I am currently finishing a series of articles on traceability, transparency and decentralization technologies (30 experts interviewed)

Food Trust blockchain network

E. coli, salmonella, accidental horse meat — there have been a lot of disturbing slip-ups in the food and beverage industry. Blockchain technology could help manufacturers and distributors avoid these mishaps.

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Blockchain is regarded as the next disruption in the technology world and is being studied in several applications, business sectors and processes. This includes the secure handling and storing of administrative records and digital authentication to strengthen intellectual property rights and patent systems, as well as bring transparency throughout the supply chain, reduce food frauds and enhance food safety.

Most of the participants in the supply chain complain about the lack of transparency and trust by other participants. The participants are asking for a better supply-chain collaboration method. The blockchain can provide this… if they are willing to collaborate.

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Blockchain is a new way of storing information, preserving it without modification, accessing it and integrating new information that becomes unforgeable. The information is recorded on the equivalent of a vast distributed register, i.e. shared on the computers (called “nodes”) of all the members of the network. The distributed nature of the registers allows transparency and auditability.
The main advantages are decentralization, security and immutability. The applications of blockchain aim to create trust where it is lacking or to replace centralized trust mechanisms.

Within the food supply chain there are different participants involved in each step, from farmers, to processors, manufacturers, certifying agencies, government agencies, logistics, distributors, retailers and so on. Each of these participants shares critical information about the product that sits in their own local server. This information is not accessible to other participants and thus, there is an increased chance of food fraud in the system.

Blockchain provides a secure environment where each of the participants in the blockchain network has access to each data and these data, once entered and verified, cannot be modified. For example, a farmer that provides an organic food certificate, which is verified by an authorised agency, cannot have that certificate tampered with at later date.

As a decentralized ledger that records, stores, and tracks data, blockchain provides a way to monitor the food supply chain and trace contamination issues to their root. It benefits the food processor, which can avoid sending harmful items to distributors; the retailer, which can cut down on or respond more quickly and effectively.

Walmart and Sam’s Club joined IBM Food Trust network, which uses a blockchain distributed ledger. In 2018, the retailers asked their suppliers, especially those of leafy green vegetables, to add their produce data to the ledger.

So long as each party agrees, blockchain serves as an accountability platform that can help cut down on food recalls, mislabeled products, and confusion over where an issue arose.

Building on their blockchain pilot launched with the IBM Food Trust in 2018, Nestlé and Carrefour are testing a similar service with customers for their Mousline mashed potatoes product in France.

Some Food Companies that use the Blockchain

Nestlé launched select editions of Zoégas whole beans and roast & ground coffee in Sweden with the ‘Summer 2020’ range being a 100% Rainforest Alliance certified blend of arabica coffee beans from three origins – Brazil, Rwanda and Colombia. Through blockchain-recorded data, buyers of the coffee will now be able to trace their coffee back to the different origins.

Avril Group is a manufacturer of vegetable oils, protein and even is in poultry with its eggs division. It has decided to leverage the power of blockchain to bring about increase in customer experience and transparency in its supply chain, including tracking. Through Food Trust, Avril will be able to ensure its customers on the quality of its products and livestock, even going as far as to show its welfare for the animals involved.

Multinational retailer Carrefour has made efforts to boost traceability and efficiency of its operations. “Being a founding member of the platform is a great opportunity for Carrefour to accelerate and widen the integration of blockchain technology to our products in order to provide our clients with safe and undoubted traceability.”, said Carrefour general secretary Laurent Vallée.

Cermaq has announced it has partnered with Labeyrie – a company with one of the leading brands of smoked salmon in France – on a blockchain project that will enhance the traceability of the two companies’ products. This project contributes to reassuring consumers that the salmon they are purchasing has been farmed in a responsible and sustainable way, is healthy and nutritious.

Sharing data

Sharing data in varying vertical marketplaces, including food, will happen if there is ample evidence of data sharing control and is proportional to a new benefit that results from sharing.

There is plenty of excitement around data sharing in a blockchain if we enable them to increase their sales through profitable business practices such as increased use of their land and absorption of their end-of-season overflow.
Distributors will join for the same reason that they now might have more local produce to sell. Retailers and food service companies would also be able to increase their sales if they have access to more local quality output that come digitized with the lifecycle of that food. The critical element that blockchains must do is to create monetization opportunities with newly, unattained data (i.e. how much fertilizer was used, was there plant disease, excess yield, distributor optimized a delivery route, precision ag practices) that is now available via a blockchain. This is a profound change in current business practices.

An interesting element to the blockchain is that when connected to an array of sensors it can capture live growing conditions, transport data and even capture the chemistry make up of produce to determine flavor profiles and ultimately taste. Sensor companies will continue to provide their hardware, cloud hosting, and software analytics solutions to farmers, suppliers, and others along the chain. Their willingness to integrate with the Blockchain comes from their clients wanting to post evidence of the quality of the food produced.
For example, if an almond farmer wants to demonstrate to their consumers that their water reduction methods are effective, they will have an interest in posting water meter usage as evidence of their product quality and sustainability assertions. There is untapped value in sharing this information all the way to the producer or buyer.

The value of the Blockchain will only be truly realized if the data collected by the sensors is made available to all across the supply chain and associated ecosystem in its most readable and insightful way. The sensor vendors want to deploy their existing relevant sensors into this market and also learn how to optimize them for scalability and reliability. They also want to understand what new sensors are needed for the multitude of different farms, retailers, crop varieties, etc. The quality of the sensors will ultimately dictate the quality/value of the blockchain and the quality of the food we consume. The Blockchain will provide not only a compelling market opportunity for sensors vendors but also an environment where the other supply chain actors will value those sensors vendors who deliver the sensors that enrich the Blockchain.

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Partial supply chain adoption

The Blockchain does not expect adoption by all participants in a supply chain. That is an unrealistic expectation. It is important that the Blockchain infrastructure is built around the concept of a web-of-trust which can tolerate visibility gaps in the supply chain. Of course, these gaps also hide information that would be made more valuable if it was exposed and traded on the blockchain.

In a very simple example, a local farmer and restaurant owner are connected with one another on the blockchain; however, the trucking company is not a member of the Blockchain. At the time of harvest, the farmer makes some assertions about the food (cultivar, practices, harvest date, etc.), and the trucking company picks up the crates. The next visibility point on the blockchain occurs when the produce is received at the restaurant. The restaurant’s smart contract, seeing that the shipment was accepted, sends an assertion to the farmer that the delivery is complete. The lack of visibility during transport is a blind spot, but it does not prevent the supply-chain as a whole from benefiting from the system.

Blockchain’s Value Proposition

  • The Blockchain is number one value proposition is to facilitate the exchange of information, create a digital twin of it and its workflow and validate the quality of food as it moves along the chain.
  • Another important role for the Blockchain is the evaluation by network participants of the assertions made by other network participants.
  • Not all information on the blockchain is available to the public. Proprietary information, methods, measures, recipes, and other sensitive data can be shared securely with selected participants.
  • The Blockchain can also be used to issue and manage the creation of unique cryptographic tokens. These tokens could be made to represent value in escrow between two participants; they could represent future production to be farmed in a particular field lot; or many other possibilities. Tokens represent a license to publish the information that becomes uniquely valued proportional to the needs of others in the chain.
  • Smart contracts are instructions that interface with the blockchain protocol in order to automatically evaluate and possibly post transactions on the blockchain.
  • Because of their distributed nature, blockchains are excellent platforms for marketplaces. The biggest application we see is a dynamic, data driven marketplace with a live RFP mechanism to engage participants. The underlying asset could merely be the information itself.

Even though ecosystem thinking has increasingly become recognized as the foundation of corporate strategy, the transformation process has remained largely artisanal, mostly comprised of facilitators with flipcharts and markers. The cost of those human interventions is so high that most ecosystem initiatives have tended to collapse under their own weight.
The blockchain is that it has a chance to be that piece of infrastructure enabling new transactions between players that do not know or trust each other (yet).