How Blockchain is Changing the Food Chain
Blockchain technology has provided a means to look at data in a way once thought impossible. For the first time, systems that utilize different computer systems, different programming languages, and different data structures can work together to find solutions that would otherwise take days or weeks to calculate. Suddenly, solutions that once took entire teams of data managers and years of intersystem development can be solved with an off-the-shelf software option.
One area where this has been successfully deployed is with food chain management. The efficiency that blockchain promises to offer this are will not only save millions of dollars but can save countless numbers of lives.
One of the biggest problems facing the food chain today is accountability. “The human food chain is under continued threat from an alarming increase in the number of outbreaks of transboundary animal and plant pests and diseases (including aquatic and forest pests and diseases), as well as food safety and radiation events,” the Food and Agriculture Organization of the United Nations reports.
“Avian influenza, peste des petits ruminants, locust infestations, wheat, cassava, maize and banana diseases, armyworm, fruit flies, food-borne pathogens and mycotoxins are just some examples of threats to the human food chain that have detrimental effects on food security, human health, livelihoods, national economies and global markets.”
We are all familiar with outbreaks of foodborne illness, such as the August outbreak affecting nearly 650 customers at Chipotle Mexican Grill. Most incidents of foodborne illness, however, is less reported. Imagine, if you would, buying a batch of clams from your local supermarket. They seemed a little bit odd to you and had a strange, ammonia-like odor. Your fishmonger ensures you that they are fresh, so you buy them and cook them. You end up spending the rest of the next two days in your bathroom.
Now, you are unsure if the blame is your fishmonger’s or if the clams are part of a bigger problem, such as a contaminated catch or problems with the processor. Currently, there is no way to investigate this in a way that you can get results fast enough to prevent others from getting sick. The process today is gathering invoices, making calls and emails, and traveling the supplier chain until someone has noticed a problem or waiting for the regulators to do this for you.
Such an investigation could take months, if not years, and lives are on the line. Walmart was placed in such a situation. In 2011, Walmart – the world’s largest retailer – was cited for selling duck meat past expiration in its Chinese stores. While there were no deaths, Walmart was forced to buy back the ducks at ten times the cost.
Walmart has been called out on its food safety in the country before. Walmart had to close stores in Chongqing after being accused of labeling non-organic pork as organic. Earlier in the year, the Chinese media accused Walmart of selling donkey meat that contained fox meat. To rebuild its reputation and return to profitability in China, Walmart started to look for ways to improve its food safety practices.
China is not known for its food safety practices, which is concerning considering the large amount of food imports that come in from the country. “Chinese imports dominate some food categories to a striking extent,” the Wall Street Journal reports. “In a testimony before a subcommittee of the House Foreign Affairs Committee in May, food safety expert Patty Lovera noted that China accounted for 80% of tilapia, 51% of cod, 49% of apple juice, 34% of processed mushrooms, 27% of garlic and 16% of frozen spinach consumed in the U.S. in 2011.”
“Reports on the state of Chinese food processing establishments are discouraging. More than half of food processing and packaging firms on the Chinese mainland failed safety inspections in 2011, according to a report by Asia Inspection, a China-based food quality control company. Meanwhile, in the U. S., inspections of imported food products are minute compared to the total volume of imports. According to a recent study by the Democrats on the House Appropriations Committee in 2011, FDA inspections were a mere 2.3 % of the total of all imported food products.”
“The flow of reports in recent years from domestic and foreign sources alike about serious violations of food safety in China has been continuous and alarming,” the 2012 report reads. “In the last year alone, the country has seen thousands of dead pigs show up in a major river, faced multiple milk scandals and busted operations that were passing off rat meat as mutton. In addition, as Patty Lovera told Congress, there is ‘widespread smuggling of products like honey to avoid tariffs and food safety restrictions [and] mislabeled products ‘transshipped’ through another country but produced in China.’”
Walmart’s solution is unorthodox and somewhat shocking, considering the conservative nature of the company. Walmart has agreed to work with IBM to help digitize its food supply chain. All suppliers of leafy green vegetables will be required to upload shipment data onto the blockchain by September 2019. This would make the back and forth of having to track invoices and engage in a telephone chain as simple as a blockchain search. What could have taken weeks could theoretically be achieved in seconds, meaning that contaminated foods can be identified and removed before they ever reach the store, let alone the consumer.
“Our customers deserve a more transparent supply chain. We felt the one-step-up and one-step-back model of food traceability was outdated for the 21st century. This is a smart, technology-supported move that will greatly benefit our customers and transform the food system, benefitting all stakeholders,” Frank Yiannas, vice president of food safety for Walmart said in statement.
“[T]his year, the United States experienced a large, multistate outbreak of E coli O157:H7 linked to romaine lettuce,” a letter from Walmart to the leafy greens suppliers reads. “All in all, the outbreak resulted in 210 confirmed cases, caused 96 hospitalizations, and tragically 5 deaths. Although the FDA and CDC were able to inform consumers, producers, and retailers that the romaine lettuce associated with illnesses came from the Yuma growing region, in general, health officials and industry professionals were unable to quickly determine which lots were affected and which were not. This resulted in millions of bags and heads of romaine lettuce having to be removed from the market place and a loss of consumer confidence in romaine lettuce, regardless of growing region, as well as negatively affecting the economic livelihood of many, including farmers.”
“Walmart believes the current one-step up and one-step back model of food traceability is outdated for the 21st Century and that by, working together, we can do better. There is no question that there is a strong public-health and business-case for enhanced food traceability. By quickly tracing leafy greens back to source during an outbreak using recent advances in new and emerging technologies, impacts to human health can be minimized, health officials can conduct rapid and more thorough root cause analysis to inform future prevention efforts, and the implication and associated-losses of unaffected products that are inaccurately linked to an outbreak can be avoided. “
Walmart previously ran field tests on tracking pork and mangoes. It is likely that Walmart will embrace blockchain tracking for all its products in the future. Walmart is joined by Unilever, Nestle, and Tyson Foods in working with Walmart to improve food accountability. Unilever, for example, is using the blockchain to track and verify tea shipments from Malawi to provide preferential pricing to sustainable farmers.
While food safety is by far the most important use of blockchain regarding food, it is not the only use. The European supermarket chain Carrefour, for example, is using the blockchain to track its branded products throughout its stores in France, Spain, and Brazil.
“For us, it’s a matter of sense for the consumer,” Emmanuel Delerm, blockchain program director at Carrefour told CoinDesk. “It’s really this that will push us to say to our producers or partners or suppliers, will they come on the platform? It’s really consumer-orientated; it’s really for them that we are doing this.”
Measuring the success of a product among multiple locations could be tricky. Even with computerized inventory systems, it will still take some sort of system to upload the stores’ sale reports, compare it to purchasing invoices, and plot consumption over a timeline. This still would not account for shrink, or the loss of merchandise lost from theft or spoilage. To accommodate this, each store will need to do a physical inventory, meaning that up-to-date information is almost never available.
By putting shrink reporting, purchasing, and sales on one system shared by all store locations, one could theoretically have sale information available at the tips of his/her fingers. By tokenizing each sale item and tracking it on a blockchain – from acquisition to sale – product performance reports can be generated in seconds instead of days at significant savings in manhours.
Blockchain also negates the hassle that come from “intermediate ordering,” or ordering from processors that are not the original producer of the food item. “A recent IBM Institute for Business Value (IBV) study on blockchain in the supply chain found by digitally tracking the provenance and movement of food throughout the entire supply chain, purveyors have instant quality assurance that the products they receive and serve customers are safe,” an IBM blog post reads. “With blockchain, this information flow can be widely shared to enhance decisions at all levels of the supply chain.”
“For example, ‘ready to eat’ foods – such as frozen lasagna – top the list for recalled food products by a wide margin because they involve a large supply chain with multiple parties. Ready-to-eat food, once processed, typically requires a third party such as a logistics provider to transport the food to distribution warehouses.”
“Sometimes another supply chain partner provides this service and then often another intermediary provider will deliver the food from the warehouse to the store. That’s not only expensive, but maintaining the quality standards set by regulators by the USDA to keep perishable products safe is also a challenge, particularly when the product contains frozen meat, vegetables or milk products.”
“Putting this transaction record on the blockchain can create significant savings in time, cost and transparency. Blockchain can transparently track the provenance of goods as they are passed from one organization to the next, building awareness and trust.”
By making the lifecycle of a product readily available for review, malfeasance – intentional or accidental – can be quickly exposed. This will not only save billions of dollars, but will save millions of lives. This system can also be used for any critical system where prominence is important, such as pharmaceuticals.
“The general use case in regards to provenance, whether pharmaceuticals or food, is getting a lot of traction because of the usually problematic long supply chain from raw materials to the end consumer,” Torsten Zube, the head of blockchain at software giant SAP, said.
“One of the key issues of pharmaceutical manufacturing supply chains is the incredible number of incompatible computer systems providing virtually no visibility into end-consumer sales for manufacturers,” Pharmaphorum wrote on the challenges of pharmaceutical manufacturing. “Some of the problems that arise from this complex situation could be avoided easily with blockchain by providing real-time access to data and visibility across the entire pharmaceutical supply chain, from the ingredient supplier’s product codes to the pharmacies dispensing prescriptions to patients.”
“Suppliers are currently working without a decentralised ledger, creating a large hole in the infrastructure, and little-to-no security for its participants. Pharmaceutical companies and pharmacy retailers are also involved in marketing alliances involving rebates and coupons that deflate the value of the product in order to boost exposure and that provide an unclear picture of how many drugs are on the market.”
“Another huge financial burden in the manufacturing supply chain is the thousands of third-party companies that are paid handsomely to provide research on the movement of pharmaceuticals. This enormous expense could be drastically lowered with a blockchain-based tracking system.”