Transforming smallholder agri-food supply chains through digital product passports: A pathway to sustainable markets and innovative business models

Abstract

Smallholder agri-food supply chains in developing economies face persistent barriers in accessing high-value and sustainable markets, including inefficiencies, regulatory compliance challenges, limited traceability, and weak market integration. This research addresses critical gaps in the literature and practice by proposing an open innovation approach tailored to smallholder systems. Focusing on Sri Lanka’s tea smallholding sector, this study examines how the European Union’s Packaging and Packaging Waste Regulation (PPWR) and Digital Product Passports (DPP) facilitate sustainability, a circular economy, regulatory alignment, and market access. The study employs a multi-case benchmark analysis using the Business Model Canvas to compare Sri Lanka’s intermediary-driven model with two contrasting cases: the cooperative-led Kenya Tea Development Agency and the premium, ethical model of the English Tea Shop. Additionally, secondary data analysis is used to examine farming practices, institutional support mechanisms, and export dynamics in the Sri Lankan context. Based on the insights gained, a novel, digitally enabled business model is proposed, integrating DPP and PPWR principles and offering a phased implementation plan to support traceability, compliance, and value differentiation. This model contributes to sustainable innovation ecosystems by empowering smallholders through digital transformation and policy alignment. The findings offer practical implications for policymakers, producer organizations, and supply chain actors seeking to foster inclusive, market-responsive agri-food systems. This research provides a unique, technology and policy-driven contribution to the open innovation literature on complex supply chain transformations.