain needs to be strengthened between local farmers and consumers. The system is thus pervaded with multiple gaps.
PROAmazonía and Cultiv@te partnership to fight deforestation and promote sustainable livestock farming
In the amazon region, 65% of the land use is designated for pasture. There is little advanced technology associated with livestock production which results in low productivity and makes it inefficient from a carbon emissions standpoint. There is also a lack of economic incentives for farmers to be more sustainable and efficient in their practices.
PROAmazonía’s Program supports the sector’s transition to sustainable production systems through improvements in productivity and enabling traceability and certification of livestock products. It also aims to increase the income of farmers who help to protect the Amazon rainforest through deforestation-free meat and dairy production.
The initiative — established in 2017, implemented by the Ecuadorian government through the Ministry of Environment and Water and the Ministry of Agriculture and Livestock and supported by UNDP Ecuador — is integrated into the framework of Ecuador’s Reducing Emissions from Deforestation and Forest Degradation (REDD+) Action Plan, which is active until 2025 and contributes to Ecuador’s Nationally Determined Contribution (NDC). Its strategy includes providing development training and stakeholder interventions to help farmers to adopt sustainable farming practices.
The Cultiv@te programme is a timely fit for the PROAmazonía initiative, enabling the discovery of the most innovative solutions from around the world to tackle Ecuador’s complex livestock challenge.
A solution for livestock traceability and sustainability
Convergence.tech was selected for Ecuador’s challenge. The proposal will build a platform to support traceability, certification and incentives across the livestock sector through a digital system, that motivates farmers to adopt more sustainable pasture management.
The project will build a traceability solution for the remaining steps of the value chain as part of Phase 2 (from slaughterhouse up to the final consumer), while integrating that with work already underway in Phase 1 on traceability (from the ranchers up to the slaughterhouse). This is to ensure full transparency and traceability across the entire supply chain while linking price benefits and incentives back to cattle ranchers.
Phase 1
The government’s Livestock Traceability System will generate a module that includes general information about the producer, the farm, the forest, supplies, etc. This data will be integrated into the national systems that are in charge of animal health surveillance, combining vaccination data, mobilization guides and animal health certificates. Data from the industry and marketing will also be integrated into this system.
Phase 2
Convergence.tech’s solution will be applied in the second phase of the value chain. Together with PROAmazonía, they will co-develop a prototype to support incentive payments and higher prices. This will be done by developing a premium market around certified beef, and ensuring that the benefits flow back to the producers.
Producers who are part of the pilot will have the opportunity to enrol in qualified “certification” programs via an app or field organization, linked to the “digital identity” created in Phase 1.
At the Slaughter Centres, producers can get their cattle certified and receive a digital credit by using their smartphones to read the RFID ear tag on each cattle. Rough cuts of meat are tagged with an identifier (a carcass tag and barcode), creating a “data passport” for the meat. The purchaser can then receive, review and “accept” the meat order digitally and thus owns this digital passport.
Once the sale is completed, the digital credit is released to the original producer, who can then spend it on agriculture inputs. The retailer of the meat can thus make provable claims on their meat certifications and their origins to consumers, as well as label them for consumers to verify this information. This allows the producer and retailer to build their brand to be trustable and transparent one from farm to market.
With this partnership, the Ecuador government will be able to trace meat products through the supply chain. Convergence.tech also offers a cloud-based platform to integrate their system with government incentives, public credit and national-level certification schemes. This will allow the government to implement deforestation-free certifications using trusted and secure digital certifications, starting from being able to track pasture movements and incentivising farmers to adopt more sustainable farming practices to avail credit and get certified. By overlaying deforestation data on this system, the PROAmazonía initiative will be able to measure the impact of livestock farms on the Amazon forest and track the effectiveness of certification and incentives on the producers’ transition to more sustainable practices.
A supply chain that is transparent and traceable will also ensure better confidence in product quality, which in the long-run can increase meat prices and help farmers to ship their products to valuable export markets while promoting more sustainable and efficient livestock farming practices that could reduce deforestation.
PROAmazonía is currently working with Convergence.tech over the next few months to drive this initiative.
