The blockchain panopticon to secure the beef supply chain
A panopticon is a conceptual prison, with a central tower at its heart. Prisoners would be unable to tell if they were being watched from the tower at any given moment, and so would have to behave as though they were watched constantly. The panopticon has been used as a metaphor for effect that surveillance and regulation have on regulating behaviour since it was first proposed in the 16th century, usually to highlight its more insidious and coercive powers.
However, unlike the original panopticon, with its one centralised ‘watcher’, recent innovations in blockchain technology allow for the development of a de-centralised network of watchers, where each voluntary participant is not only watched by others in the blockchain but is themselves a watcher, facilitating a technologically enforced and voluntary self-regulatory system of remarkable flexibility.
The most basic way of conceptualising the blockchain is of a record of transactions, with each link in the chain of transaction building off and referring to the others in a way that exponentially increases security. This innovation has greatly benefited more secure digital transactions and record keeping, as well as facilitating smart contracts (blockchain programs that automatically execute when pre-set conditions are met, resulting in self-enforcing contracts).
One emerging use of this technology is the authentication of food security in the beef supply chain through the Beefledger project. This industry led initiative seeks to house key data from the Australian beef supply chain in a blockchain ledger to allow for greater transparency, monitoring of biosecurity issues and increased trust in the export process.
This is increasingly necessary, as interconnected global supply chains now involve many actors spread across many legal jurisdictions. Traditional centralised regulatory processes have shown to be inadequate for addressing the potential for fraud, safety and animal welfare issues this new paradigm entails. Several high-profile regulatory failures have threatened consumer trust
in the supply chain, particularly in high growth economies like China that present critical markets for Australian suppliers.
The Beefledger project seeks to address these concerns through the creation of a ‘voluntary common knowledge association.’ Distinct from an association with legal-status, Beefledger is a project that seeks to connect producers, distributors and retailers to voluntarily share information critical to the security of the supply chain. For example, as a cattle owner gains new cattle, they scan the NLIS ear tags of the animals and upload them onto the blockchain. This transaction would then be verified and voted on by other member of the chain (similar to how a blockchain financial transaction is verified by nodes), who would determine if the record is authentic and should be recorded to the ledger. In this way, the different members of the Beefledger act akin to miners within a typical blockchain system, although in an inherently more human-centric capacity.
Each action of the cattle through their lifecycle from farm, to feedlot, to abattoir, through to packaging, export, and sale to consumers can be potentially recorded onto the chain in a way that allows the agriculture community to provide a transparent and decentralised self-regulatory system, where the different actors in the supply chain act simultaneously as both ‘watcher’ and ‘watched’. The various actors in the chain are incentivised to have their actions verified, and to hold other actors to the same standard, to ensure consumer trust in the overall Beefledger.
This paper explores the legal and ethical framework around the use of blockchain in law and governance, as well as the specific implications of the Beefledger project.
Key findings
1. The ‘panopticon’ as a regulatory model only works if all actors have reasonable suspicion that they are being watched at any given moment and fear the regulatory actions of the centralised ‘watcher’.
2. Global supply chains stretching across multiple jurisdictions inherently undermine the traditional centralised regulatory systems in place, by increasing the distance between actors and regulators and increasing confusion as to what each ‘watcher’ is supposed to be watching for. This results in the erosion of the minimum standard, or ‘regulatory floor’, resulting in some actors being largely unaccountable and undermining consumer faith in the whole supply chain.
3. To address this, regulation systems need to move away from centralised observation/punishment-based enforcement and capture the self-interest of the majority who are complying with standards to help enforce these standards.
4. Rather than compelling supply chain actors to modify activities for fear of punishment, self-regulation ecosystems can be designed for transparently and dependably reward actors who demonstrate achievement of outcomes ‘above and beyond’ bare minimal standards.
5. Blockchain technology provides the digital foundation upon which to build this voluntary ‘common knowledge association’, with supply chain actors assisting in validating the actions of other actors to ensure mutual compliance with the voluntary standard.
6. Beefledger represents a new cutting edge in this technological industry self-regulation, facilitating both the transfer of assets through a supply chain, but also the tracking and registration of these assets to allow for the transparent assessment and validation of supply chain security by all other actors in the chain.
Conclusions
The issues with the beef supply chain, and questions of consumer confidence in markets such as China, are not issues limited to the agriculture industry. Our globalised economy has resulted in many industries facing the same failures of regulation and enforcement. This paper highlights the importance of benefit enhanced voluntary association as form of industry self-regulation. In these associations, reward mechanisms are tied to transparency, rather than traditional systems that see observation only as it is associated with punishment and enforcement.
As consumers demand greater transparency in the supply chain, we will only see this approach become more necessary as concerns such as fraud, biosecurity, and environmental costs will be regulated to one minimum standard while also demanded by customers at a higher one.
The Beefledger system provides a framework through which other industries can adopt similar technology based self-regulatory systems, leveraging the potential of blockchain technology to support robust and transparent supply chains.
Researcher
Mr Lachlann Robb (Faculty of Business and Law)
email: l2.robb@qut.edu.au
More information
The research article is also available on eprints.