Blockchain for the Food, How Industry Makes Use of the Technology
As blockchain continues to push for mass adoption, the food and beverage industry is shaping up to be one of the most inclusive destinations for the technology: Just over the past few months, a variety of players including juggernauts like Nestlé, Carrefour and Starbucks have reported on their latest blockchain-powered initiatives within the field.
Indeed, in 2019, blockchain has been piercing the food industry at an accelerated pace. According to recent research, 20% of the top-10 global grocers will use blockchain by 2025. So, what makes the technology so appealing for the food industry participants, and are there any obstacles that can be a hurdle to potential adoption?
Empowering customers with more data and tracking food illness
There are at least two essential problems in the food industry that blockchain has been presumed to solve. First, the trust issue: According to a 2018 study released by the United States-based Food Marketing Institute (FMI), the public demand for transparency is growing within the market. Essentially, customers are becoming more health-conscious and want to know as much as possible about the food they get.
Specifically, the report found that as much as 75% of consumers are more likely to switch to a brand that provides more in-depth product information beyond what’s provided on the physical label. When shoppers were asked the same question in 2016 in a similar study conducted by Label Insight, just 39% declared they would switch brands. Blockchain, being an easily accessible, immutable distributed ledger by design, seems to be the go-to solution for that case, as it can provide consumers with concrete, immutable data about their food. Matron Ven, the chief marketing officer at blockchain-powered farm-to-table food traceability solution company Te-Food, told Cointelegraph:
“Food companies implement traceability because they see that the consumers require transparency and credibility. Blockchain’s immutability helps them to prove that the information the different supply chain companies provide is uncorrupted.”
Traceability is not just the customer’s whim, however, but a crucial component for the industry at large, in which investigations into foodborne illnesses require extra swiftness to prevent human loss. Rachel Gabato, the chief operating officer at Ripe.io, a San Francisco-based blockchain startup working with the food supply chain, told Cointelegraph:
“One of the primary drivers for food providers to consider blockchain technology is the ability of the technology to collect data from various sources and create a single view of the transactionю This plays an important role in the ability to track the food product back to its origin driving more efficiency when a food safety issue arises.”
For instance, in 2017, the U.S. Food and Drug Administration (FDA) investigated a fatal Salmonella outbreak linked to papayas imported from a Mexican farm. In order to allocate the disease’s original source, the agency conducted over a hundred interviews and studied various mango samples in lab conditions. Blockchain can reduce the process of finding the responsible supplier to seconds: By using the technology, stakeholders can track the corrupt harvest of mangoes from a particular farm and then surgically remove it from the supply chain.
Indeed, as the food industry entails numerous participants farmers, vendors, retailers, customers, etc. within the supply chain, the process of tracking goods from farm-to-table is notably complex. Consequently, the very idea of having a blockchain encourages suppliers and retailers to get their data straight, says John G. Keog, a research associate at Henley Business School and University of Reading, who co-authored an academic article on the topic. He told Cointelegraph:
“A key benefit not discussed is the fact that data needs to be cleansed, structured and verified before it goes onto a Blockchain. This is one of the key benefits and in the use cases I have examined closely, 75% of the effort was in fixing the data.”
IBM’s blockchain solution continues to dominate the field
The most mainstream and adopted blockchain tracking solution within the field is IBM’s Food Trust, which is based on the Hyperledger Fabric blockchain protocol. With the first product trials spearheaded by Walmart in China in December 2016, Big Blue’s food-tracking ecosystem has since amassed numerous industry giants, including Carrefour, Nestle, Dole Food, Kroger and Unilever. The platform officially went live in October 2018. According to IBM, during the testing period, “millions of individual food products” were tracked by retailers and suppliers using the Food Trust blockchain.
In 2019, the tech behemoth will continue to recruit participants for its blockchain traceability program, as revealed by Nestle S.A. So far this year, Big Blue has already signed Albertsons Companies, a leading food and drug retailer in the U.S. At first, the retailer will use the Food Trust initiative to track the supply chain for romaine lettuce, but it aims to branch out into other products in the future.
Additionally, it has been reported that the U.S. seafood trade association National Fisheries Institute (NFI) is now working with IBM’s Food Trust to trace seafood. Purportedly, this is the first effort to track multiple seafood species, an initiative jointly pursued by multiple companies. Just a couple of months prior to that, North America’s largest branded shelf-stable seafood firm, Bumble Bee Foods, launched a blockchain platform for seafood traceability in collaboration with German tech company SAP. Based on the SAP Cloud Platform Blockchain service, the new platform can purportedly monitor the supply chain of yellowfin tuna from Indonesia to end customers.
Meanwhile, earlier Food Trust members have been expanding the scale of IBM blockchain’s application this year. For instance, in April, Nestlé and French retail giant Carrefour reportedly started using the technology to track the supply chain of Mousline, a well-known brand of instant mashed potatoes. As per the initiative, customers are able to scan a QR-code with their smartphones to know exactly where the potatoes in a specific packet came from, as well as their journey to the exact Carrefour store.
New blockchain-based food traceability tools continue to emerge
Additionally, in March, Carrefour introduced its own blockchain-powered solution for tracking milk, called Carrefour Quality Line (CQL). CQL is reported to guarantee consumers complete product traceability across the entire supply chain — from farmers’ fields to the store shelves. As per the press release, consumers will get access to meticulous information, including GPS coordinates of the farmers producing the milk, details on when it was collected and packaged, as well as the list of stakeholders involved in the product line. Other notable blockchain initiatives happening within the food industry this year include the U.S. National Pork Board partnering with Ripe.io to test out a blockchain platform for pork supply chains. The company’s representative told Cointelegraph of the initiative:
“The ripe.io platform will enable the NPB ecosystem of pork producers to monitor, evaluate and continuously improve their sustainability practices based on six defined ethical principles guiding the U.S. pork industry. These principles provide industry standards in food safety and public health, animal well-being, protecting the environment, and improving the quality of life for the industry’s people and communities.”
Further, in the beginning of 2019, World Wildlife Fund-Australia (WWF-Australia) and global corporate venture BCG Digital Ventures (BCGDV) jointly launched a blockchain-powered supply chain tool dubbed OpenSC. The system reportedly allows both businesses to track products they produce, as well as consumers to view the origins of said products via a “unique blockchain code at the product’s point of origin.”
In July, Nestlé joined OpenSC for an initial pilot program that will trace milk from farms and producers in New Zealand to the firm’s factories and warehouses in the Middle East. The aim of the pilot project is to find out whether the system is scalable. Furthermore, the company is considering tracking palm oil sourced in the American Continent.
Alcohol and coffee: Blockchain is being applied to more niches
Blockchain has been picking up pace within the alcohol and beverage industry as well. In March, news surfaced that premium scotch whisky brand Ailsa Bay is going to release what it believes to be the world’s first scotch whisky tracked with a blockchain-based system, while later in May, the Big Four audit firm E&Y announced its proprietary blockchain solution for a major new platform that helps consumers across Asia determine the quality, provenance and authenticity of imported European wines.
Finally, Starbucks has unveiled more details regarding its “bean to cup” initiative. In May, it was reported that the coffeehouse chain will implement tech giant Microsoft’s Azure Blockchain Service to track the production of it’s coffee and allegedly provide coffee farmers from Rwanda, Colombia and Costa Rica with more financial independence.
China’s food industry has now co-signed the technology
Interestingly, China’s food and beverage industry which posted a record high of 4.27 trillion yuan (a whopping $620 billion) in revenue in 2018, and in so becoming the largest in the world is also increasingly interested in blockchain. In January, the official newspaper of the Chinese Communist Party reported that the Food and Drug Administration of the Chinese Chongqing Yuzhong District is going to apply blockchain to strengthen the supervision of food and drug quality assurance with better traceability of the product life-cycle and anti-counterfeiting measures.
Additionally, Walmart China also has revealed big plans for blockchain. In June, the company announced it was going to track food through its supply chain using VeChain’s Thor blockchain. According to the press release, the Walmart China Blockchain Traceability Platform (WCBTP) will be a joint venture by Walmart China, VeChain, PwC, cattle company Inner Mongolia Kerchin and the China Chain-Store & Franchise Association.
So far, Walmart China has revealed 23 product lines that the system will track and plans to release another 100 products for further inclusion, covering more than 10 product categories. Notably, the company expects that tracked sales will be significant in volume. The official statement reads:
“It is expected that the Walmart China’s traceability system will see traceable fresh meat account for 50% of the total sales of packaged fresh meat, traceable vegetables will account for 40% of the total sales of packaged vegetables, traceable seafood will account for 12.5% of the total sales of seafood by the end of 2020.”
In the neighbouring Vietnam, Te-Food has recently implemented blockchain-based traceability at Vinamilk, one of the largest dairy companies in Southeast Asia, with $2.2 billion in yearly revenue. Together, they will track a new infant formula product called Vinamilk Organic Gold.
Other solutions focus on food safety
Some tech companies have been applying blockchain particularly in the context of food safety instead forgoing large retailer sin setting up supply chain management. Thus, in April, Swiss food technology giant Bühler introduced two “blockchain-ready” products: Laatu, a tool aiming to reduce microbial contamination in dry goods, and Tubex Pro, a scale system that self-optimizes and produces a constant flow of production data. Both solutions are connected to the Bühler Insights Internet of Things (IoT) service, hosted on the Microsoft Azure cloud platform.
According to Bühler, their Laatu product is able to destroy over 99.999%of salmonella while maintaining the quality nutritional value of food by exposing dry foods to low-energy electrons. As the press release states, “With a potential link to blockchain, it [Laatu] is capable of providing an accurate and secure audit trail for food producers and all players in the supply-chain.” Further, in June, a nonprofit blockchain organization Iota Foundation teamed up with digital food safety management firm Primority to track food allergens with blockchain.
As Iota has specified in the announcement, the collaboration aims to reduce risks associated with potentially fatal food allergens, targeting 220 million people worldwide. Specifically, it includes the development of an application that would enable consumers to check a vast variety of foods for allergens, considering that “small traces of an allergen can then appear in the food which was supposed to be allergens free,” as the nonprofit puts it.
The application will reportedly allow consumers to access a number of details about food products by scanning a barcode on the app. The shared information would include tracking of raw materials used and their suppliers, as well as a review of food production processes. As Iota stressed in the announcement, consumers will be able to access the data “without sharing any personal, sensitive information, and without owning any cryptocurrency.”
Potential hurdles on the way: data-related issues and interoperability problems
However, blockchain adoption within the food industry has its own limitations at least for now. First, there is no guarantee that the data that suppliers initially enter into blockchain is reliable in the first place although the technology allows for the prevention of tampering and falsification at later stages in the supply chain. Thus, if a supplier has a reliable in-house system ensuring that its food is attributed correctly when released to vendors, a blockchain can ensure that this data remains immutable.
However, there is a catch, as Keog pointed out, “Things go wrong in food chains and the need to correct a record is a reality hence we need more research and discussion on the value and need for ‘mutable’ Blockchains.” Further, in most cases, data is difficult to obtain and digitize due to abundance of various setups used by suppliers, says Gabor of Ripe.io. She told Cointelegraph:
“As we have engaged with farmers in the food areas of dairy, meat, produce, citrus, commodities, a primary challenge is the access and availability of data. Farmers capture data in many different forms and the ability to digitize this data for capture and sharing has been our primary challenge.”
“The main challenges of implementations are not blockchain related,” confirms Marton Ven from Te-Food. “It’s a common misbelief, that farm-to-table traceability in centralized format is already an existing method, and we just need to replace it with blockchain based solutions. The reality is that traceability throughout food supply chains is non-existent yet, except for a few examples.” He then elaborated:
“The hardest obstacle comes from collecting data from a large number of different companies. In the recent decades, supply chains have become global, sometimes incorporating hundreds of companies from different countries, with different technological maturity, using different identification methodologies. Keeping the data integrity which is the backbone of traceability requires all of them to actively cooperate on what data to collect, how to capture the data, and how to compile the information into meaningful product data, which the consumers can read.”
Interoperability is another hurdle that is important to deal with, according to Keog. However, if blockchain solutions become compliant with the existing GS1 standards — which the food industry have been largely relying upon to format data for shared communications across supply chains before the technology’s arrival — it might be much easier to overcome the obstacles. He added:
“In this context, a Blockchain should be viewed as an outcome of a configuration of multiple technologies, tools and methods and hence interoperability is a critical component. The Blockchain solutions using the GS1 standards for product identification, company identification, location identification and the joint GS1/ISO interoperability standards called Electronic Product Code Information System (EPICS) will excel in this space.”
In the academic’s view, blockchain is not a traceability solution, but a record-keeper that can be used by a traceability platform as a trusted data source. Consequently, the state of supply chains within food industry will largely depend on how these blockchain solutions are applied:
“Wal-Mart’s strategy with a single platform from IBM Food Trust is an example of both progress and a hurdle at the same time. […] I would have preferred to see Wal-Mart providing a Blockchain enabled, standards-based platform and then their hundreds of suppliers who will use dozens of Blockchain solutions being able to connect and share standards-based data (GS1) seamlessly. Having a vendor lock-in is counterintuitive in the evolving Blockchain world.”
“As traceability throughout food supply chains barely exists worldwide, blockchain has a good chance to become the de facto standard technology for it,” agreed Ven. “But to provide global solution, other standards have to be applied as well, like GS1 standards for identification and event structure.”
Thus, as more retailers and suppliers are joining forces with blockchain companies, the idea of adopting the technology is perceived as more tenable within the food industry. As the experts have stressed, blockchain adoption within the field is not so much about figuring out the technology as the lack of proper data analysis in the first place. Ven told Cointelegraph:
“We haven’t ever met any food company which refused to use blockchain. Although solution providers have to put in a lot of education effort, food companies are open to the idea of using blockchain. Certainly the media hype around blockchain helps this effort, but 90% of the implementation challenges are not blockchain related ones.”