Using Interoperable Blockchains to Innovate the Food Supply Chain

Blockchain is a shared digital ledger system where the data is replicated across multiple computers or nodes in multiple locations at the same time. A shared digital ledger enables a supply chain network to share data and documents (business documents in an electronic format between trading partners) efficiently with verified authenticity.   Because the digital ledger is shared, data is transparent to participants within the blockchain.  And since the digital ledger is a type of database that only allows entries to be appended rather than changed or deleted, the data in the digital ledger is immutable, which means it’s unchangeable.  Lastly, because the digital ledger is stored in multiple locations, no one participant in the business network can modify the digital ledger without everyone knowing.  It also makes it very difficult to hack the system or attack the network like in the case of Denial of Service attack.  This creates trust in the provenance of the digital ledger, increased security when compared to other technologies, and increased collaboration in multiparty networks like a food supply chain blockchain ecosystem. 

With this understanding of framework, it’s worth noting U.S. retail giant Walmart has required its suppliers of leafy green produce to implement and adopt a farm-to-store, end-to-end traceability system based on blockchain.  To help their produce suppliers meet this goal, Walmart’s referred their produce suppliers to the IBM Food Trust network, which is a blockchain solution pioneered through a partnership between Walmart and IBM to improve food safety.  Walmart recognizes the value in blockchain for food traceability through blockchain’s ability to swiftly identify any potential problem thereby limiting the scope and scale of any potentially needed recall.

The value of applying blockchain technology to the Food Supply chain emerged in the case of 2018’s E. coli outbreak linked to romaine lettuce (affecting more than 200 people across 36 U.S. states, leaving over 96 people hospitalized and 5 dead).  Eventually, discovering the outbreak originated out of Yuma, Arizona,  took almost 7 days for the Walmart Food Safety Division to identify where the lettuce was grown.  However once the retailers knew that the source of the E. coli outbreak was lettuce from the Yuma, Arizona growing region, they could not easily identify which of their lots of lettuce originated from this region.   This meant retailers had to pull nearly all lettuce from stores throughout the U.S. at significant cost.   This could have been averted and a specific lot of lettuce could have been located anywhere along the food supply chain blockchain instantly if all participants within the supply chain had been sending data to a blockchain along the way.  And thus the key drivers for food supply chain blockchain adoption are increased cost savings, enhanced traceability and greater transparency. 

On a blockchain traditional SLAs (service level agreements) can be defined as smart contracts and transformed into computer code residing on the blockchain, resolving simple disputes, invoicing, and automating payments.   Essentially an event in the smart contract occurs like a shipment of a food product is received or a food lot passes an inspection. That event triggers the execution of the smart contract based on the pre-agreed upon terms and a settlement process occurs (like a notification, an automatic payment, or a generated invoice, etc).

Hence if a food shipment arrives damaged or some other issue arises, the data is logged, transmitted to the blockchain, visible and verifiable by all participants within the food supply chain blockchain, and this damage or other event executes the appropriate clause within the smart contract, and the settlement process occurs automatically based on the agreement within the smart contract.  Thus streamlining the transaction processes in food supply chain logistics removes time wasted disputing issues governed in the agreements, something important in the food industry.  For example within the fish, meat and dairy sectors time is valuable with perishable products being shipped, spoilage, delays, contamination can become an expensive problem.    The more time efficient food supply chain blockchain transactions become, the more accurate the traceability is, the more transparent and trustworthy the overall network is, the better and more verifiably the end product can become.  This creates a great value within these networks.

Globally smart contracts serving a role in agricultural insurance, green bonds, and traceability are very effective.  Agricultural insurance documented within a smart contract on a blockchain include historic weather incidents and related claims can be drafted in the smart contract.  This information is linked to payment gateways and wallets with weather data being provided regularly by sensors in the field and supported by data from regional weather stations – all able to assist in swift claims payouts in the case of a storm, drought or flooding in the field.

For improving transparency an agricultural food supply chain blockchain can help in providing an accurate and immutable record from the farm to the point of retail.  This increases consumer trust in the products they buy and is an opportunity for consumers to reward the producers who employ desirable agricultural practices in cultivating their produce. This can also lead to sustainable farming practices and responsible land use.  

Three commonly known food supply chain blockchain solutions are IBM’s Food Trust (created in partnership with Walmart the grocery retailer and distributor model),’s agricultural blockchain (focusing on freshness in distribution), and the FoodLogiQ’s Connect solution (focusing on needs of fast food restaurants).

Blockchain technology can change the food supply chain not just for Walmart, but for all participants across the world, ensuring that both suppliers and consumers can examine a products’ life cycle, from harvest or origin to its point of retail.  Of the three mentioned food supply chain blockchain solutions, Food Trust and operate on a blockchain technology called Hyperledger, whereas FoodLogiQ runs on blockchain technology called Ethereum.  It’s worth nothing Hyperledger has become the preferred food supply chain blockchain platform for B2B transactions because of its speed, scalability, and also its ability to allow for confidential transactions (essential if you are a participant in a food supply chain blockchain project that includes your competitors).

The decision of which food supply chain blockchain solution to adopt does not have to be an “either/or” decision, a forced choice of Hyperledger or Ethereum. The decision can be a “both/and” depending on the business goals, objectives, and the types of customers served.  Startup Vottun has pioneered an end-to-end food traceability system for the food supply chain industry that is blockchain agnostic and mixes different blockchain platforms, Hyperledger and Ethereum (for example), or Oracle, Quorum, and Ethereum Classic – creating an overall more efficient and collaborative system.   Vottun has placed into production a platform that is interoperable enabling the possibility to communicate across all blockchain networks and intermediaries including allowing the execution of standardized smart contracts in the different networks.  In an interoperable food supply chain blockchain ecosystem, participants can interact with others from different blockchain networks, which is invaluable since food supply blockchains are being implemented all over the world.  In a recent Juniper Research survey 48 percent of enterprises listed interoperability between blockchains as a concern about blockchain deployment.

Ous Montsoliu, an organic egg producer in Spain used blockchain technology to

guarantees transparency and authenticity of its eggs by tracing and recording every step of the production process, from the feeding of the hens, to the packaging, to the supermarket where customers can easily verify its authenticity via a QR Code from a smartphone.  Pioneering blockchain interoperability in food supply chain, they used Vottun platform to record transactions from the supply chain network on a private Hyperledger blockchain, while simultaneously exposing public data to clients on an Ethereum public blockchain, guaranteeing the transparency and long term availability of their data to their clients. However the food supply chain blockchain world is fragmented, and without interoperability,  unconnected systems will be independent silos running alongside each other without being able to communicate or transact.  Interoperable blockchain ecosystems are essential and  enable multiple organizations to collaborate within a food supply chain network regardless of which blockchain each participant use to track, trace, and verify their products within the network.