June 13th 2017
Food Supply (block)Chain
By: Annie Wu
Validation and traceability requirements increase supply chain costs and can exclude smaller vendors from the global food economy. Blockchain is a budding technology that simplifies and lowers the cost of tracking and validation. Major food companies are starting to use blockchain to transform supply chain economics.

From seed to mouth, food supply chain errors can be next to impossible to trace or investigate. Scale is global, and dozens of unpredictable events can unpredictably halt the supply chain at every step. Suppliers are always looking for ways to save expenses and sometimes cut corners when their own supply is slow, so it's essential for food brands to track and validate their ingredients seamlessly.

The 2008 China Milk Scandal caused illnesses in 300,000 babies and lead to six deaths. Milk powder was laced with toxic chemical melamine. The dairy company, Sanlu Group, knew about the contamination but continued to produce and distribute the formula for months. The incident highlighted how crucial quality control is for food companies.

Another example of bad tracking is the 2013 Europe horse meat scandal, where foods containing beef were tested and proven to contain horse meat for up to 100% of the total meat content. As seen from the map below, tracing the meat back to the true source was extremely difficult and retailers blamed random suppliers and suppliers dodged the blame. It turned out the horse meat originated from the black market.
Connections in the horse meat scandal across Europe (Source: The Guardian)
There have been many other cases of contamination, including tainted spinach across the United States in 2006 and the more recent Chipotle E. coli outbreak.

Blockchain is a reliable and cost effective way to solve traceability issues, increasing security for food companies by digitally recording every item's complete journey.

In the simplest terms, blockchain is a digital ledger where transactions are recorded publicly and confirmed anonymously. Each new record of any sort of transaction is called a "block" and is linked to the previous block; essentially, once information is entered it cannot be altered.

Here's a quick blockchain explainer by IBM:
The main advantages of blockchain are:
  1. It is decentralized, so no single company can have full control
  2. It's cryptography-based, rendering it unhackable and always providing full disclosure and accountability.

Blockchain includes smart contracts that can prevent fraud, which are computer protocols that execute terms of a contract and facilitate trade without a third party.

Blockchain can improve transparency and accountability in the food supply chain by storing and tracking every link in the supply chain. Blockchain would make tracking more accurate and can reduce human errors, theft, and fraudulent transactions.

For an organic apple, the blockchain system would create a digital record with a timestamp of the food's journey through the supply chain, holding people and companies more accountable for their actions. It begins with the growers who send a digital transaction outlining where it was grown, how it was grown, and in what environment it was grown it to the apple pickers. While this transaction is between the two parties, it is added to the public ledger that is the blockchain. The apple picker then sends a transaction to the packaging facility containing the number of each type of apples harvested. Next, the packaging facility will send a transaction to the storage facility outlining the number of packages sent. The storage facility will then send a transaction to the transportation company with information on the temperature it was stored in and how long it was stored for. Each individual transaction is stored on the public ledger, where it's verified by other members in the network and then added to a chain in chronological order. The process continues from the transporting company to another packaging facility, then the retailer and finally, the customers.

Companies are beginning to test blockchain for food supply chains. For example, Walmart is teaming up with IBM to track the movement of their pork in China using blockchain technology. They track how the meat flows from manufacturers to processors to distributors to retailers and then to the consumers. More specifically, they record farm origin details, batch numbers, factory and processing data, expiration dates, storage temperatures, and shipping details. Though still in the testing stages, Walmart representatives stated that things are glowing smoothly and they have every intention of expanding the use of blockchain to multiple food items in various countries. This is on track to being one of the biggest implementations of this blockchain technology to date.

Complex global supply chains make it hard for food companies to accurately track food origin, processing, and safety. Blockchain technology can document every article's life cycle on a public, digital record, resolving problems of accountability and visibility in the supply chain. Blockchain has the potential to completely transform and optimize all food supply chains, reducing the possibility for error while saving time and money.
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