At blockchain-themed events around the world, bold promises are being made about the ability of blockchain technology to solve the problem of food traceability and supply chains in general. But how realistic is that prospect? Is blockchain really the right tool for supply chain management and traceability? What will happen if deploy it broadly?
Incidents of food fraud are on the rise globally. Multinational conglomerates often intentionally hide the precise location of food sources, while consumers – ever more health conscious – increasingly pay attention to where their food comes from.
No one is immune from the crisis. From e-coli spinach in America to horse meat lasagne in Europe – not to mention plastic-contaminated infant formula in China – food traceability is a global and very serious problem.
Food traceability is complicated
Truth be told, the problems of the food industry are manifold. Tampering with labels and seals, misreporting of fraud numbers, parallel imports, are costing the industry billions of dollars a year. From contaminated milk to re-labelled, expired, Spanish ham; from foul tomatoes ending up in ketchup to horse meat DNA across a variety of frozen food products, to dogs and cats in Indian mutton curry, not a week goes by without another scandal somewhere in the world.
But it doesn’t have to be fraud – consumers also want to know that their food is truly organic, or that animals have been treated properly. The British are afraid of chlorinated chicken and the Germans are obsessed with buying only “made in Germany” jam – even if all the fruit come from Romania and Ukraine.
Shoppers were flabbergasted when it turned out a famous local brand farmed all their shrimp in a polluted region of China. In short, food traceability is a huge issue for manufacturers and consumers alike, from marketing to actual health risks.
Complicated Supply Chains Scream for Blockchain
Supply chains have become so complicated, manufacturers themselves often don’t know where the ingredients really come from and how they reach their destination.
Blockchain promises a solution. The distributed ledger technology of blockchain means that thousands of copies of a ledger prevent alteration of the records. Every ingredient at every step of the manufacturing process can be monitored, the responsible parties held accountable. Hundreds of startups are working on solution promising one thing above all: transparency through blockchain.
Companies like Provenance connect the digital and physical world using natural markers like genetic profiles at the top end of their tech solutions, but at the very least promise to eliminate the most egregious examples of fraud, like copying or falsifying certificates of origin or batch numbers.
Fish are tracked with data including the fishing vessel, the phone number of the captain, date and location of the catch, and other verifiable data entered throughout the journey to market. Vegetables are tracked from farm to supermarket in the same way. Meat is traced from the moment an animal is born to the moment the customer swipes the ham package at the supermarket checkout.
But is blockchain really the solution?
The problem is that the blockchain technology itself doesn’t guarantee the accuracy of the data; you still need to trust the people making the ledger entry. This problem, experts predict, will be overcome with government regulation and machine learning: big data sets will be able to flag implausible and possibly fraudulent entries. Individuals and corporations being flagged repeatedly can be blocked from the supply chain accordingly.
Food fingerprinting – the record of molecular properties of food, recorded with blockchain – is another component of the fight against food fraud. I will allow consumers to verify that a particular product found on a shelf is actually the same product recorded at the source of production.
Sensors will offer another piece of the puzzle. Did irrigation from a neighboring farm contaminate a certified producer? Did refrigeration fail during a sea voyage? Was the shipment repackaged at a port along the way? The more data points we collect on the blockchain, the safer a food product will be.
The question is do we really need blockchain (with its proof-of-work step) or is this only a question of a distributed ledger? Are there solutions that involve safe, traceable data entry without actually requiring proof-of-work and enormous energy consumption?
Expect an Increase in Food Cost
We do not have all the answers. If there is no payment step involved, perhaps blockchain is an overkill. Perhaps there are other distributed solutions on the horizon which do not come with the baggage of long hours of computer processing.
However, all this technology will, at least in the short run, increase the cost of food production. Producers banned from the blockchain tracing system will continue to operate in a gray area, providing cheaper (albeit less safe) alternatives, which will be mostly used by the poor.
Blockchain, in other words, may make food safer for affluent societies while worsening the quality of alimentation in poorer countries.
That is unless a solution provider takes on the problem and offers a viable solution to any player in the market.