Block Rockin Eats: How Blockchain Could Revolutionize The Global Food Chain

Source: Sharon Cittone - Seeds&Chips - Chief Content Officer

12-05-2017

Unless you’ve been on a vision quest somewhere outside of the bounds of data coverage, you’ve probably been hearing quite a bit about blockchain recently. It is the technology upon which cryptocurrencies like bitcoin depend, and as the value of a Satoshi continues to climb, so too do the potential applications for blockchain in other areas of global commerce.

Companies have begun to test blockchain technology within the global food chain, with startups and well-established corporations alike trying their hand at what may be the next big leap in the Internet of Things. If you’re still at a loss as to how blockchain works, how it could be applied to things like tomatoes or olive oil, and why it might make a difference don’t worry, you’re not alone. Blockchains are a complicated concept that even the most tech savvy people have a hard time explaining but beneath all of the jargon is a system that could make a huge difference in the food that makes its way to your table.

Blockchain Explained: A Primer

Imagine an old-timey General Store like the ones in a Western that your grandfather used to watch. There was inevitably a wise old store owner who kept records of everyone’s purchases on his ledger, and he might apply his own unique codes to each purchase whether he was to be paid in cash, or in trade. As long as the store owner was able to keep track of the ledger, ensure that it was kept up to date, and keep it in a safe place, this could be quite an effective system. Indeed, relationships like these, based on mutual trust between merchant and client, were often the backbone of local economies.

Now imagine that the same ledger were to be used, but with no old-timey shopkeeper and instead of tracking the transactions of a local business, the ledger would keep a record of large sums coming in and out from around the world in a sort of intergalactic general store. How could you be sure that it would be kept safe? How would you be able to track all of the transactions? How could you trust anyone in the system, if you didn’t even know who they were or where they were from?

Enter blockchain. This digital ledger is administered and monitored by a peer-to-peer network that records, observes, and encrypts every single economic transaction, not only of money but of pretty much anything and everything that has value. Each transaction that is recorded and encrypted becomes a block, and when the transactions continue they form chains. As such, no blocks can be altered without altering every other block that follows it in the chain, and that requires the approval of everyone monitoring the system. Because the system is so vast and those virtual hall monitors are themselves rewarded when more people sign on to the ledger, there are a lot of checks.

With these controls, Blockchain makes it possible to establish an economy based on trust between individuals that is decentralized and incorruptible, and which opens a financial system to everyone. In a blockchain based system, individuals don’t have to worry about their credit rating, a bank branch that will see them, or a loan for which they might not meet the strict criteria set up by a bank or financial institution. All you need is a smartphone, a bit of bandwidth (ok, a lot of bandwidth) and something of value that you want to be included in the ledger. The old timey general store is dead, long live the old timey general store.

The Food Chain on the Blockchain

Until now, blockchain technology has been most successful when applied to cryptocurrency like Bitcoin (for which it was invented) along with hundreds of other cash-based networks. With the coming of Ethereum, blockchain advanced beyond the idea of currency exchange with Dapp, or decentralized application. Where Bitcoin and others provide users with a peer-to-peer electronic cash system, Ethereum makes it possible to apply the same concept to things like title registries, voting systems, or regulatory compliance.

Or, food. The global food chain is made up of countless steps and exchange points between planting, harvesting, transporting, packaging, shipping, and purchasing any one of the millions of things we eat every day. Moreover, the very nature of the food chain is decentralized because nearly anyone can grow their own food and sell it on the global market, as long as they are in compliance with health and safety regulations.

But this is where things start to get messy. The global food system is mired in competing and often contradictory regulations that differ by state, region or country and along the way, there is no telling what happens to the products themselves. The recent EU egg recall is a perfect example of this dilemma: in September 2017, 40 different countries were found to be selling eggs tainted by the pesticide Fipronil, which may be harmful if consumed in large quantities. While two people in the Netherlands were detained for their role in the scandal, the actual origin and cause of the contamination remains a mystery.

Enter blockchain. Because it relies on the collaboration of many different players with competing that are nonetheless all directed towards the same goal, blockchain technology manages to transform anarchy into a functional system. There is no one focal point or director of a blockchain, but each individual involved has an interest in doing their part to make the system work. Applying this to the food chain means that the entire life cycle of a product could be monitored, recorded, and protected against interference or corruption so that when it reaches your plate, you know exactly where it came from. More specifically, there are three areas where blockchain technology could significantly improve the global food system:

1. Transparency and accountability. By tracking a product from its point of origin to its point of sale, each hand that touches it is tracked and signs off on their participation in the life cycle of a food item, whether tomatoes, baby food or beef. If a recall must be put into force, regulatory bodies can much more quickly identify the points along that cycle, target their inquiries, and come up with definitive solutions.
2. Monitoring best practices, origin, and processing integrity. Products claiming to be ‘farm to table’, ‘organic’, or ‘fair trade’ abound on the global market, but there is no foolproof way to ensure that these labels are legitimately applied and that the foods they label are faithful to those ethical standards. Moreover, counterfeit products account for tremendous losses on the global market, not only to large companies but to the small farmers who try to ensure the standards of their products. Tracking a product like olive oil from the time olives are harvested from the tree to their bottling in a plant and distribution around the world could save billions of dollars a year while also delivering the high-quality product that consumers believe they’re buying.
3. Access to the market for developing countries. Because blockchain is available to anyone with a smartphone and an internet connection, farmers and producers in developing countries can participate in the global food chain on their own terms instead of relying on multinational conglomerates to do their bidding. The cocoa trade, which relies largely on West African cocoa farmers, translates to low returns to the people actually doing the hard work of growing and harvesting. If we truly want to support ‘fair trade’ we must create the conditions under which it can actually happen.
4. Ensuring international labor standards. As the Guardian recently uncovered, conditions for vegetable farmers in Southern Italy are tantamount to indentured slavery. Sadly, this is but one example of a vulnerable population whose rights go unprotected while they provide a vital service for the survival of the world’s population. Building labor standards into the blockchain is as easy as entering a few computer codes, and enforcing them becomes a necessary part of the product as growing, transporting, or packaging.

These may sound like lofty goals, strung together by wide-eyed millennials who think the problems of the world can be solved by a few lines of computer code. However, integrating blockchain into the global food chain can increase productivity, efficiency and ultimately profit, which should give anyone who stands to gain from the food industry cause for reflection. Indeed, food-based blockchain is already being developed by some of the biggest names in international business.

Building Blocks: Blockchain in Action

Applications of blockchain to the food system are already sprouting up, and they’ve got some big names behind them. Ripe.io, a startup that uses blockchain in agriculture, was started by two former Wall Street financiers who believed that blockchain could be used in more meaningful ways than just mining for cash. Their pilot project, on Ward’s Berry Farm outside of Boston, tracks and documents the supply chain of the first ever blockchain tomatoes. They monitor the ripeness, color, and sugar content of 200 tomatoes on 20 different plants using sensors to record environmental factors including light, humidity, and air temperature. Additional sensors placed in the buckets where the tomatoes are packed for distribution keep track of the humidity in the storage facilities. Ripe has also partnered with Sweetgreen Inc., a farm-to-counter salad franchise, to track their crops and distribute that information to farmers, food distributors and restaurants to whom they deliver. The result is a higher quality product with a traceable chain of custody that can legitimately call itself farm-to-table.

Swiss startup Ambrosus has also employed the blockchain protocol to track one of the most contentious and corrupted products in the supply chain, olive oil. Their project mapped the olive oil supply chain and identified the stakeholders and weak points in the system, with extensive research into the ways that olive oil can be mislabeled and mishandled, resulting in a poor quality product that makes its way onto supermarket shelves around the world. Fraud is rampant in the olive oil industry, with an estimated 70% of the olive oil sold in the US either counterfeited or adulterated. These cases of fraud are not only economically damaging: in 1981, counterfeit olive oil sold in Spain led to thousands of deaths after the oil was found to have been adulterated with industrial grade-grapeseed oil. Due to the lack of transparency in the olive oil supply chain, the guilty parties were never found. The Ambrosus Olive Oil project shows that while the olive oil supply chain is particularly vulnerable as the popularity of olive oil continues to grow around the world, implementing blockchain protocols could effectively save the industry from its own success.

Perhaps the biggest sign that blockchain means business is the August announcement that some of the largest groups in the global food chain would collaborate with IBM on a blockchain protocol designed to increase consumer confidence in their products. The computer giant introduced a fully-integrated, enterprise-grade production blockchain platform via the IBM Cloud which allows users to access data about any number of products within minutes. Using the Hyperledger open source software, the IBM blockchain has tested a number of pilot projects where any participating member has a level of control over transactions, but no one member has exclusive control. Thus far, IBM has delivered their blockchain platform to over 400 companies including financial services, supply chains and logistics, retail chains, governments, and health care systems. The food supply consortium includes Dole, Nestle, Unilever and Walmart among many others. If blockchain began as a refuge for techies, it’s certainly much more than that now.

Hitting a Roadblock? Challenges to the Blockchain Protocol

With all of these applications and many others on the horizon, the future looks bright for blockchain. But as any revolutionary will tell you, there’s a big difference between ideas and execution, and bringing blockchain from the virtual world of bitcoins to the real world of tomatoes is not without difficulties. Those digital general store ledgers work because they’re comprehensive, and every aspect of the system is integrated into the larger goal of creating and protecting value. When you apply that to the lived experience of a food product, there are an enormous amount of factors to consider. For example, what if the truck drivers transporting the food aren’t members of the blockchain? Even the founders of Ripe admit that blockchain is a great resource, as long as people are willing to collaborate. What if unionized truck drivers aren’t allowed by their own rules to be in the blockchain?

Generating incentives is another major challenge standing in the way of making blockchain a comprehensive solution for the global food chain. Ripe didn’t generate any revenue on their pilot project with Ward’s Berry Farm, and for a farmer living hand to mouth, this might not entice them to invest in the equipment, certification, and training that blockchain protocols require. And while IBM’s blockchain protocols may be attracting the likes of Unilever and Nestle, there’s no indication that small or medium sized businesses will gain any greater access to the market, solely by virtue of their participation in the system. For blockchain to become truly transformative, the people whose lives and livelihood are most affected by it need to know that it will make their businesses stronger in the long run, and they need to see it for themselves. Just as with Bitcoin, it’s the wealthy investors with capital to lose who are best positioned to take big risks. For the little guy, blockchain might still be a handful of magic beans that they sell the farm for in the hopes that they’ll grow.

All of this leads to the biggest challenge of blockchain to the food system, legitimacy. In its earliest stages, blockchain technology looks incredibly promising for farmers, distributors, and consumers. But if it doesn’t manage to ensure the quality of a product, or if it doesn’t result in fewer cases of food contamination, will people still believe that it has value? Any new idea or innovation ultimately faces this challenge, but in the global food chain, the stakes are increasingly high. Putting all of our eggs in the blockchain basket risks lowering consumer confidence even further, and raising skepticism among the very people that blockchains are meant to protect.

While it’s too early to tell if blockchain is the wave of the future or a passing fad, the potential rewards do seem to outweigh these concerns. If the global food chain can truly become the global blockchain, the very nature of our relationship to food could be transformed for the better. 

By Sharon Cittone - Seeds&Chips - Chief Content Officer