How Blockchain Technology Can Be Applied to the Food Industry
By: Ivan Mantelli
Tags: Food Safety, Cryptocurrency, Blockchain, Food Industry, Agriculture

There has been plenty of noise surrounding the potential applications of blockchain technology and which industries could most use these innovations. While some pundits postulate that cryptocurrencies are of doubtful value, there is little doubt of the underlying technology that powers these digital assets. The same technical architecture that allows digital currencies to operate in a decentralized manner can also be used to ensure the transfer of information takes place in a fully transparent, secure capacity.

Of course, this can apply to any large business or enterprise whether it be in the public or private sector, so it’s not surprising to see why blockchain evangelists are so quick to prescribe this technology to as many industries as they have. Besides perhaps more obvious sectors such as finance, public works, and technology, there are some less flashy industries that are sorely in need of a blockchain-solution. The food industry is undoubtedly one of them.

Food safety, data management, and verification in the agrifood sector are some of the many areas that need improvement. For example, a retailer would be able to know which specific farms his supplier has had dealings with. Also, since transactions aren’t stored in a single location, it’s almost impossible to hack this information to falsify records. This level of transparency can extend even to end-consumers, who, with a simple QR code scanned from a smartphone, can see data such as the birth and age of an animal of death, any use of hormones, vaccinations, antibiotics, and location where the animal lived.

The applications of blockchain technology to the food industry are numerable, but here are a few of the most notable.

Consumer Transparency

As mentioned above, both suppliers, retailers, and end-consumers can be privy to every little detail regarding the animal or vegetable they are putting in their shopping cart. Not only will this allow for more informed decision making on the part of health-oriented consumers, but it will also ensure that farms and the agrifood industry at large won’t be able to hide details regarding the quality of their food.

This means that at the very least companies will take extra measure to make sure their food is healthier. A transparent food industry would also help push the organic food markets, which would, in turn, help smaller, organic farms and local producers. While this wouldn’t get rid of lower-quality, lower-priced foods, the ability to find out the exact details of your next meal before you buy it certainly will do much to shift consumer perceptions regarding traditional, mass-farming and agriculture.

The “farm-to-table” movement is an example of the existing consumer desire for these kinds of products, but unfortunately, these labels can mean little without proper transparency. Since the regulations can be fuzzy as to what “farm-to-table” food really entails, it’s easy for companies to slap on these buzzword-based labels as long as they meet certain standards. Food-savvy consumers are no longer trusting generalized buzzwords such as “healthy” or “organic”, instead seeking reassurances of quality that extend past what’s printed on a label.

As for why it’s taking the food industry so long to embrace this transparency, it comes down to the financial investment. Food production and processing rely on cheap labor, and while end consumers and retailers are the ones who benefit most from complete transparency, the burden of paying for tracking all these details falls upon those at the beginning of the supply chain, like farmers and suppliers. If farmers want to track their cattle, they would employ an RFID tag, which costs approximately $5 per tag. Using a blockchain solution that allows everyone to track these details online, the only cost would be a QR code, which costs less than $1 per animal.

Preventing Fraud and Maximizing Food Safety

While many might find it surprising, food fraud is a rising trend throughout the world. When it comes to our food supply, what we don’t know certainly has the potential to make us sick. According to the World Health Organization, almost 1 in 10 people become sick every year from eating contaminated food, with close to 400,000 dying annually as a result. With the logistics behind the global food industry becoming so complex and interconnected, it’s almost impossible for producers and retailers to guarantee the safety of their food normally.

There have been a number of high-profile instances of food fraud, such as the 2009 Salmonella peanut butter outbreak, the 2013 UK Horsemeat scandal, and even the more recent issue concerning Brazil’s largest meat production companies. But even aside from these high-profile cases, adulteration remains a constant threat to our food distribution chains, costing $10–15 billion annually.

With so much food and money getting wasted needlessly each year, blockchain can do much to change the current situation along every point in the distribution system. For food producers, blockchain means that if there is any tampering with a food item as it moves through the distribution chain, it can be immediately identified and prevented before it reaches the shelves of markets.

For retailers, being able to precisely identify which food products are hazardous via blockchain technology means that costly batch recalls will become a thing of the past. Stores in the future will be able to identify and remove the specific, offending items while leaving the rest of an otherwise fine shipment as is.

Massive companies such as Unilever and Nestlé have already begun considering blockchain solutions. Walmart, which sells close to 20 percent of all food in the United States, recently completed two pilot blockchain projects. On one of its recent traceback tests on mangoes, it took the chain almost seven days to trace back mangoes to the original farm it came from. Through one of these blockchain projects, however, Walmart found all the information it needs in just 2.2 seconds. Should some sort of contamination or disease break out, a seven day wait period to track down the source could mean thousands of possible infections and outbreaks.

What’s important to keep in mind is that this only works if the data entered is accurate, and much of the data-management practices in the food industry are vulnerable to human error. Databases that store compliance data (or in some cases, physical paper data) are vulnerable to mistakes, hacking, misplacements, or even intentional errors motivated by corrupt behavior. Blockchain not only operates anonymously but ensures that all errors in the system are traceable to individual culprits. With even first world nations suffering from shocking scandals, these benefits are more important than ever.

Alternative Payment Methods

Blockchain can allow everyone involved in the food industry to get paid more quickly. Farmers would be able to conduct transactions more promptly with cryptocurrencies rather than feel compelled to rely on marketing boards to sell their produce. This would eliminate retroactive payments and price coercion, both of which are real problems in the food supply industry.

At the same time, blockchain can help minimize or eliminate the middlemen in the agrifood sector, which would do much to lower transaction fees. Besides reducing food prices for end-consumers, it can help smaller farms and companies be more competitive in the marketplace, instead of getting outplayed by large food conglomerates with the funding to soak up needless transaction costs.

Limitations

While the potential for radical improvement in the agrifood industry is tangible, there are still some technical limitations that need to be ironed out before they can be implemented on a full-scale basis. For one, the amount of information which can be processed is limited since the multitude of contracts between organizations could lead to confidentiality problems. Balancing the conflicting desires for business privacy as well as transparency would be one limiting factor.

There is also the problem of participation. All parties need to adopt an innovative technology in order for it to work. In food distribution, not every company or point in the supply chain is equal, and more defiant companies can exert their influence over their more dependent partners. While the Walmart example can work because of the large companies influence, it would be harder for a small supplier or farmer to convince all of it’s larger partners to adopt blockchain technology if they don’t see the need for it yet.

From a technological perspective, experts need to worry about limitations to the number of transactions per second. This could create bottlenecks when it comes to exchanging information, and for an industry that is processing thousands and millions of transactions every second worldwide, this would be catastrophic.

Conclusion

Blockchain technology will play a promising role in the future of the food processing industry. From improving security and transparency, food safety, preventing frauds, and offering more efficient payment solutions, this decentralized technology is poised to dramatically change things for the better — despite what temporary limitations exist technologically or otherwise at the moment.