Can digital blockchain technology improve working conditions in the Global South?

Can digital blockchain technology improve working conditions in the Global South?

An Indonesian worker prepares stacked bunches of oil palms for transport to a refinery in Indonesia.

(Laura Villadiego)

Viewed from above, the shrimp farms that dot the coast of Thailand’s Surat Thani province form a watery mosaic of pools. The view from the ground, however, presents a different picture: most of these farms are hidden behind high walls, and information about what goes on behind them is hard to come by.

The fishing industry in Thailand, the world’s leading producer of shrimp, has been the subject of years of criticism for its opacity as well as numerous labour abuse scandals at various stages of the production chain. Despite reforms undertaken by the government in recent years, fish farms continue to be a major point of contention in the industry.

“Aquaculture workers [in Thailand] are usually hired from other countries, like Myanmar [Burma], and live on-site at the fish farms. Conditions are often harsh as work is performed under the sun,” says data scientist Juliette Alemany of FairAgora Asia, a Thailand-based consultancy firm specialising in traceability in the food industry. Hidden behind these walls, some companies don’t always register their employees or respect existing labour laws.

But a simple mobile application developed by FairAgora Asia could help to change that by providing a virtual peak behind these walls and shedding some light on what goes on in these fish farms.

Based on digital blockchain (a shared register that guarantees the veracity of internet operations) technology, FairAgora Asia designed its digital platform VerifiK8 to help companies monitor and report on their working conditions and environmental footprint.

“It’s a digital tool that monitors the social and environmental impact [of companies]. It checks social parameters [provided by the companies] against production data to find out whether companies along the production chain are on the ‘red’ or ‘green’ side in terms of their impact,” says FairAgora Asia founder Emmanuelle Bourgois.

As Bourgois explains, along with other values, the application can verify the actual number of hours worked by comparing it to production levels, and determine whether companies are committing fraud in their labour reports. According to the US Department of Labour’s latest report on child and forced labour, child labour has been found in Bangladesh and Cambodia, forced labour in Burma, and both forced and child labour in Thailand in these respective countries’ shrimp industries.

Blockchain is a protocol that allows for data blocks to be shared between individuals in a process in which the different parties involved confirm the information. It is considered to be a secure, democratic and decentralised technology as none of the parties have control over the data and consensus is required to alter it. “Blockchain can be a game-changer when there are multiple stakeholders involved, especially in exporting focused businesses,” explains Om Prakash Routray, Vice President of SourceTrace, an India-based consulting firm which is also trying to implement this type of technology in other areas, such as the cotton industry.

The data in blockchains is also permanent. “Once it is stored, you cannot modify the original document, it is a fixed point of information, you can only add layers of information to update the document. But you will always have this initial copy saved” says Alemany.

Though blockchain was originally developed in 2008 to support crypto-currencies, specifically bitcoin, its use has spread to a number of other sectors that require secure information transactions.

“It’s definitely a solution that makes a difference because with blockchain you are able to ensure once the data is in the system that it is reliable. [Moreover] it provides the level of transparency across the supply chain that is required,” says Kamales Lardi, CEO of Lardi & Partner Consulting GmbH, a consultancy that specialises in improving digitisation in companies.

Like FairAgora Asia, Lardi’s company is trying to apply this technology to another controversial industry: the palm oil industry. The world’s most consumed vegetable oil has been linked to deforestation, child labour and forced labour, among other practices.

Through its Malaysian subsidiary BloomBloc, Lardi & Partner Consulting is developing a pilot project for the Malaysian Palm Oil Council (MPOC), a lobby that represents the industry’s interests in the Asian country. The application allows for individual bunches of oil palm to be identified and tracked on their way to a refinery so that each one can be traced to its plantation of origin. As Lardi explains, the data is also available to the various stakeholders involved, with the aim of increasing the industry’s transparency and credibility.

No worker without a contract

The agricultural industry is often synonymous with informal work, especially in regions like Asia, where almost 70 per cent of the employed population works without a contract. This not only makes workers targets for labour abuse but also negatively impacts their professional future. “One of the things that we noticed is that many workers in aquaculture sometimes don’t even have written agreements, only oral agreements, and they don’t have any tracking or record of their past activities or jobs,” explains Alemany. To address this problem, FairAgora Asia’s application includes a profile of each employee that records a kind of CV, which they can use later when looking for a new job. “Even if there is no paper-based working contract there are certain data points [approved] and it is better than nothing,” she continues.

The BloomBloc platform also verifies that each bunch of oil palm is associated with a worker who has a contract and whose documentation has been verified, especially if that worker is an immigrant.

“We monitor what happens from the plantation to the mill, which is the hardest piece to trace because 40 per cent of the industry are smallholder plantations,” explains Kamales Lardi. The system also allows for other more technical elements to be monitored, such as humidity and temperature, if the necessary sensors are installed.

But as Om Prakash Routray of Sourcetrace explains, consumers will ultimately determine the success of these projects: “The conversation has been going around for a long time but […] now what we are seeing is not only big businesses [implementing this kind of technology], also small ones.” This is due to the fact that consumers are increasingly willing to pay higher prices to finance greater transparency in what they buy. “Now businesses can probably get 10 per cent or 15 per cent more if you can tell the story [of your product]. This can be dramatically improved by consumer demand,” says Routray.

Indeed, these consultancy firms are also adapting their platforms to help producers, particularly smaller ones, obtain sustainability certifications. FairAgora Asia has initiated a pilot project in Vietnam, for example, while BloomBloc and Sourcetrace are working with frameworks such as the Roundtable on Sustainable Palm Oil and organic certifications.

However, the learning curve required to use these applications can be steep for small-scale producers. “The weakest point of the blockchain in the supply chain is really around data entry. So we are trying to make data entry as non-manual as possible to make sure that data is trustworthy,” says Lardi. FairAgora Asia’s pilot programme includes specific training in recording all of the data. “It was a long process, but it was a very nice success story,” says Alemany.

This article has been translated from Spanish.