Producers, UW looks at exploring blockchain
WYOMING – Producers across Wyoming and the College of Agriculture and Natural Resources (CANR) are stepping into blockchain technology to explore creating value-added agricultural products consumers can digitally verify.
Blockchain is a database that stores information together in blocks of data that are digitally chained together.
CANR dean Barbara Rasco said the ag college at the University of Wyoming is instrumental in the Center for Blockchain and Digital Innovation Program on campus.
“I think a lot of the most interesting applications that come out of the center that will have a big impact within the state are the ones the College of Agriculture and Natural Resources are working on,” she said. “It is an area we want to focus on and develop programs that will be helpful for our producers and the ag industry in general across the state.”
A block is created when new data comes into blockchain and then is linked to another, said Mariah Ehmke, associate professor in the Department of Agricultural and Applied Economics.
“If you wanted to build some sort of value-added information, this would help you preserve it and let the consumer know at the end,” she said.
Wyoming cattle ranchers have been some of the early adopters of this technology through BeefChain owned by American Certified Brands, a Wyoming LLC.
“If you go to a grocery store and buy a steak, for every dollar spent, I think only about $.20 gets back to the rancher,” said Drew Persson, president of BeefChain and fourth generation rancher on the Persson Ranch in northeast Wyoming. “It’s because there are so many middlemen. All that value is being lost to the rancher.”
Giving ranchers more of that dollar is the main goal, he said.
Producers who participate in USDA programs such as all-natural, non-hormone treated cattle (NHTC) and source and age verification could benefit by placing their cattle on the blockchain, Persson said.
Producers using BeefChain use a radio frequency identification (RFID) tag and the blockchain to record information, shared Persson.
The first trial run through BeefChain was Wyoming-branded beef shipped to higher end restaurants in Taiwan where consumers were able to scan a QR code on their phones to see the origin of beef from Wyoming, said Jim Magagna, executive vice president of the Wyoming Stock Growers Association.
“The challenges we face with doing it for a Wyoming product is we don’t have the processing here on a large scale to do exports or interstate shipments,” he said. “When our cattle have to go to major processors, we lose that opportunity to have it identified, at least under the current system.”
Magagna said the stock growers are committed to doing what they can to help provide blockchain as an opportunity for producers who chose to participate.
Using blockchain has some potential for the sheep industry and likely the direction it may go as acceptance and understanding of it grows, said Amy Hendrickson, executive director of the Wyoming Wool Growers Association.
UW’s sheep program has started first stages of implementing blockchain technology using wool shorn from sheep at the Laramie Research and Extension Center to create limited-edition, UW-themed throws that will come with a unique QR code.
“When a purchaser scans their individual QR code, it will take them to a portion of sheepchain.org, where it will tell a more in-depth story about the blankets,” said Lindsay Stewart, project manager for the UW throw project.
Broader blockchain applications within the sheep industry are the next step for researchers at UW, said Whit Stewart, UW Extension sheep specialist.
“As we continue to do proof-of-concept-type work with blockchain and the sheep industry, this is just one opportunity to do so,” said Stewart. “I think lamb will be an opportunity to do the same thing, but we have to pilot these technologies because if we don’t, then it’s all conceptual and it’s theoretical and it’s not proven. So that’s one of the advantages of the university, is that we can be R&D (research and development) for industry efforts.”
Ehmke considers herself an enthusiastic skeptic of the technology, seeing issues with lack of regulation and concern it might not be completely fraud-proof.
“It is creating a potential world where we have the have and have-nots of cyber marketing and that worries me some in terms of economic development for places like Wyoming, where we have a lot of aging ranchers and small operations,” said Ehmke. “How can we make it accessible to everybody?”
Ehmke compares blockchain to accounting, in which firms keep track of exchanges and movement of money by writing it down. Double-entry accounting was created to provide two records of information and double check for accuracy.
“Blockchain is putting that entering method, in an abstract way, on the internet making it so not just another person checks it and audits it, but every time a transaction is made there is a group of people out there who become aware of it and assign that transaction a number,” said Ehmke. “So, in a way it is witnessed by thousands of people on the internet.”
This witnessing creates a lock in the transaction and a way to trace it back, she said.
“People who are in favor of blockchain argue that it doesn’t necessarily mean fraud won’t happen, but it will be faster and easier to discover,” she said.
Ehmke said if falsified records become detected, their origins can be more quickly found.
“It provides some incentives then if you know your animals are going on the blockchain and it can be discovered and traced back to you more accurately, then hopefully you would avoid being deceptive,” she said.
Walmart has adopted blockchain technology to help provide detection and produce recall quicker.
“In terms of crime and bad food prevention, it is more about the speed of which you can trace things back has improved with blockchain versus traditional record keeping,” said Ehmke.
There are public and private blockchains and in a public blockchain, transactions can be seen based on how you want it set up, shared Steven Lupien, director of the UW Blockchain Center of Excellence.
Blockchain has the potential to bring down transaction costs, said Ehmke.
Documenting a transaction, such as buying and selling grain, provides proof without the need to hire an attorney to create a contract, she explained.
Rasco believes conducting international trade will be easier because there would be no currency exchanges and similar types of costs.
“It will be easier on the blockchain to integrate the financials inside of that, and through platforms that include e-contracts, it will make it easier to expedite trade, make it cleaner and easier to manage party-to-party negotiations,” she said.
The expense associated with blockchain is one of Rasco’s concerns, and whether that expense is going to be borne by the purchaser or forced on a producer.
“If it becomes a regulatory requirement, the producer would end up having to absorb the costs,” she said. “If I was working with someone who was doing it just for traceability, I would encourage them to see what other things could be integrated into the blockchain that would help improve process efficacy, product quality or yield so if the cost is on the producer, there is other value they are getting out of it.”
The college plans to start looking into sensor technology that can be tied to the health of animals to record and track that information as well, said Rasco.
“This is the kind of thing we are working on at the university. How do we create more value for the ranchers, and how do we improve the business operation utilizing a system that instantly transfers value?” said Lupien.