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It’s almost mandatory to start any article about blockchain with a blockchain explainer. So here it goes… For those who don’t know, blockchain technology is a distributed ledger, a protocol formed by consensus; thousands of computers that each add a ‘block’ of data to the ‘chain’. Once data is entered, it can’t be altered or erased. It can be amended if necessary, but the original entry will still be in evidence.
That’s it. So why all the fuss? Why did the world go bananas for giant global excel spreadsheets the last few years? Well, because the applications of the technology are potentially hugely transformative to business and people alike. It’s all about decentralisation of information, which many say, will ultimately lead to decentralisation of power.
It looks like the cryptocurrency, which is just one single use case of the underpinning technology, has burst. Bitcoin, the original (and still the best according many) is wounded, Ethereum has lost its lustre and uncountable amounts of altcoins have disappeared into irrelevance. Not such good news for the speculative investors who were hoping to make a quick (fiat) buck, but many devotees to blockchain have been waiting for this moment so that only the serious players are left, and they can get on with building real-world business solutions on the blockchain.
So how could blockchain transform the food sector? In our increasingly globalised economy, food supply chains are becoming evermore complex and hard to manage. How can you be sure that Italian Parmigiano-Reggiano or kobe beef actually comes from where it is supposed to? Food fraud is rife at every level of the supply chain, whether it’s high-end specialities or bulk-sale raw ingredients for mass production. By having all transactions in a food’s journey from farm to fork on the blockchain, there is a system of absolute transparency in place. The supply chain is watertight and chefs can rest assured that they’re getting the quality ingredients they need to work with and people know that they are getting what they paid for.
In the current trust-based system, food fraud is rife. From mislabelling to adulteration, it affects consumer confidence and is estimated to cost the global industry US$30 to $40 billion a year. So, the potential win for the companies that crack supply chain track and trace are huge. But more importantly, the customer stands to gain the most.
Food contamination is another problem facing the supply chain. We saw last year with several outbreaks of E. coli in the US how virtually the entire stock of Romaine lettuce had to be recalled and destroyed.
According to the CDC, foodborne contamination causes 48 million Americans to fall ill, 128,000 hospitalisations, and 3,000 deaths every year. Produce causes nearly half of the illnesses (due to norovirus) while poultry causes the most deaths (mainly due to listeria and salmonella). Health is a major issue, but commerce is also affected.
The last year was marked for how acutely aware we became of the effects of global agriculture, both on our individual health and the health of the planet. We are told that if we don’t change our ways immediately, we could face climate catastrophe within decades. People are duly following the current trend of conscious consumption. How we eat, and how we source our food are and will continue to become, more and more important. We will need to know that if a food is labelled as coming from a sustainable source, that we can believe in what we are reading.
Enter blockchain. Recently touted as the solution to everything, its exponents have had a sobering year in 2018, but that doesn’t mean there aren’t some perfect applications for the technology. Supply chain is one. Even though it’s early days for blockchain and successful applications are thin on the ground we have already seen IBM create a blockchain for the global supply chain. The Food Trust blockchain includes some of world's largest multinational companies since 2016 and set to expand to new suppliers and consumers in 2019.
Tracing Tuna from bait to plate
About a year ago, a much-vaunted collaboration by the World Wildlife Fund (WWF) and blockchain accelerator ConsenSys, tech company TraSeable and tuna fishing and processing company Sea Quest Fiji Ltd, a pilot project in the Pacific Islands tuna industry that used blockchain technology to track the journey of tuna from “bait to plate”.
The aim was to reduce illegal, unregulated and unreported tuna fishing as well safeguard against human rights abuses such as corruption, human trafficking and slavery. Far from a silver bullet to cure all ills in the tuna fishing industry it represented a technology-based platform on which to build regulatory frameworks and it worked. Fish were tracked along their entire journey - a proof of concept.
Walmart has been something of a pioneer in trialing the blockchain. As far back as 2016 they worked with IBM to develop a track and trace solution for shipments of pork in China, which can be a fraught landscape in terms of safety for food businesses. Walmart deemed its pork trial a success. In its 2017 investor meeting, Walmart’s VP of Food Safety Frank Yiannas noted that with blockchain, he could pull a product’s tracking information in under three seconds, while traditionally it had taken nearly a week.
Raising the steaks on the beef supply chain
Another industry that is leading the way is the beef industry. Beef agriculture accounts for a mind-bending 14.5 percent of all anthropogenic (originating in human activity) greenhouse gas emissions. Any plan to slow down global warming must also include a plan to curb the consumption of bovine meat.
It is unlikely that humans will give up steaks altogether, so the most likely outcome is that of the consumer choosing to reduce their consumption. The consequence of which, means the quality and origins become so much more important. In the future, when we eat beef, we want the best beef we can possibly get, and we want to know that it was sustainably farmed.
Cillian Leonowicz, from Deloitte’s EMEA Lab, is part of a team that is working on a solution that can deliver this for the Irish beef industry. Ireland produces some of the best beef in the world and today is aiming to break into luxury markets, places like Singapore, Dubai, Seoul, Hong Kong and Abu Dhabi. Currently, there’s no way for a customer to be fully assured that what’s on their plate can be traced back to source. There might be a website, but can you trust it?
Ireland is quite advanced in terms of track and traceability of its beef but what is the real trust for a farmer after an animal has left the farm and gone to the abattoir? Obviously, there’s the grading system the animal is slaughtered, they’re paid a price based on weight and quality of meat, but how do they know what happens downstream? How do they know whether their beef goes into supermarket mince or becomes high-end restaurant steak? There’s not a lot of traceability going forward, all the traceability is going backwards.
“Traceability somewhat falls down when meat leaves the country,” says Leonowicz. “In Ireland we have good traceability once meat gets to the boning hall, then meat is deboned, and it goes from a carcass number into a batch number. So, we were thinking would it be possible to have full traceability, so that it’s not all thrown in together as a batch, but that each farmer’s kill is processed together and then you know exactly where it has come from.
In Ireland we have that,” continues Leonowicz, “but what happens when you get into international markets? If you think about what kind of mince goes into a supermarket lasagne in somewhere like Poland, how do you know? It’s much harder to tell. So, we thought if we could tell, it would be one of Ireland’s biggest product differentiators.”
The type of information that could be logged on the blockchain would include the kill date, and the maturation time as well as content that could tell the story of a beef’s origins. If a customer in China bought an Irish steak, would he be able to point his phone at the label and watch a video about the farm on which the cow was raised or a Michelin star chef demonstrating the best way to cook it?
Deloitte’s blockchain enabled platform might also be able to process feedback upstream. So, if a customer could give feedback about taste or texture, that could all then be incorporated into a plan for a company like Meat Technology Ireland to work on genomic codes for specific flavour profiles for different markets.
The problem with 'Farm to Fork'
When we talk about ‘farm to fork’, we are actually talking about supply chain. The process starts way before the farm, with artificial insemination and the genomic development of different meat profiles. When you go the other way, it doesn’t end on the fork, there’s a lot more happening with regard to that animal. There’s effluent leaking into water supplies, there’s methane emissions, so ‘farm to fork’ is a very narrow view. Blockchain enables a ‘conception to consumption’ view or ‘soil to sewer’ so it’s possible to see what’s coming through the grass because that really affects taste as well as the broader environmental impact.
By logging a more holistic data set on the blockchain there is, potentially a rising tide for all in the supply chain.
“If every farmer in a certain area is on the blockchain,” says Leonowicz, “we can see if one is performing better than others.”
“We can see that the better performing farmer might be adding nitrates to the soil at a certain time of year or have a particular pharmaceutical treatment plan. You can start to utilise benchmarks to enrich performance. You could also utilise the farm performance data to make other decisions, like if a farmer was looking for bank finance, he would have the proof of his yield and a cashflow projection. He could leverage the data for a better interest rate. The risk management is a lot better.”
Because of its ‘alternative’, libertarian origins, (we still don’t know Satoshi Nakamoto’s real identity), there is still a large section of blockchain enthusiasts who believe that the technology should be used to create a more decentralised world. Just as Bitcoin is a decentralised monetary system, they claim that information should also be decentralised. They believe that it would lead to a fairer, more transparent society. There are some who remain opposed to private blockchains, however, the more public a blockchain, the higher the risk of hacks, so we are unlikely to see multinational food organisations place their supply chain data solely on a public blockchain, but rather a hybrid of public and private.
Deloitte are very close to rolling out their prototype, at the end of March with IoT capability, says Leonowicz, and he is hopeful that it will become the standard going forward.
“This should become the standard for the industry. Once the standard is set, it can be applied to other sectors. The big question is ‘who drives adoption?’. Will it be the Supermarkets? Who are essentially the buyers, the large wholesalers or those who are buying the meat - the high-end restaurants or their distributors? Will it be the government, the farmers or the end consumers? It will probably be a combination of all three, but what I think will happen is one country will start using it and they will get preferential rates in luxury markets and then the rest will follow.”
Ireland has the potential to be that leader. Given the genetic database that already exists, the ICBF have the genetic code for every animal in the country, all that has to be done is build an extended capability on top of it, as compared to other counties where track and trace is still relatively immature.
“We have to be first,” says Leonowicz.