Blockchains are being heralded as ‘the next big thing’ in emerging technology, but what are they, and why do we need to know?
What is a blockchain?
Blockchains are effectively ledgers, recording multiple transactions across an industry in a way that can’t be changed. “A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography.” (Wikipedia 2018). Each record, or block, is time stamped so each transaction is recorded in sequence. This means a chain of transactions can be viewed from start to finish - or from the most recent back to the original transaction.
A blockchain ledger is typically managed by multiple companies in a business network or consortium, rather than one central authority. Once recorded, the data in any given block is visible to all parties to that transaction and cannot be altered retroactively without the alteration of all subsequent blocks, which would require the collusion of the network members. This is the real value of a blockchain: data is shared in a secure manner providing transparency across the business process with the assurance that the data the ledger contains is indelible.
Blockchains in the food industry
International players in the food industry are already researching uses for blockchain technology. Walmart is working with IBM in China to develop ‘track-and-trace’ systems to trace each food item it stocks back through the supplier and distributor to the producer. This is vital in the event of a product recall - where it would once take weeks to find the source of a product and trace its journey to a particular store, it now takes seconds.
Every member of the supply chain will be recorded and so will also be alerted to the recall.
To make this work, every individual package of produce must be uniquely identifiable. The global standards body, GS1, is leading the way in serialization efforts, offering unique codes called GTINs that can be applied to products. Then every participant in the supply chain must transfer the custody of these products to each other every step of the way so there is an unbroken record of the product’s journey.
IBM European Blockchain Marketing Leader, Bob Yelland said: "Blockchain will transform business transactions across networks of companies, particularly across international boundaries, and open up new business models and closer co-operation within any supply chain where traceability and provenance are critical". Bob is due to speak at the 2018 AFTP Conference.
Developing consumer trust
Blockchains won’t just be used to find out where a product has been. They can also be used to tell a consumer how it was made. Also using Internet-of-things (IoT) sensors the storage conditions of a product can be recorded. This is currently very important to consumers in countries like China where there have been frequent food scares, and a real distrust of food that has been produced in-country.
Currently, consumers in China can trace an individual steak in a supermarket back to the farm and specific animal it came from by scanning a code and looking at the results online.
Soon, consumers in the UK will expect similar levels of information to make food purchasing decisions. And it is likely they will use a mobile phone app for in-store scanning. As health warnings have encouraged consumers to look for more information about the food they are eating, many consumers now want to know what each individual ingredient is and where it came from.
This is partly due to social trends including concern for the environment (ie the effects of palm oil production, dwindling fish stocks) and a distrust of large multinationals such as Google and Facebook.
There is growing consumer demand worldwide for more transparency about food production supply chains and increased verification for food marketing claims, including proof of terms like ‘organic’, ‘free range’, ‘fair trade’, or ‘locally produced’.
Existing certifications and facility audit reports could soon be registered on blockchains to prove claims. If consumers know a company’s labelling is backed by a traceable blockchain that can’t be altered, this knowledge is likely to influence consumer behaviour.
However, as a note of caution, a blockchain is only as good as the information in it and the ability to reliably associate a physical product with its digital record. Third-party verification of food chain information will be a growing industry in the very near future.
Benefits for producers
The potential benefits of using blockchains aren’t all a one-way street for consumers.
Block Commodities and the Global Markets Exchange Group International have created a blockchain-based platform for African commodity markets. The platform helps connect farmers in sub-Saharan Africa with buyers and brokers, enabling farmers to get better prices for their crops, as well as reduced-rate loans. The goal is to democratize finance by providing farmers with up-to-date information about loan interest rates and commodities prices, which will be registered and logged on a blockchain.
Dutch coffee company, Moyee Coffee, is a small start up committed to what it calls ‘Fairchain’. Using a bext360 blockchain platform, Moyee gives all stakeholders – farmers, roasters, and consumers – access to data across the entire supply chain.
This provides unprecedented levels of transparency around the origin and quality of the coffee; allowing the coffee drinker to access the blockchain data to see exactly where the coffee came from and even how much the farmer was paid for the beans.
Find out more at the AFTP conference.
To find out more about blockchain technology and its implications for the UK agrifood industry, book your place at the 2018 AFTP conference. The conference will be held on 3rd July at Burlington House, London. It offers a timely look at the UK Industrial Strategy and Environment Plan and developments in the agrifood sector.
The conference addresses the strategy’s ‘four grand challenges’ from an agrifood perspective: AI and Data Economy, Future of Mobility, Clean Growth and the Aging Society.
Bob Yelland, IBM Blockchain Marketing Manager will discuss Blockchain and its role in preventing food fraud.