Home > Blockchain in food supply chains
Blockchain in food
Blockchain, a buzzword and an upcoming technology which is promised to provide a solution for urgent issue’s such as food fraud, safety recalls, inefficiency, underpayment of farmers and many more. Blockchain technology allows for supply chain stakeholders to interact in ways previously unthinkable and is expected to transform our food system for the better, offering transparent, efficient and inclusive food supply for all. But how will this work?
Blockchain in food supply chains
The ingredients of our food travel thousands of miles before they end up on our plates. The chains are often long and complex and therefore not always equally insightful. Blockchain offers supply chain actors a novel secure way to store and transact both data and money over the internet which eventually allows for more inclusion, transparency and better cooperation within food supply chains. On this page we’ll let you in on the details and hand you all our available resources related to blockchain and food supply chains.
What is a blockchain?
Lets start by explaining blockchain technology. Blockchain is a distributed ledger (a list of transactions) that allows information to be captured and shared in a network. In this network, each member maintains their own copy of the information and all members must validate and store each update collectively. By doing so, every member is always working with the same information, providing a single source of truth to work with. In a way blockchains are very similar to a Google sheet but slightly different as once information is stored in a blockchain, it can never be altered or deleted afterwards. This gives blockchain the ability to enable tamper proof and fully transparent data storage, automatic execution of logic and agreements and peer-to-peer digital transactions, three functionalities which ultimately provide a solutions for many of the issue’s that we are currently facing in our food system.
Fully transparent and secure data storage
By offering supply chain stakeholders one single source of information to add to and read from, consensus on the journey, sustainability and quality of a specific batch of products within the entire chain can be achieved. Because all data stored on blockchains is stored on multiple computers, this data is fully transparent, can always be traced back to its source and can’t be altered afterwards. In this way, everyone -even in a competing value chains- can share information and work together online on an equal playing field. Everyone in the chain can know for sure who said what, when and about which batch of products, without being dependent on and communicating through a vulnerable middleman Aka a central point of failure. This adds an extra layer of trust and transparency to the information provided as this makes it significantly harder to fraud the system.
In this way blockchain can create an open food supply chain, from farmer to consumer. When connected on a blockchain, both farmers and consumers will have access to important information. The farmer will have a view on further processing of his/her product, such as the quality label which is awarded at a later stage. In addition, the farmer can confirm, for example, that he has received a certain price for a certain quantity and type of quality. The consumer can see exactly where the product comes from, but also whether sustainability and quality promises are being fulfilled, confirmed directly by the right people in the chain.
Automatic execution of agreements
With the introduction of smart contracts, not only transactional information – such as, person A sends X amount to person B – but also specific rules and agreements can be added to the blockchain – such as, when Y happens, person A sends X amount to person B, but when Z happens, person B sends X amount to person A. This means a transaction is only executed when the set criteria are met. Just as with any other transaction on the blockchain, once a smart contract is created, it can never be removed or altered. It can only be overwritten by a new contract, after which the old contract remains archived and accessible in the blockchain. Smart contracts are public, meaning everyone in the chain can verify them. With the use of blockchain technology and smart contracts, a large chunk of the bureaucracy commonly related to international trade can be enforced automatically. No wonder that all the large grain, energy, food, retail and other commodity related companies are currently experimenting with blockchain!
By automatically enforcing agreements, supply chain stakeholders can interact with each other with much less need for establishing and ensuring mutual trust. This can in some cases decrease the need for paperwork and third party validation and therefore decrease costs. For smallholder farmers and MSME’s, this can mean that they can engage in international business much more easily and gain access to loans and insurances where they previously wouldn’t be eligible for. Therefore, for smallholder farmers, blockchain means that their smartphone can be all they need to build up trust and participate in the global economy. Download our Chain of Possibilities report and check out our other reports below to learn more about the potential of blockchain in agri-food specifically for smallholder farmers in low and middle income countries.
What is NOT the added value of blockchain in food supply chains?
Although it all sounds nice, using blockchain of course does not mean that the data is always correct. This is one of the biggest misconceptions people often have regarding blockchain. When someone uploads false or fraudulent information, this data can’t be altered afterwards and everyone else can trace this data back to that person, however it might still be wrong. This is also often referred to as the “garbage-in-garbage-out” phenomenon, or in blockchain’s case better said: “garbage-in-garbage-forever” as nobody can ever take it out.
Another big misconception regarding blockchain in food supply chains, is that blockchain means traceability, meaning that one would need blockchain in order to trace their supply chain. This has probably to do with all the confusing statements such as “due to blockchain XX company could trace back their products in XX seconds”. This is not entirely true. The blockchain simply secures the data so you know from where it originates and cannot be altered by a central organisation. The traceability software itself is mostly stored on a regular centralised server for the most part. The blockchain in this case only stores some essential information that the companies want to make public. The traceability is just regular software coding.
Use cases for blockchain in food
Trabocca: In pursuit of poverty free coffee
On their journey to poverty-free coffee, Trabocca saw the importance of transparency and traceability, and employed our new platform, Trace, as a tool to answer the question whether coffee farmers are earning a living income.
See this case
“We used Trace to track both the farmers’ deliveries and the payments they received. The platform allows us to provide our customers with insights about these transactions.”
Verstegen: Nutmeg on the blockchain
Verstegen Spices & Sauces and Fair food used blockchain to make the production of nutmeg transparent.
See this case
“What an honest and sincere outcome of the project. Very beautiful what we are doing. I hope it will get a nice follow-up.”
A coconut’s journey
In 2017, Fairfood became one of the first parties worldwide to sell a food product that had been logged on blockchain from tree to plate: 1,000 Indonesian coconuts. A pilot project to encourage large coconut players to explore their own chains.
See this case
“By scanning the note you can see where it came from and what exactly was paid to whom. This way we prevent abuse and you can see that the farmers have received a fair living income!”