Blockchain Technology In Food Industry: How Will It Transform The Food Supply Chain?
How Blockchain will Disrupt the Food Industry? The New Food Chain!
February 18, 2020
Blockchain Technology In Food Industry: How Will It Transform The Food Supply Chain?
How Blockchain will Disrupt the Food Industry? The New Food Chain!
February 18, 2020

As the popularity of the Blockchain is increasing, there is an increment in the studies on how blockchain is disrupting various industries. So in this article, we will focus on how blockchain will disrupt the food industry. In the food industry, blockchain technology has the potential to reduce inefficiencies in a similar way, providing more transparency in food safety and strengthening brand value.

This digitized supply chain has the potential to prevent food supplier fines by reducing delays, as well as prevent spoilage and reducing the outbreak of food-borne illnesses.

We can see that the food industry is shaping up to be one of the most inclusive destinations for technology.

It has been analyzed that 20% of the top-10 global grocers will use blockchain by 2025. Blockchain, being an easily accessible, immutable distributed ledger by design, seems to be the go-to solution for that case, as it can provide consumers with concrete, immutable data about their food. Some tech companies have been applying blockchain particularly in the context of food safety instead of forgoing large retailer sin setting up supply chain management.

In fact, blockchain is proving to be the ideal technology to drive the food industry. Ledger technology is currently being used to track food supply chains and manage food safety measures.

Problems that Exist in the Traditional Supply Chain Process

  • Food Fraud: Due to the complicated global food supply chain system, tampering, misrepresentation, or deliberate substitution has grown significantly. The most affected food categories include milk and its products, tea and coffee, fruit juices, olive oil, maple syrup, seafood, honey, and various other food items. 2008 Chinese Milk Scandal was a severe case, which led to the death of six babies due to food contamination, and around 54,000 babies were hospitalized in China. The scandal involved infant formula, milk, and various other food components being contaminated with an organic compound, Melamine.
  • Foodborne Illness: Out of 600 million people, 1 in 10 falls sick after consuming contaminated or adulterated food. Foodborne diseases hinder socioeconomic development by burdening the healthcare system by affecting trade and tourism, and national economies.
  • Illegal Production: Seafood is one of the popular categories with crisp reports of illicit production into the supply chain. The global fishing industry deals with the challenges related to unreported, unregulated, and illegal fishing. The newspaper published in the journal, Marine Policy reported that 24-36% of around 2.15 million tonnes of wild-seafood imported to Japan in 2015, valued between $1.6 to $2.4 billion, were of the unreported origin or illegal production. Illegitimate production of food items leads to economic loss as well as infectious diseases.
  • Food recalls: In some cases, government agencies like the FDA or USDA request food recall to discover the presence of any potential allergen in the food items. Performing food recalls frequently can cost the food industry a lot.

Blockchain-Remodeling Food Supply Chain

Blockchain could bring transparency and auditability to the system by connecting the following stakeholders directly:

  • Farmers
  • Logistics Service Provider
  • Processors/Refineries
  • Government Auditors
  • Retailers
  • Consumers

How does Blockchain could work in the Food Industry?

Blockchain could work in the food industry in the following ways:

  • Farmers could store information about food crops on the blockchain.
  • Food Processors add the processing details on the blockchain.
  • Wholesalers would bid for the processed products through smart contracts.
  • End consumers could ensure if the food they are having is safe to eat or not.

Benefits of Blockchain Technology in the Food Industry

Image: ideabar.agency

Food companies can utilize the blockchain to inculcate transparency in their supply chain process. Blockchain has the potential to add an extra layer of security to the food industry.

  • Transparency: Since the data captured at every step is accessible to everyone within the network, blockchain can help bring transparency in the supply chain. From production to the sale of a food item, everything can be recorded on the blockchain to get rid of any food frauds, or food recalls.
  • Efficiency: Blockchain can improve the way food is tracked, transported or sold. By maintaining every digital record of the transaction, blockchain could overcome inaccuracies caused by traditional paper-based records. In case of any food recall or investigation, the process could be carried out seamlessly as blockchain offers end-to-end traceability.
  • Secure and quick transactions: With blockchain, it is possible to transfer the information in a matter of minutes. Once the data is validated, it is replicated on various networks to take care of its security.
  • Food Safety: Blockchain could bring considerable progress in food safety by saving lives and cutting down costs. Since the permanent records of information are maintained on the blockchain, there are fewer chances of contamination incidents.
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Food Traceability

Food traceability has been at the center of recent food safety discussions, particularly with new advancements in blockchain applications. Due to the nature of perishable food, the food industry as a whole is extremely vulnerable to make mistakes that would ultimately affect human lives. When foodborne diseases threaten public health, the first step to root-cause analysis is to track down the source of contamination and there is no tolerance for uncertainty. 

Consequently, traceability is critical for the food supply chain. The current communication framework within the food ecosystem makes traceability a time-consuming task since some involved parties are still tracking information on paper. The structure of blockchain ensures that each player along the food value chain would generate and securely share data points to create an accountable and traceable system. Vast data points with labels that clarify ownership can be recorded promptly without any alteration. As a result, the record of a food item’s journey, from farm to table, is available to monitor in real-time.

Balancing Market Access

The use cases of blockchain in food go beyond ensuring food safety. It also adds value to the current market by establishing a ledger in the network and balancing market pricing. The traditional price mechanism for buying and selling relies on judgments of the involved players, rather than the information provided by the entire value chain. Giving access to data would create a holistic picture of the supply and demand. The blockchain application for trades might revolutionize traditional commodity trading and hedging as well. Blockchain enables verified transactions to be securely shared with every player in the food supply chain, creating a marketplace with immense transparency. Despite many promising perspectives of the blockchain for food, several concerns and doubts still remain, making it hard to implement the technology in the food supply chain.

System Complexities

The first challenge for entrepreneurs entering the space starts with the question of how to overcome the complexity of the food ecosystem. For a typical agricultural production site, implementing blockchain technology requires a customized system and streamlined practices for data entry. Agricultural products have various forms, storage methods, handling processes, and a variety of data recording methods. 

We often see challenges in adapting to the food system caused by multiple platforms and non-synchronized terminologies. The food ecosystem involves many players (i.e., distributors, buyers, wholesalers) and many layers of structures such as terminal markets, distribution networks, and trading platforms. Implementing blockchain in scale requires a great effort of customization at the granular level – from farm operations to working around the existing ERP system and modifying the data collection process.

Data Transparency

Advocates against blockchain for food also raise concerns about data transparency. On one hand, the disclosure of data would provide accountability for trading transactions and farming practices, which supports claims like organic, freshness, and superior quality. On the other hand, detailed information might get scrutinized and cause a backlash against businesses if things go wrong. It’s difficult to request voluntary disclosure of information, primarily when the critical data might affect businesses. In the case of agricultural production, if a pesticide is used during production for combating plant disease, consumers might diminish the value of a product or reject it entirely. Farmers might be reluctant to participate in blockchain implementation if their rivals are creating a competitive edge by hiding specific products or processing information.

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Food Companies Using Blockchain Technology

  • Walmart, the retail giant, employed blockchain to track and trace its lettuce supply chains and is being hailed as a next-generation solution in food safety. Walmart’s blockchain can trace food back to its grower in a mere 2.2 seconds.
  • The Transparent Path platform displays the farm-to-distributor journey of food in real-time. The company’s chain-of-custody software helps restaurants and CPG brands manage food safety and consumers to research a food’s origins. 
  • IBM created the IBM Food Trust to help bring transparency and efficiency to food supply chains. The company has dozens of products that measure food safety and freshness and help to reduce waste. Real-time certifications, test data, and temperature data ensure that proper food handling protocols are met.
  • Ripe.io uses blockchain to increase transparency in the food supply chain. The Ripe.io blockchain ecosystem has a variety of tools to map the food journey, including supply chain tracking, secure data aggregation, bran quality verification, and sensor and IoT integration
  • The Greenfence platform uses ledger technology to authenticate and trace all actors in the food chain-of-custody process. The software identifies and certifies the people, locations, distributors, equipment and anything else involved in the farm-to-table process to ensure that quality standards are being met every step of the way.  
  • Using Hungry Coin‘s universal blockchain rewards system, restaurants can engage and reward patrons with digital Hungry Coin Utility Tokens. The traceable tokens can be traded between consumers or redeemed for free meals and other discounts.    

Food and our Health

Image: fool.com

Bacterial contamination is only one of the risks that our food faces. Some of the other problems include:

  • Food containing products other than those claimed (horse meat, non-halal, etc.)
  • Products from origins other than stated.
  • Incorrect dates/production information.
  • Producers not maintaining adequate food production/animal humane standards

Speeding up Payments throughout the Supply Chain

Anyone who has ever been part of a supply chain will know that payments are a real frustration at times. Usually, this means allocating staff to create invoices and chasing down missing payments, etc. The reason payments take so long is that companies are required to recheck to see that goods have been received before paying invoices. For multinational companies, the sheer volume of paperwork can be overwhelming.

The implementation of smart contracts into food supply blockchain solutions will allow the automation of payments. Terms and conditions can be preprogrammed into a smart contract, which means that once this set of conditions is satisfied (good delivered and signed for), the smart contract could automatically initiate payment to the sender. This would, in effect, put an end to the need for a large number of accountants to process invoices, while also reducing errors too.

Alessandro Voto, the West Coast Regional Director at ConsenSys, said:

“Blockchain technology will help the food industry share assets and information easily, cheaply, and safely. Food transportation companies will automate trade finance and exchange digital tokens to simplify payments, especially across borders. And on the farm, digital smart contracts—or digital legal terms that execute automatically when conditions are met—could reduce the legal burden of forming cooperatives.”

Trusted supply chain data can also be used to engage customers with where their food is coming from. Blockchain has the potential to preserve privacy while not placing overbearing constraints on information exchange. For instance, food science organizations could share sensitive research data without decrypting it, preserving personal and institutional privacy.

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However, many are concerned about the scalability and the integrity of the data that gets stored on the blockchain.

Voto added:

“Enterprise developers are already working on new standards to improve data privacy, user permission, and scalability on blockchain systems. The food industry needs to establish best practices around tracking hardware and reporting processes to realize the full benefits of a shared blockchain database.”

Matron Ven, the Chief Marketing Officer at Te-Food, said:

“Food companies implement traceability because they see that the consumers require transparency and credibility. Blockchain’s immutability helps them to prove that the information the different supply chain companies provide is uncorrupted.”

On the other hand, Rachel Gabato, the Chief Operating Officer at Ripe.io said:

“One of the primary drivers for food providers to consider blockchain technology is the ability of the technology to collect data from various sources and create a single view of the transaction. This plays an important role in the ability to track the food product back to its origin driving more efficiency when a food safety issue arises.”

In 2017, the U.S. Food and Drug Administration (FDA) investigated a fatal Salmonella outbreak linked to papayas imported from a Mexican farm. In order to allocate the disease’s original source, the agency conducted over a hundred interviews and studied various mango samples in lab conditions. Blockchain can reduce the process of finding the responsible supplier to seconds. By using the technology, stakeholders can track the corrupt harvest of mangoes from a particular farm and then surgically remove it from the supply chain. 

John G. Keogh, a Research Associate at Henley Business School and University of Reading, said:

“A key benefit not discussed is the fact that data needs to be cleansed, structured and verified before it goes onto a Blockchain. This is one of the key benefits and in the use cases I have examined closely, 75% of the effort was in fixing the data.”

Keogh also said that the very idea of having a blockchain encourages suppliers and retailers to get their data straight.

News on Food Blockchain

  • On November 14, 2019, Nestle and Carrefour, the two food giants, teamed up to track infant milk products with blockchain and provide consumers with data on their origins and movements “from dairy to shelf”, as the two companies are based on IBM’s Food Trust platform.
  • On February 4, 2020, the Avril Group, a vegetable oil, eggs, and protein manufacturer, and the owner of brands Matines and Lesieur, began using the IBM Food Trust network to ensure traceability of its products.  
  • On November 25, 2019, the food industry saved up to $31 billion in global fraud savings by tracking food on its way from farms to consumers through the blockchain.  
  • UPS, the International logistics provider, shipped beef from the US to Japan while using blockchain technology from HerdX utilized blockchain to monitor the shipment.
  • BeefLedger, an Australian blockchain firm, launched a blockchain-based food provenance platform in China after rising demand for meat in the country.
  • Korea Institute of Halal Industry (KIHI) aimed to promote and conduct research and testing on Halal products.
  • On November 5, 2019, the IT firm behind Coca-Cola’s bottle manufacturing supply chain processes looked for getting a taste for blockchain technology.
  • TATTOO Wine marketplace allowed the buying and selling of wine in the Asia-Pacific using digital tokens on a blockchain-based platform.
  • On January 22, 2020, Vigneti Massa, the Italian winery, launched the 2018 vintage of its wines with near-field communication (NFC) and blockchain-enabled caps.

Conclusion

Blockchain technology is set to transform the food industry. Just as blockchain technology removed the middle man in banking and brought transparency and efficiency to the supply chain, it is also applying to the food industry. Thus, blockchain adoption within the food industry is reliable as the technology allows for the prevention of tampering and falsification at later stages.


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with an experience of 1 year. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space, as she loves writing about blockchain and other blockchain-related articles. Currently, she is working on blockchain-based news, reviews, featured articles, and guides.
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