Blockchain in Action: Solving Problems in the Food Supply Chain

In an industry where safety and transparency have to be held to a consistently high standard, it makes sense to infiltrate blockchain technology into Australia’s food supply chain. Benefiting everyone from farmers to retailers to consumers, blockchain could tackle many of the long-standing issues in food production and supply.

Brands around the world are beginning to see the advantages of the technology, and are using innovative processes to bring value to the supply chain and ultimately to the final customer, who can now get access to the complete ledger of data for their product.

When more consumers are taking an active interest in how a meal ends up on their plate, trust, transparency and traceability have to be the primary focus for brands and other stakeholders involved in the process.

What’s wrong with the Australian food supply chain?

The scale of food safety issues rises globally each year and the impact falls on both developed and emerging economies – who lose billions of dollars when things go wrong.

Until the introduction of trading on a decentralised ledger, the food industry had simply “put up” with urgent issues such as food fraud, safety recalls, traceability, inefficiencies and a lack of trust between touchpoints in the chain.

In an industry that’s valued at $8.1 trillion and encompasses a variety of stakeholders including producers, processors, distributors, consumers and regulators, a huge amount of dollars and livelihoods are on the line. While the “paddock to plate” philosophy is widely glorified, the reality is that the food supply chain previously had little visibility – something that’s vital when a typical Melbourne food basket has had to travel 21,000 km to reach its destination.

How can blockchain transform the supply chain?

There are 5 major areas in the food industry that are set to see huge changes thanks to an implementation of the IoT and blockchain. They are:

  •     Stakeholder mindset
  •     Food production
  •     Food processing
  •     Supply chain
  •     Global trade

By removing intermediaries in the chain and increasing the amount of transparent information that’s available to all stakeholders, blockchain technology could transform the way food products are created, traded and consumed.

1.   Food traceability

Food is perishable and can carry diseases; two features that threaten public safety and mean food traceability has become the centre of food safety discussions around the world. The current communication framework within the ecosystem makes tracking a product’s journey an expensive, time-consuming task. According to the Grocery Manufacturers Association, the total cost of recall for a brand could be up to $30 million (and even more in some cases).

Blockchain technology enables instant tracking of any supply chain failure, to minimise losses when a recall is necessary. Through verified provenance and production data, consumers and retailers get access to the information they need, building confidence in brands and individual products. While this is, of course, beneficial for the industry’s reputation and finances, more traceability also promotes better ethics thanks to more education and visibility on sustainable farming practices, biodiversity and animal welfare.

2.   Add value to the market

The possibilities of blockchain add value to the market by establishing a ledger and balancing prices across the board. Previously, the cost of a product depended on the judgement of the immediately involved parties, rather than on the agreed-upon information supplied by the entire chain. Increased access to data granted by blockchain technology affords a much-needed holistic view of supply and demand in the industry.

Collaboration amongst people within the food value chain is what will build consumer confidence in the quality of their purchases. As processes move towards establishing more transparency and therefore trust, food companies can reduce their losses, enhance their reputation, access new markets and ultimately boost revenue in a significant way.

3.   Improve food standards & safety

Blockchain technology in dairy and other food sectors has proven to enable data collection at every stage of the supply chain. This provides more consumer access to how food is manufactured, the environmental practices and any antibodies applied, as well as how safe and ethical practices are. This transparency forces an increase in food standards and reduces the risk of illness associated with food consumption.

The industry is in dire need for this change, with 600 million people around the world falling ill every year after eating contaminated products. Exposing consumers to health threats such as diseases, contamination and allergies can – and has – result in businesses facing magnificent losses when it comes to their reputation, lawsuits and costly recalls.

In the developing world, food safety threat becomes even higher. Regulations and transparency are less strictly imposed, and consumers are more vulnerable to food safety problems. South Asia, Southeast Asia and sub-Saharan Africa experience 75% of the world’s deaths related to foodborne illnesses.

4.   Increase productivity & revenue

It’s estimated that IoT and blockchain solutions could create up to $47 billion in annual revenue enhancement. The technology can overcome inefficiencies that previously hindered productivity, to bring new levels of speed and increased revenue to farmers, manufacturers, suppliers, retailers and brands. 

Leveraging digitalisation in food production could mean dramatic productivity gains and less waste. Though the food industry is guaranteed to yield some wastage, blockchain technology can significantly reduce this. For example, companies and regulators can access information about where and when food products were harvested, and in what conditions, to end the issue of individuals making fraudulent claims about their freshness of their food.

Through the adoption of smart contracts, the prevalence of payment delays can also be eliminated – ensuring maximum efficiency that benefits the likes of farmers who can be paid directly once their products are sold. By eliminating middlemen, the risk of fraud and duplication is removed, and transactions become as secure as they can be.

Blockchain Australia Solutions is dedicated to the growing blockchain industry in Australia and around the world, providing innovative ways in which the technology can enhance industries to improve processes, revenue and security. To find out more about our services, contact our experts at 1300 462 562.