The recent images of empty shelves in the supermarkets and warnings of food shortages focused minds on the security and reliability of the food supply chain. Along with the general shortages other issues have come to prominence such as food fraud, defects and safety recalls, supply chain inefficiency and food traceability. One of the technologies seen as a practical solution that could dramatically transform the food supply chain and address these challenges is blockchain.
Blockchain technologies can help build greater trust and transparency in the food ecosystem to reduce fraud and build consumer confidence. It can establish and provide traceability with a tamper-evident audit trail for a more transparent food supply chain and the use of blockchain native smart contracts can also help reduce the number of intermediaries in the supply network to reduce transaction costs, improve margins or lower prices and increase efficiency. In the recent Juniper Research report, ‘Key Vertical Opportunities, Trends & Challenges 2019-2030’, it suggested that blockchain, in conjunction with IoT sensors and trackers, could drive over $31 billion of food fraud savings globally by 2024.
While many people associate blockchain with Bitcoin and other cryptocurrencies, the technology can be used to manage any digital transaction and blockchains are disrupting sectors from banking and finance to health and telecoms. Blockchain is effectively a distributed database or ledger technology, which stores and manages data in so-called blocks that are cryptographically signed and linked together to form a chain. Each block contains a record of exactly when it was created, producing a complete timeline record that cannot be corrupted, lost or changed without everyone knowing about it.
The distributed nature of blockchain technology means it is replicated across all computers running a blockchain node. Transactions (records) are then processed by the nodes in the Peer to Peer (P2P) network, which verify the data and achieve an agreement – or consensus – on their validity. Each transaction is time-stamped and immutable, which is exactly what you need to create trust and confidence in a complex supply chain.
What is less attractive to those managing sensitive supply chains is the idea that anyone can join or view the entire blockchain in a public network. This has led to a new generation of private blockchain platforms that allow a single authority or organisation to retain control, and no one can enter this type of network without proper authentication. Private blockchains are, by definition, ‘permissioned’ and are aimed at applications where it does not suit an enterprise to allow every participant full access to the entire contents of the database. Private blockchain platforms focus on companies and institutions where the blockchain empowers and supports the business rather than the individual users.
Applications and use cases
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 generates and securely shares 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 fork is available to monitor in real-time, while the disclosure of data provides accountability for trading transactions and farming practices to support claims like organic, freshness and superior quality. For example, data entered on a blockchain ledger can eliminate the possibility of a non-organic ingredient later being reported in an organic product.
Blockchain is already being put to good use in the food supply chain. Walmart has been using blockchain technology to digitise its supply chain and reduce the time it takes to track the source of food contamination. With a blockchain traceability solution, it would be possible to scan a product and trace that product back with precision and accuracy to source in seconds or know with certainty whether it’s been involved in a recall.
The use cases of blockchain in food go beyond ensuring food safety and traceability. Blockchain also adds value to the 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 across the entire value chain. Giving access to data would create a holistic picture of the supply and demand. For example, using blockchain for trades might revolutionise 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 and security. Other applications for blockchain in the food supply chain include streamlining logistics and reducing retail costs, simplifying regulatory compliance and enhancing and expediting the food recall process.
Nestlé uses blockchain to trace the growing origins of its Rainforest Alliance certified coffee brand, Zoégas, guaranteeing the origins and sustainability practises of the coffee growing. By scanning a QR code on the packaging, customers can view information on farmers, time of harvest, the roasting period and even the transaction certificate for their coffee’s specific shipment. Meanwhile, Bumble Bee Foods records its yellowfin tuna operations on a blockchain to improve traceability and deter fraud. The system traces the movement of the fish through the supply chain, from the moment it’s caught to when it’s sold in the shops. Customers can view information on where the tuna originated, while Fair-trade data is also displayed to show that their money is not being used to fund unethical practices such as slave and child labour.
Private blockchain has an important role to play in the future of supply chain management and the food supply chain in particular. The global Food Traceability market size alone was USD 16,180 Million in 2020 and is forecast to be 30,110 Million USD in 2027, according to Valuates Reports and as concerns around the security, traceability and provenance of the food supply chain increase, we can expect to see a significant and growing interest in how private blockchain can provide some of the answers.