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Benefits and challenges of blockchain food supply chain growth

Using blockchain in the food supply chain may improve consumer safety, but experts say reluctance from suppliers and a lack of viable use cases are preventing widespread adoption.

For retailers and wholesalers, the dream of deploying blockchain in the food supply chain is to control food freshness and safety to limit recalls and liability issues, while also increasing efficiencies and reducing waste. Some of the relief from liability and recall concerns comes from moving liability from the buyer to the supplier. However, doing so causes some trepidation among smaller suppliers with fewer resources than their buyers.

"Anytime that you hold a supplier accountable, there is reluctance," said Scott Carlson, head of blockchain security at Kudelski Security, in an email interview. But there are upsides to that accountability for suppliers, buyers and consumers, he said, including holding bad actors accountable for their bad practices.

It's unlikely that there are a lot of food manufacturers who are purposefully neglectful. For those that are, not following expected rules of food safety is sure to put them out of business.

Wider use of blockchain in the food supply chain could also make suppliers more accountable for labor violations or cutting corners. The food market is traditionally a behind-the-scenes business, with few people understanding who does the work or why certain steps are in place. Bringing this information to the public eye is bound to shine a light on bad practices, especially in countries that are not yet fully industrialized, Carlson said.

"The hope is that the consumer will be able to pick up beef at the grocery store or from a delivery service, scan it with a QR code, and then see where the cattle grazed before they turned into ground beef," explained Josh Datko, owner of Cryptotronix, a consultancy in IoT security that frequently works with blockchain companies, in email.

Benefits and challenges of blockchain food supply chain growth

"The primary benefit of blockchain in the food and beverage supply chain is consumer safety," said Alex-Paul Manders, a director at Information Services Group, a research and advisory firm, via email. "It is probable that more food and beverage organizations will become involved with track-and-trace initiatives over the next 12 months as the result of changing or anticipated legislation changes at the FDA [Food and Drug Administration] level," Manders added.

Other benefits can come from societal pressures, consumer demand and legislator awareness of labor, nutrition and environmental issues.

Detractors fear that these benefits can be offset by the deliberate entry of misleading or incorrect data into blockchains.

"This gets to the nub of the issue: A blockchain-based system can provide proof, but it can't provide truth. In other words, if the data that's recorded is wrong or fraudulent, it remains wrong or fraudulent once it's been recorded. The only exception: if the entire lifecycle is on chain," said Martha Bennett, principal analyst at Forrester Research, in an email.

The primary benefit of blockchain in the food and beverage supply chain is consumer safety.
Alex-Paul MandersDirector at Information Services Group

However, fraud is not expected to be a major problem.

"It is true that just because something is written to a blockchain doesn't mean that it is accurate. What is true and accurate is that a record [and] transaction took place using a series of predefined rules and it is publicly auditable. This creates a real disincentive to submit data that is not trustworthy, as the 'lie' cannot be hidden, as it is immutable," wrote Paul Neto, chief marketing officer of Measure Protocol, a marketplace that buys and sells data from individuals and records the transactions on a blockchain, in response to emailed questions.

While the challenges of using blockchain are many, Manders noted that 90% are nontechnical.

"These include governance, process reengineering, sharing data with partners, defining data standards, and developing business strategies and use cases," he said.

"Technology shortcomings won't be the biggest inhibitor," Bennett said.

She warned that blockchain may be facing "a winter" of disillusionment from internal arguments over what is and isn't blockchain, "an argument that's unwinnable anyway, given the different architectures of the platforms that are available today."

She said she expects a shift in terminology, from blockchain to distributed ledger technology, as a result.

You are here on the blockchain map of progress

Blockchain is still in the early stages.

"Not surprisingly, it's taking time to build out networks and add items to be tracked -- there are many off-chain elements to consider," Bennett explained. "It's also worth remembering that we're dealing with a technology that's still in its infancy, so it's just as well not to try and scale out too soon."

In these early days, the food industry is still trying to figure out which use cases make the most sense for blockchain food supply chain deployments and growth.

"Right now, there are a few successful pilots, funding to study what it will take to execute on a global level and conversations around the topic," Carlson said.

However, blockchain currently has better footing in food supply chains than it does elsewhere.

"It's fair to say that supply chain is one of the most active areas when it comes to exploiting blockchain technology. Most initiatives are still proof of concepts and pilots, but we've seen a number transition to production," Bennett said.

She pointed to IBM Food Trust as an example.

"There are also many other initiatives involving the tracking of food items. Cargill has even contributed supply-chain-specific code to the open source Hyperledger Project to make it easier for others to adopt the technology. So, yes, these blockchain networks are for real."

Meanwhile, consumers are increasingly attracted to technologies that instill trust in food data after years of food labels being manipulated by the industry.

"Producers see that the rise of blockchain, with sourcing of each product as it comes into the supply chain, helps them give consumers the information they require," Carlson said. "Consumers like the idea of a fully tracked food supply, but would they be willing to pay the extra cost for it?"

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