TradeTech

My RMIT colleagues and I have a new essay at Medium. A taster:

The growth of the regulatory state over the last thirty years has significantly increased the compliance costs of trade. While regulatory harmonisation and tariff reductions have encouraged larger volumes of trade, these have been matched by greater demands for information those goods travelling across borders.

New regulatory concerns about labour, environmental, chemical, and biosecurity standards are being reflected in international trade agreements and are translating into more regulatory requirements at the border.

Longer and more complex supply chains as a result of globalisation has multiplied these compliance burdens.

Blockchains can provide a ‘rail’ on which all this information travels.

Blockchains are uniquely suited for an era of advanced globalisation, the regulatory state, and demand for information about product origins and quality.

 

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30 Responses to TradeTech

  1. JohnA

    Blockchains are uniquely suited for an era of advanced globalisation, the regulatory state, and demand for information about product origins and quality.

    Are these kinds of technologies and applications actually reducing freedoms by enhancing the intrusive abilities of the regulatory state?

    Why should the intrusive state regulate origin and quality matters anyway?

  2. RobK

    I can see how a distributed ledger could track stuff (at a cost) but fail to see how it would improve compliance to standards that already exist and are often disregarded.
    That said, there is always an emphasis on the traceability of supply lines in the hope that this will encourage sound procedure and ethics etc. I think it wont eliminate the need for imperical testing. I expect unscrupulous players to develop work-arounds and that the crypto approach may infact be another compliance dead weight or bias toward a particular class of supplier.

  3. RobK

    If complete tracibility is offered many merchants will be outed as their supply chains are revealed. This is both good and bad but for commercial reasons i believe it won’t happen in it’s purest form so only a limited engagement of this technology will see the light of day. A similar trajectory perhaps of the RF chips for livestock (which still dont eliminate unscrupulous players).

  4. RobK

    I can see useful applications of this technology in contracts, shareholdings etc. which ultimately will shed some light on money laundering and tax evasion (this maybe a deterrent to it’s uptake).

  5. Buccaneer

    The market is asking for these pieces of information. Look up the Rockmelons listeria outbreak in Australia, 4 people died, yet no one knows exactly which Rockmelons were affected and which weren’t. So farmers in WA may go out of business when the affected melons came from Griffith. Look up the recent listeria outbreak in South Africa on polony, 180 people died and counting. There was also food fraud in Belgium recently too. I for one would be willing to pay more for product that can transparently prove it is safe and not “Horsemeat when I ordered Swedish meatballs”.

  6. mareeS

    Our son does all sorts of things in the mining industries around the world in tech and ideas.

    We don’t understand any of it, but he seems to have it killed.

    He finished Yr12, never went to uni, just went to sea and then to the mines in the Top End.

    We think he is a high-achieving Aspergers type, as he also is a top surfer and wasmalways out there in the zone.

    Actually, we reckon the kids come by it honestly, from us, because our daughter is out there, too.

  7. RobK

    Buccaneer,
    That traceability already exists which is why the source of the Rocky outbreak is known. The public reaction is not one easily regulated or appeased.
    Sinc’s linked article is a good one and eventually this is the way of the future but i feel it will be a fiddly process and not a revolution as such. I can only make reference to the process i have been subjected to with electronic waybills for livestock. It is no doubt useful for agents but an impost on producers and little benefit to end users.

  8. Buccaneer

    Rob K,
    No it doesn’t, it might feel good to think it does, but it doesn’t. The reason they know the source of the outbreak is that they test the genetic code of the pathogen and then guess where it might have come from. They also question all the victims on what they ate and run probabilities on which foods might have been at fault. Confusing all this is that Listeria can live in your fridge. If they are good at the sleuth work then it might take them a week at best to find the affected product and then they have to test it which will take at best another week. Blockchain enabled traceability should reduce those timeframes, particularly if linked to appropriate testing regimes. We’re not close to that.

  9. Buccaneer

    It’s also worth mentioning that really blockchain is a substitute for old fashioned honesty. Our current system of governance is really based on the paradigm that the bulk of our society will operate by and large honestly and that this is in self interest. If others can trust you and you can trust others everyone operates more efficiently. Globalisation has changed this as western (and other) cultures are exposed to paradigms where honesty is not really a conscious or unconscious part of established behaviour. China comes to mind but is by no means the worst.

  10. EvilElvis

    advanced globalisation, the regulatory state, and demand for information

    So, advancement of globalisation and the regulatory state along with growing demand for information which at some point will mean access to sensitive or private information of which you’re providing a framework to allow easier access?

    Can’t see anything going wrong there, what are libertarians about again?

  11. RobK

    Buccaneer,
    Blockchain will have negligible impact on the timeframe of tracing pathogens over the system in place now.(short of mapping pathogens with some sort of fail safe scheme)

  12. RobK

    I fear many claims will be made as to the efficacy of a new scheme. Many costs will be bourne by producers, as is generally the case, yet there will be minimal benefit to end users.

  13. EvilElvis

    It’s also worth mentioning that really blockchain is a substitute for old fashioned honesty.

    How is that, Bucc? Surely a human element needs to input data at some stage.

  14. thefrollickingmole

    It’s also worth mentioning that really blockchain is a substitute for old fashioned honesty.

    I did see an interesting comment that blockchain type accounting could help keep tabs on a lot of “charity” money which would seem to end up in executives pockets rather than on goods and services.

    In response to the Haiti prozzie ring stuff with organisations there.

  15. Buccaneer

    Rob K,

    Traceability was never designed to map pathogens and it doesn’t need to either. An accurate record of where product came from and has gone to will reduce timeframes to investigate which product/s were involved. At the moment, many products are not tracked at all, Rockmelons are a good example.

  16. Buccaneer

    EvilElvis,
    An excellent point, that humans are involved and there is usually a way to get around systems. There are currently lots of companies that audit and accredit products for safety and authenticity. Blockchain could if implemented the right way enable an overarching non repudiable set of transactions that can be tracked back to the author (for transactions, documentation and physical actions, which could be automated). Most fraud seems to rely on some level anonymity, remove the anonymity and you go a long way to creating a visible supply chain. There’s still gaps, but they’re easier to close through vigilance.

  17. Buccaneer

    It is worth noting that blockchain is in its infancy, there are no guarantees that it will be workable for the things people think it can do. This is clearly evidenced by the current number of cryptocurrencies and some of their names. That said, there is a lot of product fraud and there will always be issues that mean product needs to be removed from supply chain. A blockchain enabled system of traceability could address these problems should it be accessible to all producers. These are issues that the industry has been working on for well over 20 years. More importantly, the accuracy and security of data are only issues that will become more important with the rise of automation and robotics. Imagine being operated on by an autonomous robot that put the wrong pacemaker in because someone labelled it incorrectly or didn’t check the data properly?

  18. RobK

    Buccaneer,
    Ive only had direct experience in western Australia and only with livestock, wool, tomatoes and pumpkins as a producer and i can assure you the retailer can quickly follow the supply chain back to the producer in each case. It is specifically designed to be so whether the supply is through the markets or direct contract.

  19. Buccaneer

    Rob K,
    If you are dealing with retailers directly, this is true. If not, which is the majority of produce, it’s a lottery. (we deal with the packhouses who also confirm this is the issue) However, if your product is sold bulk, there is no guarantee the retailer can separate your product from everyone else’s at the other end (again, I’ve heard this straight from the retailers). The solution to this is a new barcode called Databar. It’s being applied to produce now and could resolve most of the issues for fresh produce without blockchain. That said, there still may be a role for blockchain in the documentation for food safety audits and authenticity certification, particularly for high value product. When it comes to meat processing the problem is even harder as product goes into a room and comes out as components, it’s almost impossible to trace which caracass your mince meat came from, for example. Wool is a different issue and I have no visibility on how that supply chain works in detail.

  20. RobK

    Buccaneer,
    When i package tomatoes, each box has a grower number. I see apples etc with stickers showing the grower number. I get kill sheets from the abotoir for sheep sold to them. Each carcase is numbered, date stamped, inspection stamped and tested for various things (mostly visually for any disease or imperfections like seed damage).
    Butchers who buy these carcases have these details also.
    So unless blockchain is going to tell you whose tomatoe is slided on your burger, there will be little change from the present system.

  21. EvilElvis

    Just had a Labor troll on Facebook spruiking blockchain as a way of facilitating direct electronic voting on a myriad of issues. They already know how to game it if the left is on board.

  22. RobK

    Wool is sold in nominal 200kg bales packed by the producer, centally core tested for auction if not direct sold. Most of it is exported these days. The carding (washing) and spinning outfits would keep a watch on supply quality, depending on the value of the feedstock.

  23. RobK

    In the case of wool, i should add; each bale is numbered branded and stamped by a certified wool classer on packing. The paperwork includes declaration from the producer regarding treatments etc.

  24. RobK

    Buccaneer,
    Where meat is processed into packaged lines, each package is tracable by date stamp and batch or line number. There would be corresponding match up to feedstock. These things are traceable, certainly by authorities.

  25. RobK

    Bulk grain handling does have issues with traceability. Care is taken to sample inward loads but occasionally if contamination is found in a bulked up line, the entire line is discarded, down graded or reprocessed. An expensive exercise.

  26. Buccaneer

    Rob K,

    Meat processed by the abattoir or processor is not traceable in the way you think and this is rapidly becoming the norm. Essentially, once the carcass is knocked down the processor usually can only keep track by the number of minutes or hours they count between the start of the operation to the end. That means the traceability identifier, usually a best before date will reflect the number of hours production affected and not be related to the carcass. There are exceptions but I know this is usual practice because I’ve heard if first hand many times. You are then also assuming that the recipient of your product actually matches your identifiers to these processes. This often does not happen because depending on the product identifiers are not always universal. And the Authorities do not have a special store of data that captures all this info. Indeed even NZ MPI who are far more intrusive than the Aussie regulators can’t do that.

  27. Buccaneer

    Rob K,
    You are correct, the blockchain will never be able to identify a slice of tomato on your burger. It’s not for identification, we already have standards for that and they already can identify the individual tomato, but not the slice. Where blockchain might help, is in securing all the pieces of information that ensure the tomato is safe and authentic. We don’t see that as a big thing because in Australia there is relatively little food fraud. I can assure you it is the opposite overseas. There is a market for empty tins of baby formula in china, since the melamine in formula scandal. Look up how to make a fake egg. Ikea got caught out with horsemeat in their Swedish meatballs, in Australia. Blockchain might be able to bring enough enforced honesty to these supply chains to save peoples lives and at the same time unify practices that dilute data to the point that no one captures critical information in practice. Even when we think they are already doing it.

  28. RobK;

    I can see useful applications of this technology in contracts, shareholdings etc. which ultimately will shed some light on money laundering and tax evasion (this maybe a deterrent to it’s uptake).

    Perhaps the Taxman being able and willing to ask about luxury lifestyles while on the dole, would be a good thing as well.

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