Blockchain in the Food Industry – Ripple or Tsunami?

There has been a lot of discussion recently in the food industry about blockchain and its potential impact on the industry. From our interactions with customers and colleagues we have noticed there is a lot of confusion and misunderstanding about this technology. In response we have put together some of the most frequently asked questions to help to get a perspective as to its potential effect on our industry.

Blockchain, is a relatively new technology (established in 2009) but we are still not really sure what the consequences of this technology is going to be in the food industry. However, according to CB Insights, the food and beverage industry, agriculture sector and the food supply chain are among 55 major industries that could be transformed by the blockchain technology.

Blockchain is an entirely new technology which refers to a sequence of blocks or groups of transactions that are chained together and distributed or shared among the users as a ledger. Simply put the ledger is a "record book" and a “block" is a "line item" in that record book. So blockchain is a shared record book and each addition to this record book is a new line item.

Unlike a database, there are no administrators in a blockchain. A database can be modified, managed and controlled by a user who can create, delete, modify and change any record in the database. This cannot happen with blockchain.

Blockchain is de-centralized. This means there isn’t just one record book but thousands of copies of the record book. As there is no administrator, blockchain uses a peer-to-peer network with hundreds of computers to confirm whether data or a transaction is valid. This makes the data on a blockchain extremely secure and extremely difficult to change.

So next time you are asked to explain what blockchain is, can respond that “it is a very secure shared digital record book” Is blockchain better than a database?

The answer to this question is dependent on what you want to do with your data.

If you have confidential information or data that does not need verification then a database is most likely a better option. However, if you need to provide verification of trusted data, such as identity, reputation, credibility and integrity then blockchain is a new technology that can give you this capability.

What data verification is needed in the food industry?

In the food industry there is an inherent lack of trust, but not everybody needs to know everything. Generally, there are four key stakeholders that need verifiable trustworthy data:

1. Consumers

2. Customers

3. Regulators/Governments and

4. Auditors.

Consumers may want to know their food is sustainably and ethically sourced. They have started questioning the source of origin of the ingredients in their food. They want to be sure that what they are purchasing is actually what is on the label? For example, “are the eggs truly free range or is the corn truly GMO free?”

Customers may also want to know this information but they need more from the data. They need trustworthy supply chain information that would enhance traceability and make the process more accurate and efficient.

Regulators may want to know that the data provided for key regulatory compliance activities is trustworthy.

As a food safety auditor, I have been shown many food safety records. Some have been fraudulent or a misrepresentation of the truth. In many cases it is difficult to prove the records are false and we often had to rely on the word of the company. This led to a decrease in confidence in the data that was being provided to us. With blockchain, companies can now provide a custody of truth resulting in better transparency. In addition to increasing confidence this reduces audit trails and audit time.

We can see that there is an application for blockchain in the food industry, but is there a demand?

It is predicted that in the next five years 20% of the top global grocers will be using blockchain for food safety and traceability to create visibility around production, quality and freshness. As consumers are starting to hold grocers to higher standards of visibility and traceability best practices for the supply chain will evolve. Blockchain has the ability to reduce miscommunication, increase efficiency and speed up traceability from days to seconds.

Blockchain gives farmers the opportunity to interact with consumers. Niche marketing of GMO free, free range eggs, sustainable agriculture and organically grown products are all already being used on the back of blockchain technology. Coffee, apples, durian, palm oil, and leafy greens are just some of the agricultural products already using blockchain. Countries such as UAE, USA, Australia and China are already incorporating blockchain solutions to monitor food products from farm to fork.

Walmart is currently using a private* blockchain to trace leafy greens.

(*Private blockchains use the same principles as public ones except the software is proprietary and hosted on private servers.)

While there are numerous perceived and real applications for blockchain in the food industry it is unclear whether or not blockchain is the proverbial “hammer looking for a nail”.

Some argue that it is one of the most overhyped technologies ever,” arguing that it’s not the new internet, that in the decade it’s been around users have not grown exponentially, the number of transactions has collapsed, and transaction costs are rising through the roof.” We can understand this argument. This is a new technology and a huge market disruptor especially for the financial sector. However, there are already some big players in the game and depending on the application blockchain is not as expensive as you may think.

Where do we see blockchain having the biggest impact in the food industry?

1. Mapping the food journey, including supply chain tracking, secure data aggregation, brand quality verification and sensor and IoT (Internet of Things) integration.

2. Tracing contamination issues to the source which can avoid contaminated food making its way to the consumer.

3. Providing a custody of trust for critical information such as food safety certification, training records, qualifications and CCP records

4. Enhancing the Farm to Fork experience for the consumer and allowing farmers to more closely interact with the consumer. Essentially a marketing tool for verifiable product differentiation

Will Blockchain be a ripple or a tsunami?

While blockchain is still in its infancy, all indications are that the ripples we are seeing are going to gain momentum. Blockchain is already making waves for all the right reasons and our experience with the food industry is that the adoption of this technology will build in momentum. The early adopters and pioneers (many of which are industry giants) are already using the technology but whether it will achieve wide scale adoption will depend on the importance the industry influencers such as retailers, consumer groups and governments place on verifiable data. In this digital age, it is predicted that the biggest applications are going to come when blockchain is integrated with other technologies such as IoT (which is a system of interrelated computing devices).

Due to the distributed nature of the blockchain, if we continue to see food fraud activities the need to immediately detect fraud before the food items are put out for sale may also be a strong influencer for its use. The 2008 scandal where 300 000 infants fell ill after consuming milk contaminated with melamine cost the industry billions of dollars. Blockchain can help in getting rid of such losses and protect the wellbeing of consumers who rely on the “trust model”.

As the blockchain technology is resistant to fraud it has the ability to transform many industries. The use cases for a transparent, verifiable register of data are practically endless. In my opinion there will be a tsunami and all indications are the food industry is going to get very wet.

Food Ecosystems has teamed up with Veridoc Global who possesses a finished public Blockchain solution. With our experience in the food industry and the Veridoc Global blockchain we are uniquely positioned to help the food supply chain investigate the multitudes of blockchain applications. We have numerous completed blockchain solutions or we can customise a solution based on your needs.

a solution based on your needs. This article was written by Anthony Raschke, who is the Supply Chain Specialist at Food Ecosystems. He is an internationally recognised Food Safety Expert who aims to provide food safety leaders with the skills and opportunities to become food safety champions and excel in their field.