Blockchain technology and the food supply chain
Though food supply chains are sometimes complex, if we are to keep on top of issues like fraud and food safety, it is important that we know where our food comes from. Blockchain technology can help us do this.
In 2008, one or more programmers operating under the pseudonym Satoshi Nakamoto invented Bitcoin, an international currency that operates without any need for an intermediary or regulation.
The technology behind the currency, called blockchain, allows users in a network to share information without it first passing through a server. In other words, even though there is no master copy, updates made on one node are independently updated on all other nodes within the network.
In turns out that Bitcoin is not the only application for blockchain technology. It may prove useful in a number of other areas such as financial services, personalised health and food provenance.
Food & Beverage Industry News caught up with Mark Staples, group leader software and systems at the data innovation group, CSIRO’s Data61 to learn about blockchain technology and the food supply chain.
“Blockchain technology can help because it provides integrity for shared data across different organisations,” said Staples. “The food industry is highly fragmented, and needs data integrity for fraud prevention, food safety, and financial transactions.”
The latest statistics emphasise Staples’ point. According to the CSIRO, food fraud costs the global economy an estimated $40 billion a year. Along with financial security and safety, it is now a major area of concern for the industry.
Staples explained that blockchain technology could provide evidence for the history of the production and handling of food, from the farm to the consumer. “Each of the events in a supply chain could be recorded in a logically-centralised blockchain ledger,” he said.
In cases of food poisoning outbreaks, blockchain would make it easier to track and identify the origins of, say, contaminated vegetables or meats. Similarly, in a food fraud context, it would make it harder to pass off a cheap red wine as a well-known product.
Financial services in the food supply chain also stand to benefit from the new technology.
“Evidence about supply chain performance can support greater access to trade finance, and to better price insurance premiums. Blockchain smart contracts might also enable new kinds of payment mechanisms, for example automated escrow payments tied to independent quality assessments,” said Staples.
Food supply chains can be complex. Will this make it difficult to implement blockchain technology in this context?
“Yes, but the complex and dynamic nature of business in food supply chains can be naturally mirrored by the kind of ad-hoc participation in transactions supported by blockchains,” said Staples.
He conceded that when implementing blockchain, it will be a challenge to directly support commercial confidentiality; and that the technology has some performance limitations.
“These issues need to be overcome by combining blockchains with other technologies such as encryption and traditional web services, and by making sure that blockchain solutions are used to address appropriate problems,” he said.
In June this year, CSIRO’s Data61 delivered a comprehensive review of how blockchain technology could be adopted across government and industries, including the food sector, to deliver productivity benefits and drive local innovation.
The group has engaged extensively with industry and government to deliver two reports on the regulatory, technical and societal implications of using blockchain-based systems across various industries. It says that Australia is in a good position to be at the forefront of the technology.
“Australia has active blockchain ecosystems, with activity across research bodies, startups, large enterprise, government, and standardisation,” said Staples.
Examples include the work of the Australian Securities Exchange in collaboration with Digital Asset Holdings, to examine the use of the technology in its clearing and settlement system for the Australian equity market.
Then there is Agridigital, an Australian software provider which has been experimenting with blockchain and distributed ledger technologies across agri-supply chains.
“Primarily we have been using our agri-blockchains in pilots and proof of concepts targeting either the transactional or provenance space,” Bridie Ohlsson, Agridigital’s external relations manager told Food & Beverage Industry News.
In December 2016, the company ran a pilot in which it successfully executed the world’s first settlement of a physical commodity on a blockchain. Using a private ethereum blockchain and a pilot customer, they settled the delivery of a load of wheat on the blockchain, simultaneously reserving any levies and royalties applicable and paying the grower.
“While the pilot simulated payment to the grower’s digital wallet in real time on the blockchain, for the purpose of the pilot the grower was paid using traditional banking methods in a parallel transaction,” said Ohlsson.
According to Ohlsson, the company’s vision is to continuously work on developing agri-blockchains as part of its goal to digitise agricultural supply chains.
“This year we are conducting a number of blockchain pilots with some of Australia’s most significant participants in the grains industry,” she said. “We are expanding on our pilot work from last year, as well as directly working with blockchain technologies to provide end to end supply chain provenance in the grains industry.”
Given its supply chain potential, blockchain technology will feature prominently at MEGATRANS2018, an exciting new international trade event that will bridge the gaps between supply chain industries that have previously been operating in isolation.
The show makes its debut 10 to 12 May, 2018 at the Melbourne Convention and Exhibition Centre, based in the heart of the one of Australia’s major logistics hubs and one of the world’s most liveable cities – Melbourne.
Connecting the Australian and international supply chain, the three-day expo, delivered in partnership with the Victorian Government, will bring together those who plan, implement and control the efficient and effective forward flow and storage of goods, services and related information between the point of origin and point of consumption.
A number of main sections comprise the show’s 30,000 square metres of space – Logistics & Materials Handling / Warehousing & Storage; Road Transport, Air, Sea & Rail; and Infrastructure; with a strong emphasis on technology right throughout.
Other features of MEGATRANS2018 include the Global Shippers Forum, the Logistics & Materials Handling Mercury Awards, a Ministerial Breakfast delivered in partnership with the Victorian Government and Transport Certification Australia’s (TCA) Technology Hub.
The Port of Melbourne is a Supporting Sponsor of the show, with Enirgi Group and Linde Material Handling backing the event as Sponsors and DB Schenker as Logistics Partner.
MEGATRANS2018 is also supported by a range of Association Partners, including: the Australian Logistics Council (ALC); Victorian Transport Association (VTA); the Australian Peak Shippers Association (APSA) and the Freight & Trade Alliance (FTA); the National Transport Commission (NTC); the International Cargo Handling Coordination Association (ISHCA); and TCA.