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Blockchain Explained

Blockchain in the food supply chain

January 27, 2022

We take it for granted that food will be on the shelves when we visit the supermarket, but the recent images of empty shops and warnings of shortages have shown us how fragile the supply chain can be. This has focused minds on the security and reliability of our food supply along with other issues such as food fraud, defects and safety recall, inefficiency and food provenance and traceability. There is certainly no shortage of issues and one of the technologies seen as a truly practical solution, that could dramatically transform the food supply chain and address these challenges, is blockchain.

One reason for the enthusiasm to utilise blockchain technologies is that they can help build greater trust in the food ecosystem. Blockchain in the food supply chain can establish and provide traceability with a tamper-evident audit trail for a more transparent process, while the use of blockchain native smart contracts can help reduce the number of intermediaries.  This will lower transaction costs, improve margins (or lower prices) and increase efficiency, as well as reduce fraud and build consumer confidence. The recent Juniper Research report, ‘Key Vertical Opportunities, Trends & Challenges 2019-2030’, suggests that blockchain, in conjunction with IoT sensors and trackers, could drive over $31 billion of food fraud savings globally by 2024.  

Blockchain is one of those technologies often seen as a bit of a dark art, largely because of its association with Bitcoin and other cryptocurrencies. But in fact, blockchain can easily handle any digital transaction and is already disrupting sectors from banking and finance to health and telecoms. Blockchain is effectively a distributed database or ledger technology – which sounds a lot less ‘sexy’ but it simply stores and manages data in so-called blocks that are cryptographically signed and linked together to form a chain. Each block contains a record of exactly when it was created, producing a complete timeline record that cannot be corrupted, lost or changed without everyone knowing about it.

The distributed nature of blockchain technology means it is replicated across all computers running a blockchain node. Transactions, or records, are then processed by the nodes in the Peer to Peer (P2P) network, which verifies the data and achieves an agreement – or consensus – on their validity. Each transaction is time-stamped and immutable, which is exactly what you need to create trust and confidence in a complex supply chain.

However, what sounds less attractive to many of those managing sensitive supply chains is the idea that anyone can join or view the entire blockchain in a public network. This has led to a new generation of B2B blockchain platforms that allow a single authority or organisation to retain a level of control, and no one can enter this type of network without proper authentication. B2B blockchains are, by definition, ‘permissioned’ and aimed at use cases where it does not want or need every participant full access to the entire contents of the database. B2B blockchains focus on companies and institutions to empower and support the business, rather than any individual users.

Trust and traceability

The current communication framework within the food ecosystem makes traceability a time-consuming task, not least since some involved parties are still tracking information on paper. The structure of blockchain ensures that each participant along the food value chain generates and securely shares data points to create an accountable and traceable system. Vast data points with labels that clarify ownership can be recorded promptly without any alteration. As a result, the record of a food item’s journey from ‘farm to fork’ is available to monitor in real-time. The disclosure of data provides trust and accountability for trading and farming practices to support claims like organic, freshness and superior quality where, for example, data entered on a blockchain ledger can eliminate the possibility of a non-organic ingredient later being reported in an organic product.

Blockchain in the food supply chain is already being put to good use. Walmart has been using blockchain technology to digitise its supply chain and reduce the time it takes to track the source of food contamination. With blockchain traceability, it is possible to scan a product and trace it back with precision and accuracy to its source in seconds or know with certainty whether it’s been involved in a recall.

The applications for blockchain in food go beyond ensuring food safety and traceability. Blockchain also adds value to the market by establishing a ledger in the network and balancing market pricing. The traditional price mechanism for buying and selling relies on judgments of the involved players, rather than information provided across the entire value chain. Giving access to data would create a holistic picture of supply and demand where , for example, blockchain might revolutionise traditional commodity trading and hedging. Blockchain enables verified transactions to be securely shared with every player in the food supply chain, creating a marketplace with immense transparency and security. Other applications for blockchain in the food supply chain include streamlining logistics and reducing retail costs, simplifying regulatory compliance and enhancing and expediting the food recall process.

Another example is Nestlé, which uses blockchain to trace the growing origins of its Rainforest Alliance certified coffee brand, Zoégas, guaranteeing the origins and sustainability practises of the coffee growing. By scanning a QR code on the packaging, customers can view information on farmers, time of harvest, the roasting period and even the transaction certificate for their coffee’s specific shipment. Meanwhile, Bumble Bee Foods records its yellowfin tuna operations on a blockchain to improve traceability and deter fraud. The system traces the movement of the fish through the supply chain, from the moment it’s caught to when it’s sold at the counter. Customers can view information on where the tuna originated, while Fair-Trade data is also displayed to show that their money is not being used to fund unethical practices such as child and slave labour.

B2B blockchain in the food supply chain has an important role to play to secure the future of food sourcing and delivery. The global Food Traceability market size alone was over 16180 Million USD in 2020 and is forecast to be more than 30110 Million USD in 2027, according to Valuates Reports.  And as concerns around the security, traceability and provenance of the food we eat increases, we can expect to see a significant and growing interest in how a business blockchain can give us confidence in our choices.  

Speak with our industry-leading experts today on how we can help with your supply chain.

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