Why should value chains be transparent?

Information asymmetry is an economic concept that describes transactions where one party has more or better information than the other, creating an imbalance of power, leading one party in a transaction to unfairly benefit at the expense of the other. While the concept may seem somewhat theoretical, its real world consequences are felt in everyday dealings between actors from the most powerful governments and corporations to street vendors and villagers across the world. In the context of smallholder miners or mineral producers, which contains a large and at times complicated number of value chain actors, unequal access to information leads certain actors to be on the losing end of the transactions that take place within the value chain.

Another example, smallholder farms in sub-Saharan Africa number around 33 million, represent 80% of all farms in the region and contribute up to 90% of food production in some sub-Saharan African countries.1 Because of their relatively weaker position vis-a-vis the other value chain participants (in terms of finance, education, rural location and other factors), the smallholder farmer is often the one who is significantly more affected by unequal or insufficient information. While this gap in information is most acutely and directly felt in terms of markets and price, it is also equally pervasive in the planning, production and post-harvest management aspects of smallholder agriculture. For that reason, most of the interventions that seek to address the lack of information transparency affecting the farmer primarily target the market aspect, followed by the other areas.

Still, while the farmer remains the key beneficiary of projects intended to improve transparency in agricultural value chains, access to information is not a zero-sum game. Even as farmers receive better access to the information they need, other actors in the value chain have also sought to address their respective information gaps. To this end, second to the farmer, no value chain participant has received more attention in recent years than consumers, whose increased interest in knowing the source of the food they consume has led to a new emphasis on traceability.

Open data can play a pivotal role in breaking down the asymmetry of information that exists between value chain actors, making them more accountable to citizens, civil society and to other actors in those value chains. It can do so in several ways.

Pioneering transparent value chains in Africa, Bluegate Madini VeChain ID (“VID”) is a unique cryptographic ID that is stored on the VeChainThor blockchain. VID identifies physical products or data sets and links the digital identity on the blockchain with the physical world by binding with QR codes or IoT tags. All the process data uploaded to the VeChain ToolChainTM platform is linked with VIDs.