Grains, coffee, cocoa: consuming these foods contributes significantly to global deforestation. This particularly affects the tropics, where farmers produce many items we consume in Germany and the EU. According to the FAO, 90 percent of deforestation in the tropics is caused by agriculture. Producers cut down trees and forests to make room for agricultural land.
According to a study published by Nature Climate Change in 2021, the Amazon is already emitting more greenhouse gases than it absorbs. This is as a result of deforestation.
Without effective forest protection, we will jeopardise all climate targets. And agriculture also depends on intact forests and the services they provide.
The EU anti-deforestation regulation is designed to protect forests
The EU Anti-Deforestation Regulation (EUDR) came into force in the summer of 2023. Companies must implement it by the end of 2025. Among other things, the EUDR stipulates that raw materials such as coffee, cocoa, natural rubber, palm oil, beef, leather, soya and wood may only be imported into the EU if they have been deforestation-free since 2020. In this way, the EUDR rewards companies that are already committed to deforestation-free supply chains. Meanwhile, companies must address all other measures for deforestation-free agricultural supply chains.
For companies, this means that they must collect information under the EUDR on whether their agricultural raw materials originate from deforestation-free and legal production. They must also carry out a risk assessment. If they fail the assessment, they must take measures to address any risks. This includes, for example, supporting small farmers.
“The EUDR is an important concern for forest protection, but it requires a high degree of transparency and availability of information on the product origin and manufacturing process. Many supply chains haven’t achieved this yet,” says Axel Schulte, who is responsible for the ForestGuard project with his team at the Fraunhofer Institute for Material Flow and Logistics (IML). This is a particular challenge for smaller producers. “Their customers in the EU, i.e. importers and retailers, suddenly have a high demand for reliable, first-hand information. Producers must fulfil this need if they want to continue supplying their products to the EU market.” However, often this information is either not available at all or doesn’t contain enough detail.
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ForestGuard wants to close data gaps in the coffee supply chain
The ForestGuard project is working on a solution to facilitate transparent verification of deforestation-free supply chains. The IML team use an open source solution based on blockchain technology. “The project builds a data bridge from the producing countries to the consumer market in the EU,” reports Roman Koller, the project manager responsible for ForestGuard at Fraunhofer IML.
The team initially implemented the technology to track coffee supply chains. There is a good reason for this, as Germany is the second largest coffee importer in the world, reports Koller. “The importers, roasters, retailers and consumers based here have great power over the market. They should also be responsible for implementing measures for more sustainable production and consumption.”
But how exactly does blockchain work in the coffee supply chain?
All actors in the supply chain are connected to the blockchain network with their own accounts. As cocoa and coffee producers often belong to cooperatives, the cooperative leader can collect and process data for their members. Producers use the ForestGuard system to collect tamper-proof information on their supply chain. They also maintain sovereignty over their data, which they can make available to third parties.
From the freshly harvested coffee bean to the supermarket shelf, all steps are stored as data in the blockchain network. This includes product descriptions, the geodata of the relevant cultivation areas and proof of ownership. Most important is the evidence that these areas are deforestation-free. The evidence could be in the form of certificates issued by service providers, government agencies or local authorities for a particular area, or even satellite images. “In the end, all information that helps the reporting customers at the European end of the supply chain to prove compliance with the requirements is helpful,” says Schulte.
This provides those at the end of the supply chain with reliable information on where exactly each batch comes from. If products are imported into the EU, this information can also be used for due diligence declarations to the EU information system.
Blockchain also allows smallholder producers to better manage their harvests via seamless accounting of areas and yields.
Decentralised data management democratises supply chains
According to Axel Schulte, the advantages of the blockchain solution are that decentralised data management reduces dependencies on individual providers or institutions. “At the same time, it democratises [food] supply chains a little more. Smaller players at the origin of the supply chain are more involved in data collection and information exchange and have more control over the use of their data and product information.” In addition, distributed ledger technology in conjunction with smart contracts offers the opportunity to organise processes and decisions largely automatically and autonomously.
To ensure that the solution really fits in with the reality of life for smallholder farmers, a scientific team from Fraunhofer IML travelled to Pichanaki in the Junín region of the Peruvian rainforest in the summer of 2024 as part of the project funded by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMUV). Here, the team accompanied the entire process chain on site, from coffee cultivation and harvesting on the local coffee plantations to preparation for shipping to Europe. The insights gained from the coffee farmers’ everyday lives have been incorporated into the project’s further development.
In order to adapt their solution for deforestation-free supply chains to the needs of local people, the ForestGuard team visited farmers in Pichanaki, Peru. Open Source: Public money—public code
So that ForestGuard’s blockchain solution is usable and adaptable by other sectors and companies, it was developed as open source software without being dependent on a single commercial provider. “As a federally funded project, the principle of ‘public money—public code’ applies. There should be no de facto promotion of individual companies. We have therefore chosen an open-access approach. This facilitates the transfer of practice in order to achieve the fundamental goal of slowing down forest degradation through more transparent and sustainable supply chains,” says Koller.
But how sustainable is blockchain technology itself? Public blockchains such as Bitcoin in particular are often criticised for their high energy consumption. “Of course, it is not enough to measure the sustainability of a technology by its energy consumption alone. However, this applies even less to ForestGuard as a permissioned blockchain, as it is generally less energy-intensive,” reports Schulte.
What is a permissioned blockchain?
In contrast to the Bitcoin blockchain, for example, which is public and theoretically available to everyone, a permissioned blockchain is a blockchain network in which access rights are required in order to participate. For example, only selected members or a central organisation can validate the transactions.
While public blockchains such as the Bitcoin network rely on a lot of computing power to validate the high number of transactions, permissioned blockchains do not have this problem.
The ForestGuard open source code was published at the end of January 2025. The transfer into practice is planned for spring 2025 and potential users will be approached.
Currently, supply chain information is only recorded on-site and then made available via the blockchain. It is not always possible to check whether the data is actually correct. As on-site checks are hardly possible for every production site, AI-based tools could also be used for this in the future, according to Axel Schulte and Roman Koller. The Fraunhofer Institute is also planning follow-up projects for transfer to other supply chains.
