Blockchain has the possibility to disrupt the food industry across sectors and go beyond traceability of product origin or control quality, according to a new report from Axfoundation and IBM. The report opens for using blockchain to also track social indicators and ensure that working conditions are adhered to in the value chain. The report covers some of the key findings from Axfoundation’s cross-sectoral project that has mapped three different value chains use cases to explore possibilities of blockchain in the food industry for increased control, traceability and transparency.
“Instead of focusing on one single retailer or one single value chain, we looked into various product sectors, strawberries, fish and pigs, and found that blockchain can address industry-wide problems and tackle some of the challenges that our planet faces. I dare to say that the project is unique in bringing together different actors to share insights and learn from blockchain challenges and opportunities.” – Hanna Skoog, Axfoundation.
Industry-wide problems demands concerted action
Axfoundation has explored the potential of blockchain in the food value chain since 2017, looking at aspects of control, traceability and transparency. Among the participants in the project are retailers such as Axfood, Martin&Servera, food producing companies such as Orkla and Coca-Cola, public actors such as the National Agency for Public Procurement as well as non-profits such as the Marine Stewardship Council (MSC) and Oxfam.
“Addressing industry-wide problems demands a concerted action by all stakeholders, There is a need for public, private and not-for-profit business to collaborate to address the food chain challenges jointly, and the report and project is a step towards that.” – Hanna Skoog
Adding value by making data accessible to consumers
There is no shortage of data in the supply chain to tap into, however the report shows that the information is often invisible and cannot be captured easily with today’s systems nor reach the consumer in an accessible way. Blockchain, using a distributed shared ledger, could record such data and share it with those who needs it. The project has seen a growing desire from retailers and wholesalers to establish greater transparency both in regard to product origin, production methods and social practices at production origin.
“When sustainable practices become visible to consumers who appreciate them, the worth of applying these practices grows, together with the value of the produced goods. Blockchain may not be the whole answer – but it can enable companies to transform to a more sustainable value chain.” – Hanna Skoog
The beauty lies in the eye of the beholder
The report highlights a wide array of benefits that blockchain could contribute with. What particular value it may bring depends on what defines a better experience for a certain supply chain participant and what value it would give them. For example, ensuring that consumers can access information on how a pig was fed might be key for one value chain. Whereas for another, tracking social compliance and working conditions might be of higher importance.
– The most obvious benefit of blockchain in the food industry is traceability in terms of origin or quality of a commodity, says Hanna Skoog. However, it may just as well be possible to track social indicators and ensure that working conditions are adhered to. For example, if workers on a Moroccan strawberry farm would use the blockchain technology to log their working hours according to their contract, a retailer can trust that the working conditions meet the standards they expect of their supplier.
The report shows that, technically, blockchain can bring new opportunism for automation and optimization in the supply chain while allowing ethical claims to be verified and provide digital proofs of fair-trading practices. However, how it could work in practice is a different matter. Therefore, one of the next steps for Axfoundation is to look further into a potential value chain to see if it is feasible to test blockchain on social indicators.
“Together with Oxfam and Axfood we are doing an in-depths pre-study at a supplier of strawberries in Morocco, says Hanna Skoog. The purpose is to see if it is feasible in reality to track and validate social data at farm level. We are hoping that this will pave the way for a pilot project next harvest season.”
Blockchain is a shared ledger, in which all kinds of information can be recorded and shared with everyone who needs it. What is shared and why, is agreed by all participants. The four typical fundamental mechanisms of blockchain technologies are: the shared ledger itself, a method for consensus, smart contracts, and efficient ways to enforce some degree of privacy. These mechanisms enable greater provenance to where products are sourced from, immutability and finality. They ensure that transactions cannot be changed or added to by anyone. Blockchain achieves that without any of the checks and controls needed today.
Verified origin of data: Although blockchain doesn’t guarantee that the uploaded data is correct, it always provides a clear audit trail showing who uploaded it, and when. Actors are clearly tied to their actions and root causes can be traced.
Trusted processes (or workflows): Blockchain and smart contracts make it possible to automatically track the progress of the flow of goods. They give visibility to all parties on the status of the goods.
Participants in the project:
Marine Stewardship Council (MSC)
Martin & Servera
The Absolute Company
The National Agency for Public Procurement