Sector News

Blockchain and food: Early adopters to benefit from initial infrastructure

February 19, 2018
Consumer Packaged Goods

“Blockchain” is one of the buzzwords at the beginning of 2018, with enormous hype around the benefits that this technology can offer. Early food sector adopters can undoubtedly take of advantage implementing blockchain too, particularly when it comes to traceability.

Blockchain technology is a distributed governance system through a peer to peer network that offers validation of transactions in a decentralized way. It builds upon information technology developments in data sharing and storage, innovations in algorithms and cryptography and understanding of behavioral and institutional economic arrangements.

Blockchain technology provides validation of data and transactions; meaning that it is no longer necessary for the participants of a transaction to trust each other as this is provided by the network. Each transaction validated through a blockchain network is checked by a large number of participants that conduct the validation. If the transaction is incorrect, according to a majority of the validating network participants, it is thrown off the network and disappears. This feature offers interesting opportunities for combining digitization of agricultural and environmental processes. In other words, introducing blockchain technology will be most impactful where systems for managing resources or transactions are absent, and when a combination with further digitization of sector, value chains and government processes is feasible.

“I always compare blockchain to the internet in that it is a distributed network, where you can use it for the validation of data,” Jaclyn Bolt, Business Innovator at Wageningen UR in the Netherlands tells FoodIngredientsFirst. “While you would normally have a database communicating with others, validation would need to be done with intermediaries, like notaries or controlling organizations. Now you can facilitate the verification within the technology. You can validate your database using the blockchain.”

WUR is currently investigating the vast potential of this technology within the agriculture sector, including food. Wageningen Environmental Research is mainly looking at the potential for blockchain in the environmental social science space, including how to make specific transactions in African countries and elsewhere more secure and how to implement this technology into commodity driven value chains. Wageningen Food and Biobased Research is more concerned with nutrients and ingredients, including the potential of optimizing nutritional profiles for athletes, for example.

“In the food industry, you would go to your value chain and work together with your partners and see in what way data needs to be verified. So it can be about ownership, or specific information that needs to be verified. Only the verification of the data can then be done using the blockchain technology,” Bolt explains. “Blockchain has been existing for ten years now, but we are now past the top of the hype according to the gartner hype cycle. I think people are looking for use cases to see how it can be applied, what the implications are and what are the enabling and constraining factors for this technology. We are looking at how exactly to grasp this technology,” she adds.

Blockchain offers a traceability advantage. “When you look the value chains for food, there are already a lot of tracking and tracing systems out there, but blockchain can be used to improve or replace those systems, so it is very useful to verify data connected to nutrients, ingredients and the circumstances under which a product has been produced, such as sustainability, CSR or other issues. You can also add data on the impact a specific product would have on nature or ecosystems. So basically, it could provide certainty about the information surrounding certain products,” she says.

But the traceability advantage goes beyond the industry alone. “It also goes to the consumer so that they can really see and verify where it is from and how it has been produced,” she explains.

A significant announcement in summer 2017 indicated that major food manufacturers are already embracing blockchain. Walmart, Nestlé and Unilever are among the companies that IBM has announced a partnership with that will see the consortium adopt a blockchain inspired solution to prevent food contamination. IBM said that many of the issues impacting food safety are magnified by lack of access to information and traceability. Foods that are contaminated or contain foodborne illnesses and waste result in fatalities each year. Nestlé, Unilever, Walmart, Tyson Foods, Dole, Driscoll’s, Golden State Foods, Kroger, McCormick and McLane Company will work with IBM to identify new areas where the global supply chain can benefit from blockchain.

Again within the meat space, Cargill reported that in the run-up to Thanksgiving (November 2017), consumers were able to trace Honeysuckle White brand turkeys from a family farm to their table. Consumers in select markets could simply text or enter an on-package code at to access the farm’s location by state and county, view the family farm story, see photos from the farm and read a message from the farmer. The pilot for traceable Honeysuckle White brand turkeys uses a first-to-market blockchain-based solution enabled by Cargill. According to the company: “Blockchain models build a trusted, transparent food chain that integrates key stakeholders into the supply chain and creates a distributed ledger with immutable records.”

In another example of the application of blockchain, Belfast-headquartered Advanced Research Cryptography Ltd. (arc-net) has created what it describes as a “world first” through a unique partnership with Scotland-based Adelphi’s Ardnamurchan Distillery. The link-up could revolutionize Scotch whisky exports and safeguard the industry against counterfeits and fraud with the use of arc-net’s Blockchain platform. Each bottle of Dunfermline-based Adelphi’s latest Ardnamurchan Distillery limited spirit release has been uniquely marked and authenticated by arc-net, allowing full traceability of each bottle from the distillery through the supplier network to the ultimate consumer.

Bolt notes both pros and cons for early adopters of blockchain, with scale being a key reason to take it on. “If you are an early adopter, you are making more costs for R&D, but you are also at the beginning phase of building the infrastructure. If you are a later adopter, you are depending on infrastructure provided by others. So you may have to pay for applications of blockchain technology or become dependent of a specific supplier when the technology is not implemented as a common infrastructure but as a product. I think that if you are small it may be better to wait a while to see what will be built and how to use that infrastructure that supports your interests best. If you are a larger player in a specific aspect of the value chain I think it would be interesting to see how you could develop it,” she notes.

By Robin Wyers

Source: Food Ingredients First

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