Decentralizing the Food System: The Impact of Blockchain

The food industry is a behemoth. It handles everything from food production to distribution and consumption. The restaurants you visit with your family, the products you buy at wholesale or retail, and the food you order from delivery services like Ubereats. All are part of this industry. 

It's safe to say that we get all our nourishments thanks to the food industry. 

That's not all! The food industry plays a big part in a country's GDP and global economy. Take the USA, for example. Here are some interesting stats regarding the food industry in this country.

1. The food and beverage sector employs 15 million people in the USA. 
2. The US retail industry is worth over $800 billion and employs 3 million people. 
3. The US exported a record $153 billion agricultural products, including grains, livestock, dairy and horticultural products. 
4. The food manufacturing industry is worth over $1 trillion and employs 2 million people. 
5. There are over 900,000 food and beverage establishments in the US. It includes cafes, restaurants, and fast food chains. 
6. The food industry accounts for 10% of the country's GDP. 

But like any other industry, it has its fair share of challenges. There are food safety concerns, supply chain inefficiencies, and sustainability issues.      

Customers are more aware than ever before and want to know their food's source. There is an increasing call for transparency and traceability in the food industry. 

Can Blockchain Development Companies solve the above challenges? Let's explore it in this blog. 

The Current Challenges in the Food Industry

Let's dive into detail about the various challenges the food industry faces. 

The food we consume daily, where it comes from and how it was produced. Most of the time, people don't know due to a lack of transparency in the supply chain. 

There is no standard system that tracks and documents the origin of food. Poor coordination between farmers, processors, wholesalers, retailers, and logistic companies can exacerbate the situation. Inefficiencies and bottlenecks further increase costs and bog down the entire system.      

What if the food is contaminated? There is no way to find and recall it, which can put a person's life at risk if they eat a food product that is unsafe for consumption. 

Customers want to know if the food is safe to consume and produced sustainably and ethically. 

With increasing awareness about climate change, they are concerned about excessive water consumption, use of harmful pesticides and chemicals, and emission of greenhouse gas. 

Animal welfare is also a hot topic, with animal activists raising issues regarding animals being confined in cramped places, lack of outdoor spaces, and excessive use of antibiotics and other harmful substances.  

Food products are often mislabeled. The cheaper and lower quality products are marketed as expensive or higher quality ones. 

Due to a lack of transparency and traceability, there is no way to determine food production's social and environmental impacts.

How can blockchain technology address all these challenges? Let's look into it in the next section.   

Five Ways Blockchain Can Address the Challenges in Food Industry

Blockchain can overhaul the food industry. Here are five ways it can do it, with examples. 

Food Safety

Blockchain can identify the source of any foodborne illness by tracing the origins of contaminated food from the farms, which can prevent any outbreaks. Here is an example of it: 

Let's say there is an outbreak of E.Coli at a restaurant. Traditional methods won't be able to find the source of contamination as the food may have passed through different channels before reaching the restaurant. Blockchain can trace the farm from which the contaminated food came, allowing authorities to recall the harmful batch and prevent further outbreaks.  

So, this is how blockchain can ensure that the food is safe by providing a transparent and immutable record of its origins. 

Supply Chain Transparency

The blockchain can provide a transparent and immutable record regarding the movement of food products throughout the supply chain. It can forge trust between producers and consumers. 

Customers want to know the origins of the food they are purchasing, like where it was grown and how it was processed. Traditional supply systems cannot provide that kind of information to them. 

But blockchain can trace the food, allowing customers to see the complete record of a food product's journey from the farm to their plates. It can also provide information about the farmers who grew the food, the processors who prepared it, and the logistics companies that transported it. 

Through its ground-breaking combination of features like smart contracts, Ethereum can significantly benefit supply chain management. 

Food Waste Reduction

Blockchain can reduce food waste in the industry. It can achieve this by tracking the movement and storage of perishable food items, ensuring the food gets consumed before it spoils.

Imagine a farmer who grows a variety of fresh produce, such as tomatoes, cucumbers, and peppers. If the farmer cannot sell all of their vegetables before it spoils, they may throw them away. 

However, by tracing the produce on a blockchain, the farmer could connect with buyers interested in purchasing the vegetables before it spoils. It could include restaurants, supermarkets, or even individuals looking to buy fresh, locally-grown produce. By using blockchain to track the movement and storage of perishable food items, it is possible to reduce waste and ensure that more food gets before it rots.

Fraud Prevention

Blockchain can prevent fraud in the food industry by providing a tamper-proof record of transactions and provenance.

For example, a customer purchases a high-end bottle of wine from a retailer. They want to ensure that the product is genuine and not a cheap knock-off. Tracing the wine on the blockchain will allow the customer to see a complete record of its journey from the vineyard to the retailer. 

It could include information about the vineyard where the grapes were grown, the winery which produced the wine, and the distributor who sold it to the retailer.

By providing this level of transparency, blockchain can prevent fraud and ensure that consumers get what they pay for to the seller. It will build trust and increase confidence in the integrity of the food supply chain.

Improved Efficiency

Blockchain can improve efficiency in the food industry by streamlining supply chain processes and reducing the need for different channels.

For example, a farmer wants to sell their produce directly to a restaurant. They may need to go through a distributor or wholesaler to reach the restaurant, adding extra costs and complexity to the process. 

However, if the farmer and restaurant can connect and transact directly using a blockchain platform, they could bypass these intermediaries and transact directly. It can save costs for the farmer and the restaurant, as they would not need to pay the fees charged by the intermediaries.

Blockchain will reduce the need for intermediaries, leading to cost savings and better efficiency.

Further Reading: How Blockchain Could Revolutionize Traditional Banking

Examples of Blockchain Initiatives in the Food Industry

Walmart 

Walmart uses blockchain technology to trace food products' origins and ensure they are safe for consumption. 

They have partnered with the IBM food trust platform, a blockchain-based system for tracking food products. 

Walmart uses this system to track the movement of pork in China and produce in the USA.

The pork meat from a Chinese slaughterhouse gets recorded on the blockchain along with information like the pig's origins, the farm it came from, and any veterinary treatments it received.   

Additional data like the date and location of any inspections, transportation details, and storage conditions are recorded as the pork meat moves through the supply chain. 

This information is available to every supply chain member, including farmers, processors, and retailers. It allows them to track the movement of the pork meat and ensure that it's handled with care.  

IBM Food Trust Platform 

The IBM food trust platform is a blockchain-based system for tracking food products. Companies can use this platform to trace the movement of food products from the farm to the store shelf. With better traceability and transparency, all supply chain members can access the recorded information on the blockchain.  

The IBM food trust platform records information about the food's origin, such as: 

1. The farm the food came from
2. Details about its handling and transportation 

This data is available to everyone. 

Authorities can use this platform to track the source of any foodborne illness and other issues that may arise, preventing any outbreaks and protecting customers. 

Companies can use this platform to reduce waste and improve supply chain efficiency by optimizing inventory management and minimizing spoilage. 

Blockverify 

Blockverify aims to combat fraud and counterfeiting in various industries. The platform uses blockchain to provide a tamper-proof and verifiable record of a product's origin and ownership. 

The platform uses smart contracts, IoT sensors, and blockchain to track and verify products through the supply chain. A product is assigned a unique digital identity once it gets scanned by the sensors. This identity contains information about its origin, ownership, and authenticity. A verifiable and unchangeable record is created by attaching the digital identity to the physical product.

Blockverify wants to provide customers with a means to verify the authenticity of a product before making a purchase. It can also help companies identify fraud in their supply chains. 

Further Reading: How Blockchain Can Transform the Insurance Industry

A Potential to Transform an Industry

Blockchain can transform the food industry by improving supply chain transparency, traceability, and efficiency. Identifying and tracking issues like food contamination or foodborne illness will be significantly easy by creating a digital record of food products. 

Smart contracts on the blockchain network can streamline food supply chain processes and reduce costs. 

Blockchain technology will boost consumer confidence by providing additional information on products they are purchasing.  

Companies can reduce food waste by identifying issues more quickly. 

The technology is still in its nascent stages. But we are witnessing more and more blockchain development companies coming to the forefront. For example, Hyperledger is an umbrella project of open-source blockchains and related tools to support the collaborative development of blockchain-based distributed ledgers.

Only time will tell how it fares in the future.