29 Oct 2018 — Hyped as a potentially game-changing pioneering innovation, blockchain technology is inspiring change and innovation in the global food and beverage industry – and although it’s still in the extremely early stages, blockchain technology offers the promise of disruption on a huge scale across multiple sectors including agri-food, retail and the ingredients business at large.
Giants like Walmart, Nestlé, Unilever and Dole, are hopeful that the high-tech tool can be used to address traceability issues and tackle food safety problems. These companies, alongside the likes of Driscoll’s, Golden State Foods, Kroger, McCormick and Company, McLane Company, Tyson Foods, are part of a consortium that joined IBM last year intending to strengthen consumer confidence in the global food system further.
Cutting-edge companies looking to get ahead of the curve are forming partnerships in this burgeoning technology invented a decade ago by Satoshi Nakamoto – the name used by the unknown person or people who designed bitcoin and created its original reference implementation – for use in the cryptocurrency bitcoin.
Global Blockchain is an investment company that provides investors access to a mixture of assets in the blockchain space, strategically chosen to balance stability and growth. The management team consists of industry pioneers – including founders and early adopters of blockchain projects, as well as the creators of the ICO (initial coin offering) revolution.
According to Shidan Gouran, the President and CEO of Global Blockchain Technologies Corp, blockchain lends itself well to food traceability because it enables entries from any user on the network, it makes the data stored on the ledger immutable, and it gives full provenance to goods that change hands, which is useful when something has to be traced back to its source.
The flagship use case for blockchain in its context was Walmart’s collaboration with IBM to trace pork chop shipments from China, in which a multi-day tracing process got reduced to just two seconds.
Last month, Walmart urged leafy green suppliers to contribute to the blockchain database. The move aimed to seriously ramp up food safety following US outbreaks of E. coli in romaine lettuce and salmonella in a number of products from eggs to breakfast cereal. You can read more on this here.
“It is not particularly accessible to smaller businesses right now because the technology isn’t fully developed just yet,” Gouran explains to FoodIngredientsFirst. “However, we will see this ramp up in the coming years, especially since Walmart announced that it would require some of its produce suppliers to implement blockchain technology next year. IBM’s Food Trust solution exemplifies this idea well, being a solution for SMEs. That will be part of a growing trend that will necessitate the development of blockchain solutions that are friendly to small businesses,” he reveals.
Traceability has firmly entered the mainstream of company Corporate Social Responsibility agendas, it’s one of the key drivers of new business policies, modeling how a supplier or company must ensure that traceability is at the heart of its ingredients and processes.
“Traceability isn’t just a big deal in the case of recalls, it is also a big deal in the case of substantiating claims about certain goods,” claims Gouran. “For example, how do we know that fair trade coffee really is ‘fair trade?’ Do we actually know where it comes from, or do we simply take it on good faith?” Gouran muses. “Similarly, how do we know that food labeled as kosher or halal really meets the standards? Supply chain fraud in all of the forms that it can take is a really big deal, particularly for more sensitive goods (counterfeit pharmaceuticals is a big one).”
Traceability relates to many things to include ethical sourcing, proving certain standards are met, and even verifying the authenticity of products for their safety. Blockchain taps into these trends mostly because it’s immutable (that is, once data is entered, it cannot be altered), meaning that the actions of a single illicit part of the supply chain (e.g., someone who swaps the real product for fake product) will stand out and can’t be covered up.
“Moreover, smart contracts can automate ordering processes, whether that’s offices ordering lunch for the team, or restaurants ordering food supplies based on a change in data, such as stock hitting a certain percentage threshold, thus triggering a re-order,” Gouran notes. “Smart contracts can prompt actions and immediately deliver payments on the condition of certain conditions being met (e.g., purchaser’s warehouse confirming delivery). This can be adapted to very small and very large scale transactions in the food and beverage industry.”
“When each member of the supply chain (farmer, warehouse, trucker, distribution center, store) is able to make entries in a way that cannot be reversed, any one item can be traced to the point of a possible problem. Take the recent romaine lettuce E Coli outbreak for example. They knew it came from a farm in Yuma, Arizona. But which one? The way the supply chain currently works, you’re looking at several different systems that don’t talk to each other, having to coordinate somehow to find out where it came from. Since that takes a matter of days, you then either run the risk of people eating potentially contaminated lettuce, or you have to put out a blanket recall on all lettuce. Since blockchain can do the tracing in just seconds, it prevents that risk or that waste,” he says.
Gouran believes that other companies will follow suit as agile companies start tapping into the benefits of blockchain. “Blockchain’s abilities will set new standards in business processes, and it will not take long for it to catch on once the case studies begin to yield impressive results. Indeed, Carrefour is leading the way when it comes to food safety, as a perfect case of implementing blockchain technology,” he adds.
“Considering that in a year from now, many of Walmart’s produce suppliers will already be using blockchain, we are likely to see even bigger developments in the future,” Gouran continues. “I would anticipate that in the timeframe of around five to ten years, we will see blockchain technology used by both businesses and consumers in food-related transactions. We are also likely to see provenance-sensitive food categories (such as kosher and halal foods) using blockchain to ascertain the proper origin of a product.”
Are there any other areas that will benefit from blockchain? “There are too many to count,” Gouran claims. “Insurance, banking, government services, commodities trading, in-game currencies for video games. Blockchain’s ability to decentralize is relevant to virtually everything on the face of the earth,” he concludes.
By Elizabeth Green
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