Leveraging new technologies to fund fair, sustainable smallholder farming
We led a groundbreaking project combining blockchain technology, supply chain transparency and financial savings aiming to improve the livelihoods of smallholders worldwide through sustainable agricultural outcomes.
Trado is a new open-source model to redistribute finance through the supply chain, bringing positive impact to smallholder farmers without incurring extra costs to brands or retailers.
Launched at a roundtable hosted by HRH The Prince of Wales and convened by the Cambridge Institute for Sustainability Leadership (CISL), this project brought together an ecosystem of brands, retailers, banks, NGOs and technology startups – led by Provenance alongside Halotrade and Meridia. Together, we developed the ‘Trado Model’ – a data-sharing process connecting first-mile producers, last-mile consumers and the supply-chain players in between.
This was validated through on-the-ground research and a pilot in the Malawi tea supply chain with the aim of driving large-scale change to the current systems in place.
Providing smallholders with long-term stability
More than 500 million smallholders produce 80% of the food in the developing world (FAO: 2017). Yet making a living income continues to be a struggle, with approximately 50,000 tea pluckers in Malawi trapped in poverty (Ethical Tea Partnership: 2017).
The fractured flow of information in supply chains makes it difficult for buyers, such as Unilever, to offer better payment terms to their suppliers. This means the processors who pay smallholders are often limited to more expensive local rates of the financing. This translates to lower wages for the smallholders, limiting opportunities to save and invest in sustainable practices.
Increased first-mile visibility for better financing
We piloted the Trado model in the tea supply chain. Collaborating with the Lujeri Tea Estate in Malawi, we were able to make smallholder farming data directly accessible to Unilever. The tea leaf produced – and the social impact and sustainability credentials – were registered through the Provenance platform on the blockchain. This provided Unilever new data on the availability of goods to support the release of payment earlier, reducing the period of expensive financing for the processor.
In turn, this created a saving that could be spent by the farmers or co-operatives.
For this pilot, the saving was then invested back into the smallholders by funding places at the local farmer field school, which trains them in sustainable practices. NGOs on the ground confirm the distribution of the payment to the school and record the impact progress on the blockchain.
A new way to redistribute value to smallholders at no extra cost
The Trado pilot showed a way to create social impact without having to introduce a price premium elsewhere in the supply chain or ultimately to customers – something that often limits sustainable initiatives in businesses. Over time, the model has the potential to be applied to other supply chains and, ultimately, give greater resilience and stable livelihoods to smallholders worldwide.
Do you want to learn more about the journey of this project and see the outcomes to apply to your industry?
Smallholder communities receive money to invest in sustainability initiatives – increasing quality over time of goods produced.
COMMUNICATE PROVEN IMPACT
Data to communicate stories to consumers, ability to demonstrate and measure impact against SDG commitments.
THE SAME PRICE
Sustainability doesn’t need to cost more. The savings generated in the Trado model are found through a data swap enabled by supply chain transparency and blockchain technology.
Blockchain technology is becoming more mainstream – we talk about the potential at Sainsbury’s, but this pilot has really showcased how the technology can be used in practice in retail.Rod Shephard
Strategy Manager, Sainsbury’s
Transparency is key. The fact that you cannot tamper with the data, as well. It provides an audit trail. – I think those are essential points along with the fact that inefficiencies were taken out of the Supply Chain and resulted in benefits for the producers.Alain Verschueren
Head of Innovation & DLT, BNP Paribas