May 3, 2017 | by Elliot Maras

Photo courtesy of iStock.

Most people are not yet familiar with bitcoin, the virtual currency, but the technology that supports it – known as blockchain – is making inroads in how goods and services are being managed. Blockchain technology, which provides the infrastructure for virtual currencies like bitcoin, is bringing new efficiencies and transparency to supply chains.

As a shared, secure record of exchange, a blockchain allows anyone with access to its electronic ledger to track what went into a product and who handled it along the way. This transparency will impact all sorts of products, but it is especially relevant to food supply chains, given the geographic expansion of these supply chains in recent years and the amount of data companies track.

"Quite a few large food companies have experimented with using the blockchain technology for their supply chain management and quality assurance, such as Wal-Mart for example," said Angel Versetti, CEO of FoodBlockchain.XYZ, a company looking to bring blockchain technology to the food supply chain.

By digitally recording the identity of goods, blockchains can provide a permanent, immutable record for every food ingredient as it travels from farm to table. This transparency gives processors, wholesalers, distributors, restaurateurs, food trucks and consumers information about where their food comes from, how it was processed and a full accounting of its movement along the supply chain.

What is a blockchain?

A blockchain consists of a decentralized network of servers that can receive data from sensors in real time. Once the data is recorded, it can be accessed by all participating servers and cannot be edited or manipulated. Any authorized party – suppliers, distributors, restaurateurs, food trucks and customers – can access the data and verify the quality and safety control features of their products.

The technology has many uses in the food industry. It has been used, for example, to track fish from a trawler to the supermarket to help stop human rights abuses and illegal fishing.

One company making a bid to become a leading blockchain technology provider to the food supply chain is FoodBlockchain.XYZ, based in Switzerland. It plans to manage commercial relationships among different actors in the food supply chain by issuing a token called Foodcoin. The different players in the supply chain will use the token to ensure compliance to quality and safety standards.

The data will also provide insights about the financial and socio-environmental costs and benefits of sourcing food from specific suppliers. This will enable food businesses to purchase raw inputs from those suppliers offering the best combination of quality, price and socio-environmental indicators.

All players benefit

Suppliers, processors, distributors and retailers will all be able to ensure that products meet quality and safety requirements. Parameters to assess the quality and sustainability of seafood, for example, could include temperature, sunlight exposure, pollution of trucks and distance traveled.

Companies will be able to create ID tags for food batches or individual food units that will contain product information from FoodBlockchainXYZ.

Such ID tags will allow consumers to review the history of a product and check what farms the ingredients came from. The information can indicate whether the farm follows sustainable agricultural practices.

The Foodcoin token will allow consumers to reward growers that follow sustainable agricultural practices. This could help establish a new reputation system for farmers and other food suppliers.

Technology advances

"For a long time it was technologically challenging to bring this about," Versetti said. "With the emergence of bitcoin blockchain, the vision came closer to being realized, but with the limited ability to code on top of the bitcoin, this was still challenging."

Because blockchain technology continually evolves, Versetti and his team were able to leverage the Ethereum blockchain, a newer technology that many developers hail as being more versatile than the bitcoin blockchain.

"The benefit of Foodcoin would be to power up our Ethereum-based sensor system for food quality control and to be the means of contract execution and reputation establishment for actors in the food industry, allowing the end consumer to use Foodcoin to reward the farmers who follow sustainable practices, or intermediaries with strong ethics, or manufacturers who care most about quality and safety of food," said Versetti.

"Foodcoin will have valuable use cases for all actors of food supply chains, beginning with farmers, through manufacturers, intermediaries, retailers all the way to the end consumers," he said.

Safety and quality audits

FoodBlockchain.XYZ also plans to support safety and quality audits. Versetti said the company will perform these audits itself or partner with other companies.

The FoodBlockchain.XYZ team has been working on a quality assurance system to streamline the fragmented information in the food supply chain for quite some time, Versetti said.

The company is presently working with companies in Switzerland, France, Germany and Iceland. It plans to release its first software in June.


Topics: Business Strategy and Profitability, Food & Beverage, Systems / Technology


Elliot Maras / Elliot Maras is the editor of KioskMarketplace.com and FoodTruckOperator.com.

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