Anyone who bought cryptocurrencies towards the end of last year is likely to be wishing they hadn’t. In December, bitcoin peaked in value at £14,600 (US$19,400), but in recent weeks, the most popular cryptocurrency has been trading at around £5,000 ($6,400).
But as cryptocurrencies lose value, other industries are finding uses for the distributed digital ledger blockchain technology, which employs encryption to make data entered permanent and unalterable.
In particular, blockchain has been adopted as a way to provide data on supply chains that can be trusted by companies and individuals that may be geographically far-flung and are often in competition with each other.
Perhaps the most intriguing option for blockchain systems involves food and drink. This sector includes some of the most difficult supply chains to manage, which handle vast quantities of relatively cheap yet unique items that vary enormously in quality – and where poor quality can injure or even kill.
Blockchain for tuna
Many food supply chains also raise ethical and environmental concerns. This explains why the World Wide Fund for Nature (WWF) charity is involved in establishing a blockchain system to track tuna from shortly after a fish is caught to when it is bought for consumption – or more snappily, from bait to plate.
Bubba Cook, WWF’s western and central Pacific tuna programme manager, says the system should help those who want to support legal, sustainable and ethical fishing.
“As more industry participants adopt this technology, and engage as good and transparent actors, it will slowly begin to squeeze out the illegal operators, the bad guys who benefit from obfuscation in the supply chain,” he says.
A 2016 study by the Pacific Islands Forum Fisheries Agency estimated that illegal, unreported and unregulated fishing results in economic losses of US$616m, equivalent to 12% of the area’s tuna catch.
Currently, more than 90% of the world’s fisheries are fully or over-exploited. “Any additional value that’s going to be secured from the fisheries has to occur as an efficiency, or an improvement in quality,” Cook says.
Showing exactly where fish are caught should allow consumers to be confident they are buying from sustainable fisheries and boats that work to minimise ‘bycatch’ (pointless killing) of seabirds and sharks, giving them a sales advantage over those that don’t.
“It will have a huge impact in pushing those regions towards transparency and traceability afforded by the technology,” says Cook.
WWF is working in Fiji with TraSeable Solutions, a local ICT supplier, and Brett Haywood, owner of Sea Quest, a tuna fishing and processing company that uses sustainable methods.
“One of the things that was very appealing to [Haywood] about this particular technology was his ability to identify where his fish ultimately was going to end up,” says Cook, allowing Haywood to sell more effectively, cut out intermediaries and secure better prices.
The project involves an RFID tag being fixed under each tuna’s gills when caught, which is used to track it into processing, beyond which QR codes take over. Tracing what happens in processing is important, as this is often where fraud takes place.
“If you have a 40-kilo fish going into a processing facility, you shouldn’t see more than four 10-kilo pieces coming out of it,” says Cook.
But why does the system need to use blockchain? “If the world was perfect and integrated, you could do this with traditional databases. But that’s just not reality,” says Tyler Mulvihill, co-founder of Viant, which provides the blockchain system for the project.
“Right now, you’re trusting that each person does not tamper with their own database. There’s an economic incentive to change data if it’s beneficial to the party.”
Aside from trust, a single blockchain system provides one source of data. “The current solution is phone calls, emails and Microsoft Excel spreadsheets back and forth,” says Mulvihill.
Blockchain could make it cheaper to handle transactions, potentially allowing smaller, more frequent payments to suppliers, such as a boat’s operator could receive 10% of the value of each fish when it is landed, 40% when the resulting products are shipped and the remaining 50% when these are sold.
Viant uses the same software employed for the Ethereum cryptocurrency, with the latter only able to handle around 15 transactions each second.
Mulvihill stresses that the software is the only thing the system has in common with the cryptocurrency: no mining (or creation) of currency is needed, as the ‘ether’ tokens in the system do not have a financial value and have already been mined. Plus, as a system open only to a relatively small number of trusted users, it can work much faster.
Mulvihill sees fresh food as another area with potential for blockchain, with Americans having suffered from tainted spinach and romaine lettuce over recent years. The process of withdrawing food could become much more efficient with a single source of data.
He adds that such systems can also be used to inform individual consumers. “This is about helping people understand exactly where their food or their drink is coming from, and telling that story about the fish, the fishermen, their families and their crew,” he says, with the likes of craft brewers trading heavily on such stories.
This is also true of products that support conservation work. Dutch food importer The Wild Bunch specialises in sustainably-produced goods from forests in Indonesia, with the aim of preventing deforestation by giving local farmers a viable alternative income. As a result, it needs to demonstrate both traceability and that a significant proportion, ideally 20%-30%, of the retail price reaches the producer.
Tyler Mulvihill, Viant
“We want to make it more effective for the farmers to produce products that are wild-harvested from the forest,” says chief executive Dirk-Jan Oudshoorn. “That’s why we want to make it completely traceable so we can cut out the middleman, follow the journey and see what the costs are and where.” Consumers will benefit from seeing that a fair price is paid and that their purchases directly contribute to forest conservation.
For The Wild Bunch, the use of blockchain is incidental. “This is a means to an end,” says Oudshoorn. “This could be a great way for us to show that we have nothing to hide.” It should also reduce fraud, he adds: “Through this technology, we also hope that we can then at least minimise the risk of corruption, as everything is registered and cannot be changed afterwards.”
The company came across UK-based Provenance, its blockchain supplier, through hearing about it piloting a system that allowed festival-goers in the Netherlands to scan Indonesian coconuts, see exactly where they had come from and what price was paid to the farmer. The only alternative supplier was involved in tracing palm oil, a product for which Indonesian forests are often felled, ruling it out from an ethical point of view.
The Wild Bunch, which has only recently started working with Provenance, expects to use its system for forest sugar, virgin coconut oil and illipe butter – the last of which is made from nuts from endangered Shorea Stenoptera trees.
The company is not currently able to apply for Fairtrade status – often-used to demonstrate ethical behaviour – as this requires a certain number of suppliers in a sector so fair wages and rates can be calculated. “Fairtrade for us is not possible at the moment, as we are making unique products,” says Oudshoorn.
A later aim is that blockchain will let consumers see where Wild Bunch’s products come from – although it has yet to decide if this will be an area or an individual farmer – and who is receiving their money across the supply chain, potentially including retailers.
“Instead of investing in expensive and open-to-manipulation certifications, we’d rather invest in making everything transparent, so the consumer can decide for his or herself whether it’s a fair price and can find out how their purchase contributes to sustainable production and forest conservation,” says Oudshoorn.
The method through which consumers will obtain data is yet to be decided, but may involve scanning a QR-code.
Food info in fancy places
Absolute Taste, a caterer for events including the British Grand Prix and the Lawn Tennis Association’s Queen’s championship, as well as for private jets, wants to provide a broader range of information to those eating its food.
“It’s very much around the benefit to the consumer,” says Martin Brougham, a chief operating officer at blockchain middleware supplier Omnitude, with which it is piloting use of the technology. “For private jet food, there might be an iPad available for scanning the bar-codes on the menu to get more information.” At events and at restaurants, specific information could be printed on menus and labels, drawn from a blockchain system.
As well as providing more information to consumers, a blockchain system can provide this to the companies involved, helping them become more efficient.
In the case of strawberries with two or three weeks of shelf-life, it serves everyone involved to get them on sale as quickly as possible, and blockchain-held data could be used to see where delays and waste occur.
The system could also share the results of spot check tests carried out by one party, saving others from repeating these.
“Most problems in the food supply chain, which in some way rely on the actual flow of items, can be solved with technology like this,” says Ramesh Gopinath, vice-president of blockchain solutions for IBM, whose Food Trust blockchain project involves major companies including US retailer Walmart.
Limits to blockchain
Other applications include auditing, dispute resolution and regulatory compliance, according to JL Marechaux, head of technology for JDA Labs, the research division of US supply chain software specialist JDA. This could include regularly recording the temperature of products during transport, particularly those that should stay either chilled or frozen, in case of later problems.
However, JDA does not currently use blockchain within its software, and as an industry specialist rather than a blockchain one, Marechaux sees problems as well as opportunities.
“There are some use-cases that are not appropriate for blockchain,” he says. For example, such systems are designed to copy all information across all nodes, which may cause data protection and residency issues.
And performance and capacity can still cause headaches. “Blockchain has not been designed to replace huge databases,” says Marechaux, and it may be unsuitable for large amounts of data.
He adds that performance is improving and the blockchain framework chosen to support a food supply chain is unlikely to work in the same way as one used for a crypto-currency: “But the maturity is not there yet for all the different framework.”
He thinks this will change, because it will have to. “There is no way to get wide adoption of blockchain if you do not have performance in a system,” he says.
Read more about blockchain in supply chains
- The pieces needed to create supply chain blockchain networks are emerging. But blockchain won’t fix all the problems that supply chains face, such as theft and data accuracy.
- Many in manufacturing are excited about blockchain’s ability to verify goods moving through the supply chain. Unfortunately, the technology's readiness might not be what it seems.
- Taiwan’s OwlTing taps blockchain to improve food safety.