Traceability ultimately costs farmers

Blockchain levels of traceability when it comes to agriculture and food production, in theory, are great tools. But the price of all new tools is paid for from farm margins.

Many consumers claim to be interested in knowing where their food comes from, but at the grocery store, at least in North America, most reject the idea of paying more to know.

That isn’t the case in other parts of the world, where premiums are paid for traceability and it’s culturally acceptable to invest in the provenance of food stuffs.

There are some successful mid-sized farm and food businesses that have been able to capitalize on the trend of knowing. Generally, these are close to large population centres and have been able to focus their operations on meeting those demands and providing higher percentages of their revenues to support marketing efforts — something most farms, large or small, can’t or won’t choose to muster for wide range of practical reasons.

Traceability is growing for commercial grains and oilseeds. Some brewers in Asia are looking for malt they can tie to regions of North America, and some are insisting that farms producing for them meet strict terms of operations and provide complete field and crop histories. The provenance they seek doesn’t make better beer, but does make a better story to market, and at least for the short term, pays farmers a premium for telling the tale of their grain. Craft brewers here at home offer some of these differentiations in their products, however their operations are mostly not scalable to make the opportunities particularly attractive to commercial grain farmers.

Hopefully, the new costs of traceability will be shared by farmer investments in precision agriculture that deliver most of the returns to producers through improved agronomy and easier financing, with historical data coming along for the ride.

Like many emerging markets in farming there are often some premiums at the beginning, but pretty soon the extra becomes the new standard expectation.

It’s likely time for us to start keeping all that production data because you never know who might be willing to pay for a little provenance, at least for a while. After that, who knows if they’ll be willing to pay at all.

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