Discussion Paper No. 335 of 2024 on Using Blockchain Technology in Advancing Information Flow in Kenya’s Avocado Value Chain

Abstract

Blockchain technology (BCT) can provide a channel for efficient information flow that is necessary. This study sought to advance information flow in the avocado value chain using BCT. Despite developments such as contract farming, integration of ICT systems, and extension services; the avocado value chain faces numerous challenges among them inadequate market information, weak vertical-horizontal linkages, and post-harvest losses. This has negative impacts on avocado production and export sales due to uneven distribution of profits among the producers. The study identified that for the implementation of BCT in the avocado value chain, various driving forces directly influence its use. The key drivers include little expertise and insufficient knowledge of using BCT either at a single point or multiple points of the value chain, and low scalability of BCT limits the number of users and volume of transactions. High initial costs associated with acquiring BCT, especially for smallholder farmers, can lead to a monopoly situation over time for those who can pay for it. There is a need for immutable records for the avocado value chain to help store information safely and permanently. The presence of intermediaries can lead to information asymmetry in local and international avocado markets. Limited policies and laws on BCT pose challenges to compliance concerning food safety, traceability, and transparency. Standardization for integrating BCT seamlessly with the current system is inadequate while issues of data privacy and cyberattacks among others require solutions. The impacts of these driving forces on each other can lead to effective use, early adoption, late adoption, or low use of BCT. To address the future scenarios of low use and late transition of BCT, the study recommends formulating comprehensive legal and regulatory frameworks to govern and support innovations while mitigating potential risks. This will improve compliance and guarantee fair compensation to smallholder farmers. Building capacities for strengthening the national ecosystem through technical skills development for professionals, education, and training for farmers will accelerate the adoption of BCT thus improving avocado yields. Increasing the engagement with global digital governance through supporting investments and partnerships in BCT use, will promote sustainability in the avocado value chain.