According to Ed Treacy, vice-president of supply chain efficiencies for the Produce Marketing Association (PMA), blockchain technology holds great possibilities for improving efficiency and traceability in the fresh produce sector. In particular, it optimises supply chain operations, enhancing quality management, increasing market and business intelligence, reducing costs, and fostering brand protection.
Over the past decade, blockchain technology has developed into one of today’s leading technologies. It can help digitally trace and authenticate food products from an ecosystem of suppliers to store shelves and ultimately to consumers.
For the retailer, it means fresher food, reduced food waste, faster targeted recalls, and supply chain visibility and traceability. On the customers’ side, it builds trust and confidence, encourages brand loyalty, and provides appropriate information and transparency.
Blockchain: what it is and what it offers
Blockchain technology can be described as a continually growing list of records that are separate (blocks) and are then linked (chain).
The data in the chain is secure. Using sophisticated encryption protocols, it creates a unique serial number that incorporates the data and the time using distributor ledger technology.
It is therefore impossible to modify data without others being aware of it.
In the world of fresh produce, blockchain is a protocol for sharing information. It is not a database in the sky, software or hardware. It is a set of rules that has the user’s name on it and is shared.
Put another way, a blockchain is simply a ledger of transactions, but a unique type of ledger where data cannot be changed or deleted. It is essentially a secure database with copies spread across multiple computers, and everybody involved has the same record of all transactions.
Depending on the configuration, it can be tailored to control which parties have access to which data.
Blockchain takes place in a decentralised environment and enables information to move securely. A powerful attribute of the methodology is its ability to move through the supply chain at the same speed as the product.
Pilot projects: successes in several countries
Blockchain technology is still largely in a pilot phase, but it is moving fast, and users are coming to grips with it and finding more efficient solutions.
In the US, a pilot project by Walmart provided proof of the blockchain concept. A packet of pre-sliced mangoes was traced through the supply chain back
to the farm in six days, 18 hours and 26 minutes; assembling the data went from almost a week down to 2,2 seconds.
Multinational technology company IBM, as part of a consortium with 10 major food suppliers in the US, embarked on collaborative pilot projects with the grocery industry.
The purpose was to apply blockchain-based technologies to the food supply chain to improve food safety and ingredient transparency for a more authentic and trustworthy global food supply chain.
Results from the pilot studies are encouraging, and provide proof of the value and benefits of blockchain.
Blockchain pilot projects use existing business practices and standards; business procedures should not be reinvented to accommodate blockchain. Moreover, the benefits to each trading partner should be greater than the cost.
Other blockchain pilots
A number of other blockchain pilot projects are under way. One relating to beef and grain exports was implemented in Australia. Last December, IBM and Walmart launched a blockchain-based food safety alliance for China that aims to make China’s pork market safer.
Blockchain technology has also been applied in tuna supply traceability, and another project has been piloted for tomatoes.
Microsoft has set its sights on retail as an industry that could benefit from blockchain technology. Earlier, the company hosted a demonstration at the National Retail Federation Show in New York that aims to help retailers streamline their supply chain operation by creating smart contracts based on blockchain.
Trimble and partner company HarvestMark are leading contributors in blockchain technologies and open-source communities that save customers millions of dollars each year.
Trimble operates across five continents, with more than two billion products traceable each year. Advanced blockchain technologies solve scaleability and security issues and handle thousands of transactions every second.
The company uses channels and multiple ledgers to manage complex transactions while protecting confidentiality. Blockchain apps are configured to handle location and freight data.
The value of blockchain provides opportunities for real-time data analytics and deep domain knowledge for the perishable food value chain. Pricing, capacity, utilisation and other data can be tracked and analysed.
One carrier reduced contract management headcounts from 12 to three and increased revenue by $3,5 million [R50 million] through better matching capacity and demand.
In essence, blockchain improves efficiency and provide net benefits for role players in the entire supply chain, including growers, transportation companies, retailers, regulators, manufacturers, distribution centres and customers.
The methodology can help brands track sources of contamination far quicker than before, reducing the impact of compromised food. As far as product recalls are concerned, blockchain can provide end-to-end traceability of data, and it has the ability to verify the history of the product and provide real-time location and status.
It also has the ability to upload, manage, access, edit and share compliance documentation, test results and audit certificates.
The future value of blockchain technology lies in the analysis of data and how data will be used to the benefit of the entire supply chain, from growers to consumers.
Data-sharing, transparency and privacy
Some of the issues that need to be tackled include supply chain data transparency; which data should be shared with customers or trading partners; private versus public blockchain networks and the cost of development; performance; the ability to select privacy levels; and regulators’ right to access to blockchain data.
Although blockchain technology is mainly in a pilot phase in the fresh produce industry, role players should start preparing now to use it in their businesses. This can include identifying inefficiencies in workflow, processes and systems, and analysing whether blockchain is the answer to the issues.
Systems should be prepared to post information into a blockchain ledger and determine the best method of capturing data at all points. Company data-sharing and privacy policies should be updated to make provision for blockchain.
The views expressed in our weekly opinion piece do not necessarily reflect those of Farmer’s Weekly.
This article is a summary of Ed Treacy’s presentation at the 2018 PMA’s Fresh Connections: Southern Africa Conference and Trade Show.
For more information, email Lindie Stroebel at [email protected].