Building a Food Supply Blockchain

Food on shelf in supermarket.

Ten of the world’s largest food supply companies recently announced plans to form a blockchain that will revolutionize how the sector tracks food on a global scale. Referred to as the Food Trust, this new initiative will allow for speedier, more efficient recalls of unsafe or contaminated food, ensuring consumers are informed as quickly as possible.

Not only will this new technology better protect consumers, it will also support company loss prevention caused by unnecessarily broad recalls while improving company reputations.

The group of involved businesses is made up of:

  • Walmart Inc.
  • Nestlé SA
  • Dole Food Co.
  • Driscoll’s Inc.
  • Golden State Foods
  • Kroger Co.
  • McCormick and Co.
  • McLane Co.
  • Tyson Foods Inc.
  • Unilever NV

Understanding Blockchain Technology

But what exactly is blockchain technology? Originally created for use with Bitcoin, blockchain allows digital information to be distributed without being copied. The technology can record virtually any type of activity, financial or otherwise. Any information stored in a blockchain lives in a shared and constantly updated database.

The database itself does not live in a single location, allowing for easy verification. Because the data is not stored in a central location, hackers cannot compromise the security of the information. Blockchain can’t be controlled by any single party and does not have a single point of failure. So, all the risks involved in traditional, centralized data storage are eliminated.

Every transaction that occurs is referred to as a “block” and is recorded automatically. Updates to a blockchain network occur every ten minutes, maintaining accuracy and transparency. 

How Blockchain Will Change the Food Supply Sector

Blockchain technology could completely revamp the way the grocery store sector goes about day-to-day business activities, benefiting consumers and companies alike. Below are a few of the main features and benefits offered by this technology:

  • Increased transparency and traceability — Using blockchain in the food supply sector would greatly increase transparency, specifically regarding where food items come from, when and how they were shipped, and so on. This is of increasing importance to today’s consumers; in a recent study by Response Media, 70% of respondents stated that their purchases are always or frequently influenced by the transparency of the products. This is especially important when dealing with seafood, which has been found to be sold under false pretenses in restaurants and grocery stores alike, with proprietors and retailers intentionally listing the wrong species on labels.

    Traditionally, transparency initiatives resulted in higher expenditures for parties at the beginning of the supply chain, like farmers. But blockchain creates a consistent, easy-to-use, and cost-efficient system for all parts of the supply chain.
     
  • Reduced waste and higher sustainability — When contaminated food enters the retail or restaurant space, it must be urgently recalled. But these recalls are often time-consuming and overly broad, resulting in a slow process that prevents consumers from taking precautionary measures as quickly as possible and leaves parties in the supply chain to deal with the high expenditures and losses involved. A more efficient, targeted blockchain system would allow for expedited recalls, reducing food waste and, therefore, benefiting the environment.

    Plus, agricultural companies and retailers would be able to assess the demand for food items in real time, meaning that supply could be adjusted as needed, further cutting down on waste. This is a boon to farmers, who would face fewer risks in their business, while also helping individuals on a global scale, as food supply companies would be better able to gauge and meet worldwide demand.
     
  • Reduced costs and more ability to compete — Blockchain technology would also allow farmers to trade directly with consumers, reducing costs for both parties while eliminating food waste. Blockchain cuts out the middleman, reducing transaction fees, while decentralization makes it easier for smaller farmers to compete against large entities. For instance, new blockchain technologies give small farms access to sophisticated financial services, allowing farmers to pre-sell crops using smart contracts which don’t involve third parties and provide more information to consumers.

    Consumers would also see lower prices since farmers’ yields would be higher and more profitable. And because food companies would be able to be more transparent about the origins and details of their products, premium brands — even small ones — would be in a better position to compete, touting what sets them apart from the rest and illustrating why consumers should pay more for their superior products.
     
  • Fewer instances of foodborne illness — When contaminated or unsafe food products enter the supply chain a domino effect often occurs, with grocery stores blaming their suppliers, those suppliers blaming their own suppliers, and so on. Traceability is limited with the traditional food supply chain system and recalls are often complicated, drawn-out, and costly processes. But with blockchain technology, every aspect of a supply chain would be easily traceable, cutting down on food fraud and speeding up recalls.

    Consumers would have access to a wealth of information about the products they’re purchasing, allowing for better peace of mind. With blockchain, buyers would be able to find out where the meat they’re purchasing came from, how it was raised, and what environmental, animal well-being, and hygienic controls were in place.

The Challenges in Implementing Blockchain Technology in the Food Supply Sector

While blockchain technology offers a huge range of unique benefits for food companies and consumers alike, there are some obstacles involved in its implementation — namely, scalability. When dealing with the agricultural sector, grocery stores, and consumers, a massive amount of information must be collected and distributed very quickly to allow for accuracy and efficiency. Any transmission of incorrect information could be disastrous for the consumer experience.

The energy requirements involved are also very high, making scalability even more challenging. Since transactions are added to a chain at set intervals, and only a set amount of information can be transmitted into each block, a bottleneck can occur.

But efforts are underway to deal with the problem of scalability and limitations on bandwidth. For example, Transparency-One, a solution for source-to-store supply chain transparency solution, has announced new features for scalability in food supply chains. Several other projects are also underway to allow for easy scalability in blockchain systems.

Looking Ahead

Research and projects for blockchain for the food supply and grocery sector are ongoing, with many new exciting initiatives and ideas on the horizon. Companies and investors around the world are recognizing the benefits offered by this technology, and are taking steps to implement new techniques into their supply chains — allowing for boons to consumers and businesses alike.

And with various other initiatives being explored in this sector — from lean methodologies to optimization techniques to improved inventory forecasting — the way we supply and buy food products will continue to shift and evolve in the years to come.

 

Image Credit: Trong Nguyen/Shutterstock.com

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