Is blockchain technology the new Uber of the agri-food sector?

Innovation can make supply chain more transparent,

There has been a lot of noise on cryptocurrencies and Bitcoin of late.

While some suggest cryptocurrencies are a fraud, others believe them to be the next economic revolution the world has seen since the internet.

Bitcoin has brought to light the interesting concept of blockchain technology, which offers great potential for the agri-food sector. Yet it is far from being the panacea for diverse issues affecting the industry, at least not yet.

Simply put, blockchain technology is a way of storing and sharing information across a network of users in an open virtual space. Blockchain technology allows for users to look at all transactions simultaneously and in real time. In food, for example, a retailer would know with whom his supplier has dealt. Additionally, since transactions are not stored in any single location, the information is almost impossible to be hacked.

For consumers, blockchain technology can make a difference. By reading a simple QR code with a smartphone, data such as an animal’s date of birth, use of antibiotics, vaccinations and location where the livestock was harvested can easily be conveyed to the consumer.

Blockchain makes a supply chain more transparent at an allnew level. It also empowers the entire chain to be more responsive to any food safety disasters. Massive organizations such as Nestle and Unilever are considering blockchain technologies for that reason.

Walmart, which sells 20 per cent of all food in the U.S., has just completed two blockchain pilot projects. Prior to using blockchain, Walmart conducted a traceback test on mangoes in one of its stores. It took six days, 18 hours, and 26 minutes to trace mangoes back to its original farm. By using blockchain, Walmart can provide all the information the consumer wants in 2.2 seconds. During an outbreak, six days is an eternity. A company can save lives by using blockchain technologies.

Blockchain will allow everyone to be paid more quickly, from farm to plate. Farmers could sell more quickly, and be properly compensated as market data would be readily available and validated.

Blockchain technologies could “Uberize” the agri-food sector by eliminating middlemen and lowering transaction fees. This can lead to fairer pricing.

However, it will work only if the data at the source is accurate, as current practices in the industry are much more open to human error. Much of the compliance data is audited by trusted third parties and stored either on paper or in a centralized database. These databases are highly vulnerable to informational inaccuracies, hacking, high operating costs and intentional errors motivated by corruption and fraudulent behaviour.

Blockchain operates anonymously, so mistakes would be traceable to individual culprits. Considering recent food fraud scandals, which we have seen in Canada and elsewhere, this feature is not trivial. Blockchain technology provides a method with which records are kept permanently.

Most importantly though, it facilitates data sharing between disparate actors in a food value chain. Many retailers have sold fraudulent food products unknowingly. With the use of blockchain these days could come to an end.

Our current traceability systems need work, and blockchain technologies could be the evolution it needs.

However, there are noteworthy limitations.

The amount of information which can be processed is limited. Since everything is out there, several contracts between organizations would need to be secured for some level of confidentiality to be retained. Balancing confidentiality with transparency would need to be worked out.

Secondly, blockchain is really in its infancy and most are uncertain about its potential. Some organizations are moving ahead while others wait to see what happens.

Nevertheless, the most important challenge for blockchain technology remains participation. All parties must adopt the technology in order for it to work.

Industry public leaders should embrace blockchain as an opportunity and it should be added to a digitalization strategy currently affecting the entire food industry.