Blockchain Technology Applied to the Cocoa Export Supply Chain: A Latin America Case

Blockchain Technology Applied to the Cocoa Export Supply Chain: A Latin America Case

Mario Chong (Universidad del Pacífico, Peru), Eduardo Perez (Universidad del Pacífico, Peru), Jet Castilla (Universidad del Pacífico, Peru) and Hernan Rosario (Universidad del Pacífico, Peru)
DOI: 10.4018/978-1-5225-9993-7.ch019

Abstract

This chapter recommends applying block chain technology to the cocoa supply chain. Using this technology, it will be possible to show and guarantee the traceability of the final product. Traceability in the cocoa chain begins in the production stages (harvest and post-harvest) to obtain relevant data related to cocoa beans and their producers, promptly, until finding the raw material origin and inputs used during the process. The material provider's name must be considered, as well as the manufacturer's expiration date, the batch number, and the production area's reception date. This is why authors recommend using Block chain, which is a data structure that stores information chronologically in interlinked blocks. It works as a digital master book and the participants reach an agreement to register any information in the blocks. Throughout the chapter, authors show how to apply this technology.
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Introduction

Cocoa is a food rich in minerals, vitamins and fiber that has numerous benefits. Additionally, it has nutritional and therapeutic properties that are used for various products processing.

Presently, cocoa’s supply tends to be less than its demand. The estimated projections made by international experts’ point to a stock reduction in the main global production centers (African and Asian countries), thereby a price increase is predicted in the coming years (Romero 2015).

Cocoa is mainly known as input to produce chocolate (Morales et al. 2015). It is valued globally for its benefits. Its commercialization is influenced by European chocolate producers’ demand.

In Peru, cocoa is produced since the XI century (Barrientos Felipa 2015). It has grown in an orderly and competitive manner, entering in an increasingly demanding global market that is willing to pay better prices even from New York and London Stock Exchange.

Due to the growth in cocoa production in some towns, many producers have financially benefited and, at the same time, the chain has contributed to improve the gross domestic product (GDP) (Swisscontact 2016). Most of the producers are small and integrated, directly or indirectly, to the international market with the challenge of achieving economic sustainability. The area from San Martin until Puno is tropical, ideal for cocoa cultivation. In 2015, Peru produced more than 85 thousand tons of cocoa. However, it is still predicted that there will be production potential and logistic competence.

Any strategy design within the framework of international supply must consider that local production is gathered in a small number of producers, exporters, local and international transportation services providers as well as public institutions (Barrientos Felipa 2015). In that sense, it is necessary to develop a stronger traceability mechanism that has the ability to be unalterable, generating trust in international buyers. For that purpose, this research will attempt to apply the block chain technology to the cocoa supply chain. This technology, invented in 2010, allows to show the traceability of any final product without centralized servers (Ge, Brewster, Spek, Smeenk y Top 2017).

This paper is divided into three sections: the performance of the cocoa value chain and the issue to be addressed, the fieldwork and proposals to improve the value chain, and, finally, the research findings.

For this reason, the objective of the project is focused in the proposal of applying block chain to the cocoa export supply chain, in order to identify and attack the factors that limit the international markets’ access to information in real time.

As a consequence of the foregoing, it is necessary to answer the question, what are the factors that affect the cocoa logistics chain? The specific questions answered throughout the project are the following:

How important is it to count on a product and/or input traceability in real time? How could information uncertainty be reduced?

It is important to indicate that the hypothesis which this project maintains is that the logistics chain’s participants don’t have an adequate tool capable of providing digital traceability of information in real time.

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