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Towards a Blockchain Based Supply Chain Management for E-Agro Business

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 Towards a Blockchain Based Supply Chain
Management for E-Agro Business System

Sm Al-Amin1 , Shipra Rani Sharkar2 , M.Shamim Kaiser3 and Milon Biswas4 ,

Bangladesh University Of Business & Technology

smalamin.piash@gmail.com1 , Shipra.sarkar.cse@gmail.com2 ,
shamimkaiser@gmail.com3 milonbiswas4702@gmail.com4

Abstract. Considering the overall situations of cultivator’s economic

degradation, food safety chain issue, and whole food supply chain, newer
technologies are emerging in the field of agriculture over time. If we look
at third world countries, these traditional food supply chains still play the
main bearish down prediction. For the result, if any customer deceived
by adulterated foods then in most cases he/she could not get the original
source of the food where it was produced or processed. And in this case,
also the administration cannot make this possible to identify and punish
the fraudsters. This is where the fraudsters get the opportunity to mix
adulteration in foods, put new expiration on expired foods, and release
them in the market. Again because of the lack of efficient distribution
facilities between cultivators and industrial or last stage vendors most of
the cases cultivators could not get fair pay. And to solve this problem
and set explicit or trustworthy communications, the civilization needed
immutable and trustworthy technology so that all these problems can
be solved. And in that stage Blockchain comes to the picture. In this
research paper, we propose an effective, efficient, and satisfactory model
or system and service solution to agro traders and also a food traceability
system based on blockchain and the help of IoT to make their business
more smart and rich. And through the blockchain, smart contract, and
the help of IoT sensors we tried to do maximum effort to reduce human
intervention.

Keywords: Blockchain, smart contract, IoT, agricultural supply chain,

food traceability, food safety.

1 Introduction
In the states of the computer world, the fastest growing technology gets over on
each other continuously to prevalence in the technological universe. The curtain
of these simultaneous improvements of technology is only for necessities and for
exalted life schemes. For decades, agriculture has been associated with the pro-
duction of essential food crops. At present, agriculture above and beyond farm-
ing includes forestry, dairy, fruit cultivation, poultry, beekeeping, mushroom,
arbitrary, etc. With 40% of the global workforce, the agriculture sector presents
only 6.4% of the entire world’s economic production [1]. But sadly, lack of proper
treatment of agricultural cultivation and for the transportation process, tons of
2 Sm Al-Amin et al.

tons harvest has been destroyed every year. Food safety is so important that
49% of shoppers showed interest that they’ll pay extra for products that have
top high quality/safety standards. Basically in the absence of a proper supply
chain process that catastrophe has been occurring every year. Still, most of the
cultivators depend on the traditional food supply chain procedure that is costly,
sometimes often non-profitable because tons of crops are destroyed. Also to drive
these supply chains, cultivators or investors have to fall in difficulty because of
transactional security purposes often. In the traditional food supply chain, by
mixing of different quality products it is not possible to regulate the food con-
dition when it comes to the customers. With its continuity, it is the high time
to bring the touch of modernity in the agricultural sector through Blockchain
technology.

Fig. 1. Flow diagram of traditional supply chain management for agro business.

Now everyone would like to know where the food has been produced before it
is served on the plate. Is this food quality safe for their family or people? Do
these production houses produce this food through following the proper guide-
line or not? To get the solution for all of the necessary question’s answers and
to get the proper privilege of a supply chain the Blockchain comes to the pic-
ture. Because nowadays blockchain is the perfect technological weapon for e-agro
business toward the next level. In 2008 blockchain was invented by a person us-
ing the name Satoshi Nakamoto to serve as the public transaction ledger of the
cryptocurrency bitcoin. So the technology behind bitcoin is blockchain. Many
people know it as the technology behind Bitcoin, but blockchain’s potential uses
extend far beyond digital currencies. The technology can work for almost every
type of transaction involving value, including money, goods, and property. So
why not for agricultural improvement! That’s why our goal is to improve the
supply chain process effectively through blockchain and make a secure transac-
tion connection between two-sided creditors. Through blockchain, our hope is to
shrink the traditional supply chain process that was involved in various types of
 e-Agro using Blockchain 3

complex characters to fulfil the whole supply chain process. Hence, blockchain
comes to the pictures to solve these complex untrusty procedures into a trustful
model. So that people can trust the transactional process and get immutable
evidence of all data among unknown trade holders.

2 Related Work
Blockchain is an emerging technology. Because of requisite technology nowadays
many researchers and technologists are trying to invest their highest potential-
ity to use the blockchain in many desired segments. For this reason, there are
numerous publications and case studies in the field. In this section, we review
and highlight related work found in the literature on blockchain applications for
agricultural supply chains. Though the use of blockchain banking, finance and
insurance industries have been increasing steadily, agriculture is scant and just
started to gain popularity.
In case of providing an idea of traceability in agriculture, Tripoli and Schmid-
huber [2] discuss an application which is a combination of distributed ledger
technologies (DLT) and smart contracts. The authors identify the barriers of
technical limits and try to facilitate a better understanding of the opportuni-
ties, benefits and applications of DLTs in agri-foods. Gandino et al [3]. (2009) for
traceability management, proposed a framework for the evaluation of a traceabil-
ity system for the agri-food industry. This framework based on Radio-frequency
identification (RFID) technology attached to products in a fruit warehouse con-
sidering both internal and external traceability. Let’s go back three years ago,
Feng Tian [4]proposed a food supply chain traceability system for real-time
food tracing based on HACCP (Hazard Analysis and Critical Control Points),
using blockchain and the Internet of things. Also, The author blames the cen-
tralized system is vulnerable to collapse by fraud, corruption, tampering and
falsifying information. Previously, [5]The author(Feng Tian) analyzed the ad-
vantages and disadvantages of using Radio-Frequency Identification(RFID) and
blockchain technology for agri-food supply chain traceability systems. Especially
through the case study, Holmberg and Aquist [6]has shown the implementation
of traceability in the dairy industry based on blockchain. Also [8] Lei Hang pro-
posed a blockchain-based fish farm platform basically for ensuring agricultural
data integrity. Because the main concept in the paper is about how to get se-
cure and transparent agriculture data using the blockchain instead of messy and
mutable data for commercial analysis. [7]Khaled Salah proposed an approach of
blockchain-based Soybean traceability in agro supply chain. Caro et al. [9]present
Agri-Block IoT, they have given much emphasis on the case of traceability by
producing and consuming digital data along the chain using IoT in the food
supply chain.Lucena et al, [10]present a method of grain quality measurement
considering blockchain as a new type of distributed database and transactions
can be generated and ruled by using smart contracts.
According to those relevant work, it’s pretty obvious that a growing trend is
adopting Blockchain technology for enhanced information security and authen-
tication in various criteria not only other banking or industrial security purposes
but also agro-food supply chains. Our aim is to emphasize all transactional and
4 Sm Al-Amin et al.

locations information from cultivator to customers and also besides that provide
the facility about the transaction between the cultivator and industrial through
a smart contract for cultivators fair pay.

3 Blockchain Based Supply Chain Management for

E-Agro Business System
In this section, we describe our proposed solution through our E-Agro business
approach and how every stakeholder gets fairly benefited through implement-
ing the model in real life. In the blockchain model, every stakeholder enrols as
a node hopping for-profit and according to keeping this in mind,we design the
overall system process. And this model is not only suitable for the cultivators
and traders but also for customers food safety as well as for the government’s
investigation.

Fig. 2. Flow diagram of our proposed agro-business supply chain management using
Blockchain.

In the above model, cultivators contact factory owners to sell the particular
amount of harvest and after arbitrating the cost about the vocation of the har-
vest, the full load of vehicles is going to chase on the way to the factory.When
the harvest gets fully loaded into the factory then the smart contract automat-
ically executes and notify the factory owner’s bank for starting transactionthe
predetermined money into the farmer’s bank account.So, the cultivator was not
deprived of his fair pay. Then the workers are going to start the food process-
 e-Agro using Blockchain 5

ing and after that to find buyers, the owner posts a declaration for selling the
produced food through a smart device. Then after a bunch of bargaining, the
buyers buy the product from the seller of the factory and again posts to sell the
products to the customers.But between traders, the transaction process will be
occurred by cryptocurrency instead of banking. The whole transaction process
and its data are saved in the blocks of blockchain through smart contracts.
As evident from those processes, any activities can be documented and stored
in blockchain through a smart contract.
3.1 Smart Food Traceability System
Since, the main purpose of integrating blockchain technology in the food industry
for food traceability in the e-Agro business model, so, we can be assured to this
fact that according to characteristics blockchain is a promising technology for
the food safety traceability system. If any customer deceived by adulterated
foods and wants supervision about the source of the food then it’s quite possible
to trace. Because the location of providence, where the harvest was cultivated
and stored is indicated also the main important fact that when the food was
processed is stored in the blockchain. By using a smart traceability system in
the food supply chain govt authority can take significant steps to identify a
fraudster in the food industry.

4 Why Blockchain Is Secure

Blockchain works on the peer-to-peer network which simply means by assembling
multiple nodes by authentic connection and doesn’t need any central server. So,
the simplest way to explain blockchain is like a series of data blocks where each
block contains a unique hash number and also contains previous block’s cur-
rent hash value so that, through this, it could be linked up with the previous
block. But still, People have four concerns about blockchain. Those are a. Con-
fidentiality b.Integrity c. Non-repudiation and d.Authentication. So, how is it
possible to solve these four problems and that’s where the concept of cryptogra-
phy arrives to solve all these four concerns. It has a concept of encryption and
decryption and in this case, asymmetric key cryptography comes to make the
whole architecture actually secure. Asymmetric key cryptography also is known
as public-key cryptography but basically two different keys are used here one is
a public key and other is the private key. So,
All this network has multiple nodes and each node has a public and private key
so to encrypt or decrypt any data we need to use both keys at the same time,
not one like a symmetric key. Each transaction is signed with a private key and
then can be further verified with a public key. And the signature becomes invalid
for different transaction data.
As a result blocks of the blockchain just ignored and won’t make it to the chain
as a new member block.
But another concern also comes for blockchain security purposes, and that is
about the malicious node. What if mining becomes too easy and needs less time
and that’s why spammers get a chance to enrol into the chain and be able to cre-
ate so many identities in the network through mining blocks. And 52% of nodes
6 Sm Al-Amin et al.

Fig. 3. Securely hashing data flow in blocks of blockchain.

are capable of changing /attacking the whole chain and the longest chain rule
is already being established as a trust issue. So to remove the malicious nodes
and make the time delay for mining, the proof-of-work(POW) algorithm was
invented. The main benefits of the POW algorithm are the low impact of stake
on mining possibilities and anti-Dos attack. The main mechanism for making
transaction delays is ‘difficulty’. By using difficulty and insert nonce value in a
block, it’s possible to make changes to a little or massive portion of hash value
into the desired number of zero or any other choice able number. It makes min-
ing a challenge for the miners and that’s why the only real miner shows interest
to add blocks by mining. And still, by the theorem of the longest chain, it takes
the position of the irrevocable trusted chain.
The formula of difficulty looks like,

Fig. 4. Computer System is maintaining transaction delay according to the desired

time interval(10 minutes time interval here).
 e-Agro using Blockchain 7

new-difficulty = old-difficulty * (targeted block’s implement time/actual time

waste of equal blocks implement)
If difficulty changes after 2 weeks then equivalent minutes is 20160. And if the
expected mining time interval is 10 minutes then 2016 blocks create in 2 weeks.
But if the machine becomes powerful and creates a new block within 9 minutes
then the approximate times for creating 2016 blocks = 18144 m.
let the old difficulty = 5, then new difficulty formula is,
new-difficulty = old-difficulty * 20160/18144
= 5*1.11111
= 5.55 (increase 0.55)
Hence, if expected blocks number == actual blocks number then difficulty
change is equal to zero. The value of Difficulty is changed to control the trans-
action of each block on exact time when the machine power is high or low.
4.1 When And Why should ’Difficulty’ be used or not?
’Difficulty’ is nothing but a value defined by a system that is basically used to
show how hard is it to find a hash value that will be lower than the target. Since
the main goal is to use ‘difficulty’ in blockchain particularly for making the time
delay of any transaction adding a new block, so in the case of cryptocurrency
transaction process by blockchain, that means, coin transfer from one node to
another (like a transaction between traders in [fig:2]) ‘difficulty’ is emphatically
important to keep the security and overcome for enrolling any spammer. Other-
wise, if we need to deploy blockchain as a quick data or message transfer tool then
‘difficulty’ approach is not the best place for applying.But in the case of banking
transaction process by blockchain is not appropriate for using ’difficulty’(Like a
transaction between cultivator and trader[fig:2]).
5 Why Blockchain is in the Supply Chain Management
System
The supply chain industry is huge and it’s only going to grow over time all over
the whole world markets particularly on the coast of Africa are going to grow
exponentially over time and parts of developing countries as well. Any products
that we see in our office/home/industries it follows a path of intermediaries to
get from the factory where it was manufactured to us.
That chain includes manufacturers, procurement officers, people who are quality
inspections officers, distributors, suppliers etc. That means a dozen intermedi-
aries in between the process. As a result, a lot of data can get lost, or any of
the intermediaries could easily modify that data properly to fit their best inter-
est. And there’s not only one company in the supply chain, multiple companies
involved in this. So the problem is that all have competing interests and for a
reason, one trader should have to trust all of them. These vulnerabilities create
a transparent issue in the supply chain and make a significantly worse impact on
the supply chain in the worldwide sustainable business. So trust is a big problem
when it comes to a supply chain. Also, It’s difficult for small businesses to get
into the game, because usually manufacturers only want to deal with big com-
8 Sm Al-Amin et al.

panies. And that’s why small companies have to provide some of their authentic
information for the verification process. So again it comes down to trust issues.
Supply chain as of now the biggest industry for blockchain. Blockchain is being
used as a way of making the supply chains more secure, transparent and efficient
for sustainable business. If we look at the 2018 PwC global survey of Blockchain,
financial service industries are using the most advanced blockchain technology
in development nowadays. Also along with financial service, industrial products
and manufacturing, healthcare, government, the sector of entertainment and me-
dia is adding their footsteps in the blockchain.

Fig. 5. Statistics of Industries, those are most advanced in developing through

blockchain.PwC-2018 [Total =! 100 % cause Blockchain-based industries are not equal
to 1% of overall industries yet.]

Even, blockchain in cryptocurrency might provide a decentralized unit to con-

duct monetary by spreading its operations across a network of computers by
surpassing local and international regulations.
Hence judging by the criteria of necessity, the viability of blockchain technology
has open doors through supply chain management(SMC) and manufacturing. It
has created the logistics and handling industry within the realms of the interna-
tional economy in terms of workforce, investments, and sheer size.

6 Smart Contract For e-Agro Business System

The smart contract is a piece of code for computer protocol intended to digitally
facilitate, verify, or enforce the negotiation or performance of logics for credible
transactions without third parties.So, If we are talking about smart contracts
then the 1st question is about, why should we trust smart contracts? And the
 e-Agro using Blockchain 9

answer is pretty simple and that is, smart contracts are stored on a blockchain
and inherit some properties. They are immutable and distributed. Once a smart
contract is created, it works according to the logic of instruction and never
be changed again.So it cannot be possible to release some funds by forcing or
tempering from a smart contract.Because that time other stakeholders in the
network will spot the attempt and make the proposed as invalid.

Fig. 6. Through Smart Contract, farmers can get predefined fair pay. Even by dealing
with unknown traders.

In our model, smart contracts are used for three portions, one for building trust
between cultivator and factory owner about money transaction.Even with un-
known a trader.Second, for cryptocurrency transactions between traders. And
other for fetching food traceability, processing and traders business informa-
tion into the blockchain. In the first portion, the bank connects with this smart
contract as a stakeholder or partner in the network. That means this smart
contract’s executed value or instructions also be validated by the bank. And
all other smart contracts used as information collector and food traceability for
customers and the government respectively.
After fully loading harvest into the factory,the factory owner cannot stop or
reduce the predetermined amount of money. Because in this cases, the factory
owner is also just a stakeholder in the network. But if the fully loaded harvest
fails to arrive at the factory then the predetermined amount of money’s control
automatically goes back to the factory owner’s bank through the smart contract.
According to this approach, the smart contract can play a significant rule for
building trust issues even if between unknown traders.

7 Conclusion
Blockchain technology provides an open platform for both suppliers and buyers
to negotiate for reasonable prices of their goods. Suppliers can make direct mobile
 10 Sm Al-Amin et al.

payment transactions to the buyers. That eliminates intermediaries and brokers.

Digital technology like blockchain can reduce the traditional food supply chain’s
vulnerable cornerstone into secure and efficient supply chain through imple-
menting our proposed model[Fig:2].Our future plan is to connect the blockchain
verification system with the banking section. So that cultivators can easily get
the advantage through it. We could use blockchain cryptocurrency system for
money transactions, that we already showed in the model [fig:2] for other traders
through the smart contract. But considering the lack of education for most of
the cultivators, we think it is not well enough to understand the blockchain
cryptocurrency procedure to them. Though Blockchain is the main centre point
in the e-Agro business system, IoT device also plays a significant role. In this
model IoT device used for reducing manual recording and verifications. IoT sen-
sors send information of locations in near real-time and then that activity would
be documented stored in a chain through a smart contract. In the digital era,
technology can be a momentous pillar for the transformation of the food supply
chain and blockchain is one of the unrivalled solutions for this.
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