There is no one who denies that blockchain is going to disrupt many sectors. With the emerge of Decentralized Finance (DeFi) everyone will have access to financial services (e.g. trading, lending, borrowing, payments) in the future without the fulfilling the requirements of traditional financial entities (Sheinix, 2020). However, besides DeFi there is another huge real-world blockchain application that might benefit our safety, health and climate; food supply chain traceability.
Today’s food producing companies seek for a more precise and accurate supply chain food traceability as their consumers are demanding that their food is both safe and environmental-friendly produced. Take for instance the outbreak of the E. coli outbreak that was linked to Chipotle Mexican Grill restaurants, which was caused by the lack of transparency across their supply chain. In addition, the global damage as a result of ‘food fraud’ and lack of food traceability is estimated at $50b per annum (Bindt, 2016). Traceability refers to tracking the whole process from production to consumption; it is all about safe food trade, ensure trust among supply chain participants and to prevent future disease outbreaks.
There are several reasons of why blockchain technology will contribute to a greener and safer food supply chain. First, blockchain technology provides better traceability. All food trades and concerned transactions cannot be deleted afterwards or hidden as every change is tracked, recorded and showed to the all blockchain network participants (e.g. producer, distributor, supermarkets, and consumers). Second, blockchain technology stores all data in a decentralized ledger. This means that there is no single server or entity who has the power to keep food information hidden; multiple copies across the world are saved on different computers. (Civati, 2021) As the fundamental core competences of blockchain technology relies on trust, transparency and no need for central authority, this technology are particularly helpful with:
- Hampering food damage or preventing food fraud
- Realizing on-time mass recalls of contaminated food as more accurate and precise food information is provided
- Decreasing food spoiling
- Stimulating food companies to produce fair-trade food and pay their suppliers fair prices for the products they buy.
- Strengthening the relationship between food companies and their customers.
Although the potential of blockchain technology on the food supply chain seems promising, there is one main limitation to consider. In order to successfully adapt blockchain in the food supply chain, the overall cost of implementing such a technology is highly unpredictable because of its relative young existence (Simal-Gandara, Galvez, & Mejuto, 2018). Nevertheless, as major companies such as Walmart and Nestlé adopting blockchain technology, I truly that more companies will follow them in order to achieve a common goal; a safer and healthier life for all.
References:
Sheinix. (2020, January 27). DeFi: The Future of Finance? From Medium: https://medium.com/swlh/defi-the-future-of-finance-757c35a2bcfd
Bindt, V. (2016). Costs and benefits of the Food Fraud Vulnerability Assessment in the Dutch food supply chain.Wageningen : Wageningen University.
Civati, A. (2021, April 9). Blockchain & Food Traceability. From LinkedIn: https://www.linkedin.com/pulse/blockchain-food-traceability-alessandro-civati/
Simal-Gandara, J., Galvez, J., & Mejuto, J. (2018). Future challenges on the use of blockchain for food traceability analysis. TrAC Trends in Analytical Chemistry , 222-232.
Very interesting post! Problems in the food supply chain is something that gets way too little attention. Blockchain gets, probably, mainly associated with bitcoin and other crypto currencies, so very interesting to see the application of this promising technology to something completely different. I think it is fascinating to see how technology can prevent all these different kinds of problems. The only thing that I wonder or would worry about is the effect on electricity usages. The Bitcoin network is known to use a very large amount of energy. I wonder if the large electricity usages will also become a problem if a lot of companies shift towards blockchain for their supply chain. But this is probably something that will get sorted out ones more companies adopt it and the technology improves over time. Excited to see how this will unfold in the future!
I think this subject is highly fascinating. I think this technology can solve many more supply chain industries than only the food industry. Take the clothing/fashion industry for example, the technology – with its traceability and transparency as you described – could fight child labour. Insight/transparency into where and how clothing are made can affect customers behaviour and decisions to buy a specific brand. However, as you also stated, the adoption and implementation of blockchain in the supply chain of an industry has it’s limitation. In addition to the costs I think it also concerns a lot of stakeholders who must work together and must be willing to cooperate and adapt. An interesting project about this subject is VeChain. Check their website (https://www.vechain.com) if you are interested, it’s basically a company with the goal of implementing blockchain in the supply chain of different industries in order to solve world wide problems, of which one is food traceability and safety:
“The blockchain-enabled food safety SaaS powered by VeChain ToolChain™ can provide food industry enterprises with various traceability functions that have been effectively verified, including origin traceability, cross-border traceability, full-process traceability, and more. It can also help food companies exploit value via data generated by their own business. The immutable data on the blockchain enables companies to increase the efficiency of compliance review, government supervision, logistics and supplier evaluation.”