The food we buy in grocery stores and restaurants has a story to tell about where it came from and each step it took on its journey to your dinner table. Blockchain technology can help tell that tale.
The story many food companies want to tell these days is about safety. Earlier this year, an E.coli outbreak sparked the recall of tons of prepackaged romaine lettuce nationwide. By the time the source was traced to farms in Yuma, AZ, the outbreak had touched 36 states, sickening more than 200 people and killing five of them between March and June, according to the Centers for Disease Control and Prevention.
Blockchains can identify outbreak sources more quickly and in doing so, tell those stories about food safety, according to Mark Parzygnat, program director of blockchain at IBM (NYSE: IBM). The technology creates a digital ledger whose information is constantly synced and verified. With blockchain, food companies can quickly track and trace each individual food product—a process that’s slower with current paper-based systems. A search for the source of a tainted product used to take Walmart (NYSE: WMT) seven days, due to the reliance on paperwork, before the retailer adopted blockchain, Parzygnat said. Now with the technology, searches take just 2.2 seconds.
“It saves a tremendous amount of time, it saves a tremendous amount of money, and it saves people,” he said during an ag biotech forum last week at the North Carolina Biotechnology Center.
Blockchain isn’t necessary for all organizations; for a small group, a database might suffice, Parzygnat said. But if an organization is doing multiple things with its data and outside parties need access to it, a blockchain might make sense. Besides food, industries that could benefit from blockchain include financial services, retail, and insurance, Parzygnat said.
Walmart, the nation’s largest grocery retailer, is now using blockchain with some of its suppliers. The company had participated in an 18-month pilot study with IBM testing blockchain in its food supply chain. In September, Walmart announced it would adopt the technology, and it notified its leafy green suppliers that they must use it as well.
The potential food applications of blockchain are starting to attract startups to the technology. San Francisco-based ripe.io recently raised $2.4 million in seed financing to support development of a “blockchain of food,” a technology platform that the company says will digitally connect growers, labs, retailers, and others in the industry. Ripe.io’s founders came to focus on food after working in finance and financial technology.
Blockchain offers more than faster traceability. In agriculture, it offers new ways to validate goods as they move along the supply chain, according to Andy Kennedy, co-founder of Durham, NC, food traceability software startup FoodLogiQ, and a speaker at the forum. Kennedy, who is also the interim director of the Global Food Traceability Center at the Institute of Food Technologists, said that when food is transported over great distances, some spoilage is unavoidable. But he added that blockchain, combined with sensors, can reduce spoilage.
Sensors can monitor conditions such as humidity and temperature in food storage areas and trucks, sending that information to the blockchain, Kennedy noted. Data analysis can pinpoint problems, such as when a driver altered the refrigeration temperature to improve the truck’s fuel economy, he said. Temperature fluctuations also pose problems in grocery stores. With sensors constantly uploading environmental conditions to the blockchain, growers and retailers would be able to determine when and where conditions changed, providing information they can use to address spoilage problems.
Blockchain could also benefit the truck drivers by supporting new payment models, Kennedy said. Drivers are often paid only upon delivery, and at a rate determined by the miles traveled. Blockchain could allow for payment as a product progresses through its journey.
For consumers, blockchain’s value comes from the technology’s ability to convey a product’s history, according to Leonard Nelson, founder and CEO of Raleigh, NC, artificial intelligence firm Navia. The technology can capture what he described as “intangibles” of a product, such as authenticity and environmental friendliness, that if properly documented, can increase the product’s value to both the supplier and the consumer. As an example, he pointed to Adidas, which has partnered with environmental group Parley for the Oceans in an initiative to make shoes from waste plastic salvaged from coastal regions.
Adidas markets its Parley line as premium shoes, selling for between $120 and $180 a pair. The company supports the higher price points with the story behind products, Nelson said. Using a smartphone, customers can scan the heel where an embedded chip has information about the product and its journey from waste plastic to new shoe. This information is maintained by blockchain technology, Nelson said.
In food, blockchain can help where fraud is rampant, such as fish. Nelson pointed to research from the United Nations Food and Agriculture Organization that says an average of 20 percent of fish in retail and catering is labeled and served as the wrong species. Blockchains can give consumers a way to trace a fish to when and where it was caught, providing verification that justifies the price of an expensive filet.
Nelson acknowledged that introducing traceability technology will add to food cost. But he said blockchain can fund traceability because it provides information to those who want to know more about what they are buying and who are willing to pay for those details.
“The idea is to drive context so whoever buys that product can engage with the product,” Nelson said.
Digital ledgers can also help retailers manage how much of a particular item they need to stock during times of peak demand, such as the days leading up to Thanksgiving, according to Parzygnat. Grocery stores typically increase their turkey inventory ahead of the holiday, but blockchain can provide a store with real-time information about inventory, as well as the availability of turkeys from suppliers, he said.
“If I’m starting to run low, I have this network with all of these potential suppliers that I can do a deal with,” Parzygnat said. “You don’t have to keep a ridiculous amount of supply in stock.”