Blockchain in the Food Supply Chain

Written by Tanner Judah, Blockchain Analyst at BitSystems.io

More and more consumers and stakeholders are looking deeper into the food supply chain figuring out where their products are coming from and how it gets to them from end to end. New regulatory standards are also driving this positive trend of food transparency across the entire transport process. All of this has lead to an increased demand in visibility and traceability in the supply chain of the food industry. Blockchain has the capacity to provide a path forward and a means to navigate the complexities of the current systems.

The legacy systems in place in which supermarkets obtain their products is extensive and exhaustive. Generally speaking, supermarket’s supply chains begin in this respective order: fisheries or farms, then processing plants, onto some form of transport, then to wholesalers or directly to retailers, and then to the end customer.
Along the way, different databases with extensive data, phone calls, transportation logs, regulatory requirements, recordkeeping, validation of food origins, and product genealogy are all required for things to run smoothly between the start and endpoint.

Additionally, the two parties involved on the chain have two different sets of priority criteria. Stakeholders in the supply chain are more concerned with efficiencies in digital records that products have, like regulatory requirements, record keeping, purchase orders and transportation logs. Consumers in the supply chain are more concerned with where their fish or meat was sourced, if it was properly handled, where and how it was stored, and if any additives were used in their purchased product.

A report was recently published from the Organisation for Economic Co-operation and Development (OECD), stating that counterfeit goods account for as much as 2.5% (461 billion) of world trade. And, by selling counterfeit or spoiled goods to loyal customers, it can drastically impact jobs and corporate revenue.

Improvement in visibility and traceability are the key factors that will address stakeholder and consumer priority criteria and the core issue of counterfeit goods. Currently, companies including Walmart, Walamai, Vegan Nation, and others, are incorporating blockchain proofs-of concepts (POCs), centered on three main areas: verifying authentic goods, improvement of supply chain traceability, and efficiency in transactions and interactions.

Improvement of supply chain traceability means that companies are digging deeper into the visibility of multiple stakeholders in the supply chain with the desire to track products down to specific origins in a matter of seconds. Before blockchain, this type of information gathering would take either days or weeks. This type of information gathering creates massive bottlenecks in operations with guaranteed revenue loss.

Currently, lack of efficiency in transactions and interactions means that many supply chains are swamped in heavy paperwork processes with complex bureaucracy that involves middle men in global trade, which creates an administrative burden for all parties in the given supply chain. Blockchain has the opportunity to ultimately help the respective parties come to an overarching agreement on billing and insurance faster and more efficiently.

One key blockchain use case in this arena, started in 2016, when Walmart partnered up with IBM to begin testing blockchain software to improve its contamination management. Walmart began by placing high importance on visibility and traceability with their mango shipments from Mexico to the supermarket. By using their blockchain software, Walmart management was able to track down mangoes purchased by a certain customer either that day or months ago in a matter of a few seconds.

Walmart also teamed up with Chinese pork manufactures to guarantee meat safety by tracking where the pig was farmed, slaughtered, processed and packaged, all the way to the store front. The company believes tracing important products like pork could be a huge milestone in preventing foodborne illness.

For example, since meat shipments must not rise above a certain temperature, the test took temperature data from sensors attached to the food products and committed this data to the blockchain-based system. From there, automated quality assurance processes notified relevant parties in the event of suboptimal transport conditions. Since launching this test, Walmart has also announced the creation of a Blockchain Food Safety Alliance, an extensive partnership to apply tracking, traceability, and safety benefits to the food supply chain in China.

Another example use case is VeganNation, an online company that connects vegans all across the globe. The company has recently launched the world's first vegan-friendly decentralized community platform. The creators of VeganNation agreed that most vegans have difficulty obtaining a guaranteed answer about where their food products actually come from; this is important for the community to ensure their food products are actually cruelty-free. Therefore, the company wanted to focus on providing an online shopping platform for buyers and sellers of vegan meals and products to trade among themselves. By applying smart contracts, the company will be able to ensure a visible and transparent supply chain from end to end for guaranteed cruelty-free food products. They also provide a designated crypto-currency for all trusted transactions used in their global community. The company believes bringing blockchain into the VeganNation’s supply chain will bring the transparency the vegan community seeks, as it aspires to make conscientious purchases.

Blockchain still faces many challenges on the food supply chain. The technology is still in the infancy stage. Current blockchain implementation will continue to progress over the years but it’s likely mainstream adoption will take time; standard business practices and processes must be resolved before blockchain can reach its full potential. There will always be advantages for being a first mover and blockchain experimentation will continue forward because of its potential to solve some of these critical supply chain issues in a powerful streamlined way.

BitSystems is a global blockchain research and development firm that is focused on delivering tailored blockchain development solutions. Contact us to learn more about how we can help you tailor a blockchain solution for your business (www.bitsystems.io).