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Tracking ethical sourcing in the food industry via blockchain

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Challenge

A number of practices in the food industry are compromising the ecosystem of environment, wildlife and people all over the world. Issues that range from, human rights abuses, illegal, unreported, and unregulated trade practices are harming this ecosystem and creating trade disputes.Tracking ethical sourcing in the food industry is an essential process for certain industries like fishery.

As a significant component of the food industry, the global total capture of fisheries production peaked at 90.9 million tonnes in 2016. However, this amount is arguable as most of the fish caught in developing countries is by purse seiners which are unrecorded as authorities encounter difficulties to trace it. This opens an opportunity for technologies, ensuring traceability by tracking the sourcing of products in the food industry. Such a system would aid standards compliance and help eradicate fraudulent reporting while contributing to ecosystems preservation.

Solution proposed

Blockchain technology would ensure the secure flow of information by sharing a unique version of truth among all stakeholders involved; from fishermen to factories, certifiers and consumers. This would enable the tracking of the whole value chain; from compliance data, to methods of fishing and vessel type. For instance, a blockchain-based system could help the tracking of Tuna from the fisheries to the customer’s plate, ensuring the respect of fishing quotas, and providing transparency for the end customer. Monitoring fish quotas would also avoid ghost fishing and fish migration thus affecting the fauna of the oceans.Public blockchains would ensure the provenance of such goods at a broader scale, as they remain open to on-board new stakeholders internationally while keeping the consensus mechanisms unchanged. Certificates or claims stored and exchanged in an immutable, decentralised and globally auditable format would standardise international trade requirements in the food industry.

Development and adoption

Blockchain tracking solutions in the food industry are developing robust proof of compliance to standards at origin and throughout the chain. The recent adoption of Provenance blockchain solution in tracking fish quotas in Indonesia from landing to the consumer’s table is seen as a first step to track sourcing in the food industry. Interoperability with other platforms is also an area for future development; as such solutions in the food industry could also communicate with other industry platforms (e.g. logistics) to add transparency and traceability to the value chain.

Economic perspective

A lack of information across the value chain is not only costly from an ethical perspective. Imperfect information and problems with transparency make it very difficult for consumers to make informed decisions. Lack of access to products differences in terms of quality or other attributes such as sourcing making it near-impossible for a consumer to consider whether the price that is being charged for a product is fair. This leads to information gathering and information processing costs for the consumer and amounts to verification costs that are in most cases too high for individual consumers.If consumers have access to the information they wish to verify on a product, they are able to more easily compare their actual willingness to pay the price being charged. For a consumer that values ethical sourcing this trust would make it possible to pay the higher premium for this sourcing – and trust that what this premium is being paid for is being delivered.

Trade perspective

Increased international trade flows have made inspection and quality control at the different stages of the value chain nearly impossible. Not only is it difficult for consumers to know where their products come from and how they have been produced, companies also struggle with making sustainable partnerships and verifying partners’ sourcing. Centralised solutions, managed by intermediate parties to register, trace and test products are also expensive and can sometimes bring up discussions on their independence. For example, criticism with Fair Trade labelling organisations have included questions on whether the premium paid by consumers is fairly distributed in the value chain, or whether monitoring standards have been properly implemented. A distributed ledger makes entered data immutable, so that all players can contribute to the information and data is verified by all required market players. This makes a (costly and at times questionable) centralised entity unnecessary for guaranteeing fair trade practices. Of course it remains open if the data entered in the ledger was trustworthy to begin with. However, in the case where a trusted system to track sourcing (based on blockchain or other technologies) could be established, then one would expect increased trade in ethical goods as consumers could more easily access and verify product information.

Social perspective

The very nature of the use case has very strong impacts on fair trade and ethically sourced products. As it makes verification easier for consumers, it makes them more likely and more willing to pay the ‘ethically sourced premium’, increasing the prices and thereby the revenue of the producers. Recurring cases of consumer boycotts against multinational companies (e.g. Nestlé, Coca Cola) due to unethical sourced products showcase the need of producers to signal the sources of their products. In the long-term, blockchain technology could allow consumers to better verify where products came from, raise awareness and overall allow for better informed choices that support ethical and socially good products. This would come in a time where more and more consumers value the sourcing of a product over its price. Nevertheless, as with current promises by companies to source ethically, a blockchain-based platform that tracks the sourcing of food would need to first gain the trust and recognition by consumers.

There are already some examples. Starbucks is looking to connect coffee farmers to the person drinking the coffee in order to verify its ethical sourcing under its Coffee and Farmer Equity practices. Their mobile app will show customers information about where their packaged coffee comes from, where it was grown and what Starbucks is doing to support farmers in those locations. To give more weight to the support, Starbucks has been interviewing farmers in Costa Rica, Colombia and Rwanda to understand their specific needs. Connecting the farmer to the customer through the company allows for more personalisation, both in the support provided to the farmer as well as in the decision making process for the customer.

Technical perspective

The technical perspective is mainly provided by viewing the blockchain as a platform for exchanging and storing information regarding the origin and processing chain within a food delivery process. Thereby, the information is stored in an immutable way as to guarantee the transparency and traceability of the foods origin and its ethical aspects. These type of blockchains should be typically permissioned with on-boarding belonging producers and delivery businesses in order to increase their transparency and promote them better as an incentive for their business. This would allow, on one hand, to verify the participants, make better social advertisement for their products, and reduce the risk for identity based fraud and entering malicious information, since the ledger would be immutably storing the belonging data leading to the demand created by the emerging reputation and trust. The possible solutions range from the utilisation of Ethereum and HyperLedger to Algorand. Furthermore, electronic based solutions for product tracking such as QR codes, QR scans, NFC (e.g. RFID) and sensors can be used for following the path of a food product and automatically verifying its ethical aspects over the blockchain.

Security perspective

Naturally, state-of-the-art security mechanisms are required in order to enable the secure and immutable storage and/or management of relevant data and transactions on the blockchain. Indeed, belonging PKI infrastructure and security measures in general (penetration testing, ISO2700 security certification …) would be required for such a product. The key aspect for such a blockchainbased fair trade initiative is the above mentioned ‘permissioned vs. permissionless’ aspect. Given that the ethical tracking would require to establish trust and transparency among the various stakeholders and the customers and society in general, there should be no possibility to swap identities and basically improve ‘reputation overnight’.

Environmental perspective

With regard to the environmental perspective, the issues relating to the energy consumption of transaction mining are also valid for this case. Multiple solutions are possible, including the utilisation of PoS type of mining algorithms as well as the usage of private permissioned blockchains, in which the mining is not really required in the large scale as in public blockchains. On the positive side, the tracking of food origin will have an enormous environmental impact in terms of reduction of CO2 and NOx. It will allow citizens to select mainly local products that were grown and produced in a sustainable and ethical way; the selection is carried out based on the transparency and immutable information provided and managed over the blockchain. The utilisation of blockchain concepts would increase the trust, transparency and automation (with regard to the data and tracking management) in comparison to legacy (often closed and centralised) databases and registries. Hence, less gas pollution is generated in addition to reducing the transport ways and correspondingly the CO2 emissions associated with the food products in question. The utilisation of blockchain in that regard will increase the transparency of food supply chains and serve as means to earn better reputation among citizens and customers with environmental awareness.

Data protection and privacy perspective

Similarly to what has been observed in reference to the previous use case, from a data protection and privacy perspective, blockchain inherent characteristics seem very suitable for tracking ethical sourcing in the food industry. This is primarly due to its ability to lower the chance of fraud or data mismanagement. However, although blockchain can be used to increase data security, its adoption within the food industry might have its own drawbacks. As previously noted, although blockchain allows for the prevention of data falsification, this is only achieved at later stages in the supply chain, while it is not granted that the data that suppliers initially enter is reliable. Furthermore, if public blockchains are used, control over privacy can be an issue in so far as, in many commercial instances, users prefer not to disclose all details of a transaction history or sensitive information. This kind of privacy control is easier in permissioned blockchains, which are private by default. Therefore, public and/or permissionless blockchain systems may need to be combined with other technologies in order to address the privacy issue.

Transparency perspective

Depending on the type of blockchain platform being used, blockchains can be designed to provide different levels of access to the data stored on the blockchain itself. The technology can provide transparency to the stored data, while keeping other kinds of data private. By investing in a transparent product lifecycle, firms adapt their strategies in response to market forces and inspire confidence in end consumers. Through a blockchain employed in the food industry, stakeholders are able to track products through the multi-staged supply chain, providing a digital infrastructure that conveys trust and transparency to supply chain participants. Blockchain participants can track specific products in all stages of the chain and they are also able to track any characteristic or attributes about food products involved. As a result of the increased transparency, if a problem should occur with a food product, users who have access to the system, could identify the point at which it originated and act accordingly, saving valuable time, and avoiding serious dangers to the consumer’s health and the brand image and minimising damage. When the technology allows to easily identify the root cause of the problem, faster reaction times are indeed possible, because supply chain information is immediately available on the transparent decentralised system. Furthermore, prices in all stages of the chain and the provenence, the production and the producers of the products can be traced. Allowing full traceability of all sources of all inputs used in all stages in the chain, blockchain employed in the food industry ensures a significant level of transparency available to every stakeholder involved, thus enhancing corporate integrity, loyalty and sustainability in the food industry.

150 150 Vidhyanand CS

Vidhyanand CS

I am Vidhyanand from India. I love to build applications on blockchain. I write regularly about blockchain and its use cases to increase awareness about web 3.0

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