- Merck KGaA, PwC Germany and The Hashgraph Group are piloting a Hedera-based cocoa traceability system.
- The system combines Merck’s M-Trust physical authentication with THG’s TrackTrace platform to link physical cocoa with digital supply-chain records.
- The pilot comes ahead of the EU Deforestation Regulation deadline on Dec. 30, 2026 for large and medium operators.
- EUDR will require covered companies to provide stronger evidence that cocoa is deforestation-free, legally produced and traceable to its production plots.
Merck KGaA, PwC Germany and The Hashgraph Group are piloting a Hedera-based system to trace cocoa from its physical origin through the supply chain, as chocolate makers prepare for tougher European Union rules on deforestation.
The system combines The Hashgraph Group’s TrackTrace platform with Merck’s M-Trust physical authentication technology. PwC Germany is providing consulting, process design and implementation support. The companies announced the cocoa pilot on Sept. 8. `
The goal is to solve one of the hardest problems in supply-chain traceability: proving that a digital record actually corresponds to the physical cocoa moving between farms, traders, processors and manufacturers.
That problem is becoming more urgent as European regulation turns cocoa provenance from a sustainability objective into a compliance requirement.
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EU Rules Put Cocoa Origin Under Scrutiny
The EU Deforestation Regulation, or EUDR, will begin applying to large and medium-sized operators on Dec. 30, 2026. Most micro and small operators have until June 30, 2027. Cocoa is one of seven commodities covered by the regulation.
Companies placing covered cocoa products on the EU market will need evidence that the commodities are deforestation-free and legally produced. The regulation requires information including the country of production and geolocation of the plots where the cocoa was grown. EU Deforestation Regulation — EUR-Lex
For plots larger than four hectares, companies generally need polygon coordinates describing the perimeter. If cocoa comes from multiple plots, information for each production plot must be included.
The penalties can also be significant. EU member states must establish sanctions that can include financial penalties, confiscation of products and revenues, and temporary exclusion from public procurement.
That puts pressure on chocolate companies to maintain reliable information even when beans pass through several intermediaries before reaching a factory.
Connecting Physical Cocoa With a Blockchain Record
The Merck-Hashgraph system attempts to address a weakness that has complicated blockchain supply-chain projects for years.
A blockchain can preserve a record once information is entered. It cannot independently establish that the physical material being scanned is the product described by that record.
Merck’s M-Trust technology is designed to provide that physical link.
M-Trust allows physical products to be connected to digital twins using security features such as pigments or chips and compatible reader devices. The platform enhances product and process traceability through physical authentication and decentralized identity technology.
Under the cocoa pilot, M-Trust can authenticate the raw material, product or packaging at verification points. TrackTrace then records the relevant supply-chain event, while Hedera provides the distributed-ledger layer used for timestamping and auditability.
Origin information, certificates, quality records, due-diligence documents and authentication events can be added to the digital identity as cocoa moves through the chain.
“Digital traceability only delivers its full value when it is connected to physical proof,” Thomas Endress, Executive Director and Head of M-Trust at Merck, said in a statement shared with AlexaBlockchain.
“M-Trust verifies that the product being scanned is genuine, while TrackTrace records that authentication event as part of the product’s digital history,” Endress added.
Why Cocoa Is a Difficult Test?
Cocoa is particularly challenging because much of the crop is grown by smallholders and moves through fragmented supply chains before reaching global manufacturers.
That fragmentation creates problems beyond deforestation.
An estimated 1.56 million children are involved in child labour in cocoa production in Côte d’Ivoire and Ghana, according to the International Cocoa Initiative, citing research covering the 2018-2019 production season. The two countries sit at the center of global cocoa production.
Traceability technology cannot by itself eliminate child labour, illegal deforestation or smuggling.
What it can do is give buyers a better mechanism for identifying the farms, intermediaries and batches connected to a product. That can support audits, risk assessments and investigations when problems emerge.
“This solution shows how cocoa traceability can move beyond fragmented documentation and self-declared claims,” said Stefan Deiss, CEO and Co-Founder of The Hashgraph Group.
“By integrating TrackTrace with Merck’s M-Trust technology and PwC’s process expertise, we can link any physical product, not limited to cocoa, to a trusted digital record,” Stefan added.
Cocoa Traceability Is Already Moving Toward Plot-Level Data
The project enters an industry where large cocoa companies have already invested heavily in digital traceability.
Cargill can trace every cocoa bag it purchases in Ghana through a barcode to one of 27,000 individual farmers. In Côte d’Ivoire, half of the cocoa in its direct supply chain is fully traceable from farm to factory.
Broader industry efforts have also made progress.
The World Cocoa Foundation said 83% of directly sourced cocoa from companies participating in its Cocoa & Forests Initiative was traceable to the plot level in Ghana in 2023. The comparable figure in Côte d’Ivoire was 82%.
Those numbers also expose an important limitation.
They cover directly sourced cocoa. Maintaining comparable visibility becomes harder when cocoa enters indirect supply chains involving additional aggregators and intermediaries.
Blockchain Has Been Tried Before
Blockchain itself is not new to cocoa traceability.
IBM and Heifer International deployed IBM Food Trust with smallholder cocoa and coffee farmers in Honduras in 2021. Cocoa could be traced through different stages of production, with supply-chain participants uploading information to a permissioned blockchain.
The Merck-Hashgraph pilot therefore matters less because it uses a blockchain and more because it attempts to strengthen the connection between the ledger and the physical commodity.
Merck has been working on that problem for years. In 2019, it disclosed a U.S. patent covering technology designed to connect physical products with blockchain records using unique physical identifiers or “fingerprints.”
The Blockchain Still Cannot Prove the First Claim
There remains a fundamental limitation.
If incorrect farm coordinates or false compliance information are entered into a system, an immutable ledger can preserve the incorrect information just as effectively as the correct information.
M-Trust can help establish whether a physical product corresponds to a previously authenticated identity. It does not independently establish whether the original farm declaration was accurate or whether deforestation occurred.
Companies will still need farm mapping, supplier controls, due diligence and other verification mechanisms required by EUDR.
That makes PwC Germany’s role more consequential than it may initially appear.
“PwC’s role is to help organisations in regulatory compliance, map out supply chain process, design solution based on requirements, define workflows and enable technology provider to make traceability operational at scale,” said Husen Kapasi, Enterprise Blockchain Lead at PwC Germany.
A Digital Passport, But Not an EU Requirement for Chocolate
The companies describe TrackTrace as a Digital Product Passport platform and position the architecture for wider European product-traceability requirements.
There is an important regulatory distinction.
The EU’s Ecodesign for Sustainable Products Regulation, or ESPR, establishes the framework for mandatory Digital Product Passports for certain products. But the regulation explicitly excludes food and feed from its scope. Chocolate therefore does not currently require an ESPR Digital Product Passport simply because it is sold in the EU.
EUDR is the more immediate regulatory catalyst for the cocoa industry.
The commercial test for Merck, PwC Germany and The Hashgraph Group is whether their system can maintain credible farm-to-product provenance across a fragmented supply chain without making compliance prohibitively expensive.
With the Dec. 30 EUDR deadline coming up, the big question is: can cocoa companies prove where their beans came from?
The above article “Merck, PwC and Hashgraph Test System to Trace Chocolate Origins” was first published on AlexaBlockchain. Read the complete article here: https://alexablockchain.com/merck-pwc-and-hashgraph-test-system-to-trace-chocolate-origins/
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