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A digital platform to improve supply-chain traceability

What it does. The eSpice Bazaar pilot is a digital platform prototype that uses blockchain to aggregate and trace information about the supply chain production of chili and turmeric in India. The purpose of the pilot was to develop blockchain architecture to ensure traceability on the eSpice Bazaar platform developed by the government and test its functionality. During the pilot, the block chain application was developed, deployed via Amazon Web Services, and integrated with the eSpice Bazaar portal to serve as its quality assurance and traceability backend. Architecture was built to extend traceability beyond the farm level, and data from 2,942 farmers producing chili and turmeric in Andhra Pradesh were collected, uploaded to the platform, and tested for immutability and retrievability. The traceability function of the platform was then demonstrated to the Spices Board via a user-friendly QR code system – the QR code on the spices package or the end product when scanned traces the product through every step of value chain and all the way back to the farm from where it originates. While this tool is not financial in a strict sense, it does use a technology, the blockchain, developed and used mostly in a fintech context.

Value proposition. Indian spice farmers often invest heavily in the planting and harvesting of spices, only to be forced to sell them at low prices, often to middlemen who take a percentage of the profit. The eSpice Bazaar pilot lays the groundwork for a blockchain-powered platform that will enable farmers to sell directly to buyers. The completed platform will eventually enable traceability from harvest to trade, provide market access and better prices to farmers, deliver higher quality produce to traders, and introduce visibility, transparency, accountability, and sustainability into the spices value chain.

Why and when to use it. Traceability can help increase the value capture of poorly compensated producers in a value chain. However, the probability of successful implementation is increased when there are neutral intermediaries such as UNDP to coordinate the pilot, source technical expertise (e.g., through a private sector company), and attract government support (e.g., the Spices Board of the Ministry of Commerce and Industry of India).

Known issues and troubleshooting. A multi-sided platform only works when all key stakeholders participate. For this solution to be viable, farmers, aggregators and processors, certification agencies and exporters would all have to use the platform. More specifically, farmers and farmers’ associations would have to be comfortable with the technology and have access to it. Similarly, exporters and processors may require incentives to use a platform that could reduce their market power. Finally, the platform would need to deliver traceability beyond the farm level to facilitate trade.

Context. India is the largest producer and consumer of spices in the world, exporting $3B worth of goods annually, and trading $1B domestically, between 2020 and 2022. Spice farmers already had low visibility within the value chain, and during the pandemic, they were forced to sell through aggregators who fixed prices. Additionally, the rejection of Indian exports due to difficulty meeting food safety regulations on aflatoxins, pesticides, and hygiene, impacts the value of export and profitability of the value chain. To address this challenge, UNDP India, with funding from the Japan Cabinet Office (JCO), partnered with the Spices Board from the Ministry of Commerce and Industry, to run a pilot with 2,942 chili and turmeric farmers in Andhra Pradesh. The NEC Corporation (which developed the blockchain backend), farmer producer organizations, and traceability and value chain experts also contributed to the effort.

Cost. USD 115,000, primarily used for human resources (contracting companies and consultants to deliver services) and communication.

People

  • Project lead. The project lead will coordinate all key stakeholders, secures key partners, and manages relationships with donors.
  • Standards organization with technical expertise in value chain traceability. This organization will provide implementation support by coordinating with stakeholders such as the government, farmers, traders, quality control labs testing produce, and exporters and traders.
  • Blockchain solution developer. The developer will build the blockchain architecture required to conduct quality assurance at each level of the spice value chain.
  • Nonprofit or civil society organization with community relationships. This organization will mobilize farmers and manage data collection.

Focal point. Ravi Chandra

Country, year, and language: India, 2021 to 2022, English

Resources

  • Blog post. Use this resource for a narrative account of how the eSpice Bazaar pilot developed.
  • YouTube video. Use this resource as a visual account of how the eSpice Bazaar pilot developed.