Blockchain Applications in the Food Industry
At Nooor Blockchain Armenia, we refer to blockchain applications in various industries from time to time. Those industries vary from fashion to healthcare, from education to aviation, and from real estate to HORECA. Today, our topic is something no human can live without, any substance consumed to provide nutritional support for an organism (according to Wikipedia :D).
What blockchain has to do with the food industry? What challenges might it help to overcome? Will its use cases get more overtime, or the impact it might have is not that significant?
Today we will find out the answers to these questions. But first of all, let’s have a look at what the food industry looks like right now and what challenges it might be facing.
The food value chain is an $8.1 trillion industry, and food safety is one of its major problems worldwide. Because of those problems, businesses are exposed to potential legal and reputational risks. Moreover, those risks cost them billions of dollars. Consumers are exposed to serious health threats, including food contamination, allergies, and even death. Governments lack control levers in case of a disease breakout.
The estimated cost of food safety problems in lower and middle-income countries is $110 billion each year. This includes loss of economic activity due to the inability to work or medical expenses and death. The pattern is $56 — $93 billion a year for the US. It is reported that more than 200 diseases occur as a result of unsafe food containing harmful bacteria, viruses, or chemical substances. Moreover, 600 million people get sick after eating infected food, and 420 000 die every year.
So What Can Blockchain Do in the Food Industry?
Blockchain can potentially change the food production process, food processing, and other aspects, but today let’s focus on the area where the major changes occur — the Food Supply Chain.
Smart contracts can reduce the number of intermediaries in the supply chain network. This can reduce transaction costs, increase productivity, and as a result, bring much profit to the farmer and producer. Moreover, reduced human interference will shrink the trust gap between producer and consumer.
On average, every food product travels over 40,000 miles, which further exacerbates the vulnerabilities resulting from the lack of traceability and visibility. Since blockchain brings everyone from farmers to retailers to one platform, all the participants can access the necessary information. For instance, everyone can know when and where the milk was produced, what kind of greens did the cows consume, when the milk got to the factory, etc.
In case of an outbreak of food-borne disease, it can take weeks to find its origin. In 2017 an outbreak of salmonella found in papaya caused a great sales decrease of the product. Its retail sales fell from $96 million in 2016 to $88 million in 2017, affecting both food suppliers and farmers. It took more than two weeks to track the source of contaminated papayas, whereas, with integrated blockchain, it can be done almost instantly. According to IBM, 2.2 seconds precisely.
In 2016 Interpol detected over 11,000 tons of either counterfeit or low-quality food in 57 countries. Items can be tokenized and verified on the blockchain. As a result, product counterfeiting will be reduced or eliminated in this relatively inexpensive process.
As mentioned above, finding the source of a food-borne disease may take weeks. And better traceability can help save lives since it allows companies to act faster.
So one of the retail market giants — Walmart, decided to test a decentralized food supply ecosystem on Hyperledger Fabric. Walmart, together with IBM, ran two proof of principle projects to test the system. 1st one was about tracing mangos sold in the US stores of Walmart, and the other aimed to trace pork sold in its China stores.
The Hyperledger Fabric blockchain-based system worked for the two products. For pork in China, it allowed uploading certificates of authenticity to the blockchain. It brought more trust to a system where it used to be a serious issue. And for mangoes in the US, the time needed to trace their source went from 7 days to only 2.2 seconds!
Walmart now traces the origin of over 25 products from 5 different suppliers using a system powered by Hyperledger Fabric. The company plans to add more products and categories to the system soon. In fact, it has announced that it will require all of its suppliers of fresh leafy greens (like salad and spinach) to trace their products using the system.
Nestle has announced about expanding its use of blockchain technology, with IBM Food Trust Blockchain for the company’s luxury coffee brand Zoégas.
With the help of blockchain-recorded data, coffee buyers will now be able to trace their coffee back to its origins. Consumers can scan with their mobile phones the QR code on the packaging and follow the coffee journey from the growing locations to the Zoégas factory in Helsingborg, where the beans are roasted, grounded, and packed.
Besides, the data includes information about farmers, time of harvest, transaction certificate for the specific shipments, as well as the roasting period. Isn’t it amazing to be able to see all the paths your coffee has passed before getting to you?!
As for olive oil, the opportunities the platform provides are very similar. Now, they can track, trace, and store data in the supply chain of olive oil. Consumers can access all the information through the scan of the QR code on the bottle.
Producers, on the other hand, can use the platform to easily share information with permissioned parties. The data can help reduce food waste by keeping track of its freshness and storage.
Through a consumer traceability app, the company anticipated the growing demand, which rose by 30% during the pandemic.
Blockchain is also used for tracking food for our four-legged friends. The authors of Marleybones wanted to know what was going into their own dog’s food. So they cooperated with Provenance to bring this idea to life. With Provenance software, businesses can easily gather and present information about products and their supply chains. They mapped out their supplier network, showing the flow of ingredients from farm to bowl.
They selected the relevant Proof Points to back up sustainability and brand values claims. These are shown at key stages of their supply chain through a Product Journey, which can be found on the product pages of their site and accessed by scanning a QR on their packaging.
You can see an example with their ‘ Pooch Posh Nosh Chicken ‘. The transparency again builds trust between the retailer and consumer.
The significance of blockchain technology in the food industry grows rapidly, so here are some figures for what is awaiting us in the near future. It is estimated that better traceability will boost the international food trade by over $100 million per year.
According to Gartner Inc., 20% of the top 10 global grocers by revenue will use blockchain by 2025 for food safety and traceability. That is to create visibility to production, quality, and freshness.
As stated in a recent report by Cointelegraph Consulting and VeChain, by 2023, it is expected that blockchain will support the tracking of 10% of the food industry products globally. By 2027 $300B worth of food will be traced using Blockchain and IoT.
As we saw, IoT & blockchain platforms can increase trust, transparency, and coordination throughout the food supply chain. This will potentially save $155 billion per year.
To Wrap It Up
Nowadays, the global food industry is facing many challenges, mainly concerning food safety. This is a serious problem because it not only threatens people’s lives but also harms businesses financially. Luckily we have blockchain technology to help us out. The technology can be implemented in food production, processing, supply chain, and global trade. With blockchain solutions, the food industry will save time, finances, have a transparent supply chain, improve food traceability, reduce food fraud, and build consumer trust. Besides, very soon, a significant part of the industry will work on blockchain.
Thanks to the game-changer companies providing blockchain-based solutions for the food supply chains, the food industry is booming. Such companies are IBM Food Trust platform, Hyperledger, Provenance, Carrefour Food Trust, Bytable, and others.
I hope you found useful information and interesting insights in this blog post.