Can digital value chain tracing drive the sustainability transition? A closer look at Peruvian cocoa

Key messages:
- Growing consumer demand for agri-food commodities grown under responsible social and environmental conditions creates financial
incentives for the private sector transition towards sustainable sourcing.
- Verifying farming sustainability is challenging in smallholder context due to complex supply chains. But novel digital technologies allow
tracing commodities back to farms of origin, enabling increased transparency on farm-level practices.
- Implementing digital traceability systems requires commitments by various value chain players, so financial gains from higher market
demand must be shared equitably.
- Given limited external supervision, careful choice of sustainability metrics is important to ensure data accuracy and to limit opportunities for fraud.
- Setting up tracing systems may require investments in farmers’ digital capacity and co-design of user-friendly interfaces. Where increased consumer demand does not cover costs, public payments for ecosystem services can uphold incentives for farmers’ sustainability transition.