Blockchain and the food industry: bound to meet each other
9 May 2019 | Written by Nicholas Chilese
From the first projects of the giants Walmart and IBM to TuttoFood, the international B2B fair for food & beverage in Milan, the blockchain as a solution to trace the food supply chain: an in-depth analysis of benefits and obstacles
The food industry is experiencing a real technological revolution: drones, big data, sensors on machines and fields, smart packaging and apps supporting logistic-administrative decisions. A market, the one of AgriFood in Italy that, according to the estimates of the Smart AgriFood Observatory of the Politecnico di Milano, is worth over 100 million euros.
In this changing landscape where solutions are multiplying to organize production with attention to eliminating waste and optimizing time, the experimentation of new technologies to track the supply chain remains uncommon.
The use of the blockchain. According to the AgriFood Observatory in Italy, in fact, the tracking technologies are “traditional” in 55% of cases and therefore require extensive human intervention, which can more easily lead to errors. In 42% of cases, there is more digital and automatic management and only in 8% of cases, the use of barcodes, RFID, IoT sensors or blockchain is detected.
Yet the world’s largest retail and distribution chains have been experimenting with blockchains in their supply chains for some years now.
At the end of 2016, the world giant Walmart moved with IBM to create a meat tracking system on the Chinese market. In 2018, fruit producer Dole, Unilever, Walmart himself and Swiss Nestlé joined together in a consortium to implement blockchain technology through their supply chains in collaboration with Big Blue. Carrefour also announced an important investment plan that will focus on the implementation of blockchain systems to track 20% of its references by 2019. Finally, according to Gartner, by 2025, 20% of the top ten global retailers will use blockchain systems for food safety.
The advantages. This mobilization aims to increase the protection of the client’s health and the quantity and transparency of information provided to consumers.
The World Health Organization estimates that there are sixty million people who get sick globally each year because of foods that are not suited to quality standards. In Italy, in 2018 the NAS seized 14 million products in companies, supermarkets, and restaurants that did not comply with legal obligations. Moreover, in the US, a study by the Food Marketing Institute claims that 75% of consumers do not trust what is reported on the labels.
A series of problematic issues for which the blockchain can be part of the solution.
As detailed in previous articles of the magazine this computer technology is similar to a “distributed” register which, unlike the classic data storage system on centralized servers, allows them to be stored on a large number of network “peers” or “nodes” represented by individual devices connected to the Internet. This different method of storing information allows some advantages: first, the register is public, there is, therefore, information transparency and secondly, it is immutable, precisely because the nature of the distributed database makes it difficult to violate, and finally the tracking and transmission system information via blockchain is very fast.
In the reality of distribution chains, the characteristics of this computer technology are extremely efficient in the case of tracing, for example, of a contaminated lot. With the classic methods, according to Walmart’s tests, it took more than six days to trace a package from the orchards of Ecuador to a supermarket in the United States, with the blockchain system for the same operation took just over 2 seconds.
According to data collected by 76 companies in the world on display in the TuttoFood Blockchain Plaza by Filippo Renga, director of the Agrifood Observatory, the implementation of digital tracking systems has led to a 42% increase in the efficiency of supply chain processes, a 38% increase in the effectiveness of traceability systems and an increase in revenues of 14%.
Risks and limits. But what must be emphasized concerns the implications of the difficult application of the blockchain and the limit represented by the off-chain.
In the case of widespread application, in fact, the necessary definition of communication standards in terms of data format and type, which is anything but trivial, could be an obstacle. Furthermore, in relation to the limits, the off-chain theme must be mentioned, linked to the verification of information before it is entered into the IT system. Well, if the one who is responsible for entering information at a certain point in the supply chain manipulates it before being inserted, we would find ourselves having a wrong datum in a rapid and transparent system. The problem would, therefore, lie between what happens in the supply chain and what comes in as information in the blockchain system.
Overcoming the “off-chain” obstacle becomes plausible with the complementary use of other technologies such as the IoT, the internet of things, that deal with the automatic detection of data and information where possible.
In conclusion we can be sure of the goodness of the use of the blockchain in terms of supply chain tracking, but it should be emphasized that in order for it to be an effective technological transaction, is needed a complementarity in the use of new technologies and above all a broad involvement not only of the entire value chain but also service providers and the Public Administration in particular.
In this sense, Gianmarco Centinaio, Minister of Agricultural Food and Forestry Policies, intervened at TuttoFood in the “Blockchain Plaza” area, who announced his intention to set up an inter-ministerial work table to involve all stakeholders on the topic within a few months. develop a medium-long term planning system.
Shared planning is essential to strengthen Italian exports and combat the phenomenon of Italian sounding, the counterfeiting of Made in Italy products, worth 90 billion euros globally. A huge value considering that the value of Italian food exports in 2018 was less than half, amounting to 41.8 billion euros (Istat).