"Mining," "coin circle," "Bitcoin," "blockchain"—these are probably the hottest buzzwords recently. Although blockchain technology is generally applied mainly in the financial services sector, it is increasingly influencing various industries. Today, we have selected a research brief from CB Insights on food safety and blockchain to share with you. Don't just think about whether to "mine" in Xinjiang or Inner Mongolia; let's see what revolution blockchain can bring in the field of food safety. Enjoy it.
Ten Retail Companies Partner with IBM In August 2017, the world's 10 largest retail and food suppliers partnered with IBM to integrate blockchain into their supply chains, enabling food suppliers to trace ingredient origins more quickly. These ten companies include Walmart, Nestlé, Unilever, McCormick, Tyson, Kroger, McLane, Driscoll's, Dole, and Golden State Foods, with combined annual global sales exceeding $5 trillion. Through this collaboration, IBM's blockchain platform will help food companies improve supply chain visibility and traceability, making food safer.
What Problems Exist with Traditional Methods? The food supply chain is actually very complex, involving farmers, warehousing, transportation companies, distributors, and retail outlets. Among so many links, information recording methods may range from Excel spreadsheets to emails to paper records. Multiple recording methods are not only inefficient but also inaccurate. When you buy vegetables at your local supermarket, the brand on the vegetables probably doesn't know which farm the vegetables came from. Therefore, when quality issues arise, brands are unable to respond. Food safety is no small matter. According to the U.S. Centers for Disease Control and Prevention, foodborne contamination causes 48 million Americans to get sick each year, 128,000 to be hospitalized, and 3,000 to die. Nearly half of the problems are due to unclean production processes (mainly due to norovirus), with poultry problems causing the most deaths (mainly due to Listeria and Salmonella). When food origin records are incomplete, in the event of a contamination incident, companies may need days or even weeks to identify the source of infection and recall the corresponding products. For example, in 2006, nearly 200 people fell ill and 3 died from eating spinach contaminated with E. coli. Simply because the U.S. Food and Drug Administration (FDA) could not determine which bag of spinach contained the infection, it ultimately had to advise Americans to avoid eating any fresh spinach, causing the spinach industry to lose $74 million.
What Changes Can Blockchain Bring? Blockchain is a public, distributed ledger. Unlike centralized recording methods, it has a single source of data and consistent data recording (achieved by recording data simultaneously on all nodes), thereby creating clearer tracking channels at each link. By using blockchain, food companies can trace the source of food problems more quickly. This not only helps reduce consumer risk and provide safety guarantees, but also reduces financial losses through targeted recalls. The specific method of applying blockchain is as follows. Food companies can attach IoT-connected tags to goods, with each batch assigned a unique identification number. These identification codes can record the product's origin, processing information, storage temperature, shelf life, and other information. At each stage of the supply chain, employees can simply "check in" the product (write a block) using its identification code, and blockchain will securely track the product across checkpoints. Employees can also enter the identification code to obtain real-time data about the product and its history, which is a significant improvement over contacting various parties and transferring files among multiple people. Walmart, one of the largest food retailers in the United States, is already a pioneer in using blockchain to ensure food safety. Walmart began piloting blockchain with IBM in the fall of 2016, with Chinese pork as the main pilot item—this is big news in the food industry. Yum Brands terminated its China operations in 2015 after a series of food scandals at KFC China. The trial was a huge success. Frank Yiannas, Walmart's Vice President of Food Safety, noted at its 2017 investor conference that through blockchain, he could extract product origin information within three seconds, whereas traditionally this process took nearly a week. Following this success, the company expanded the trial to track Mexican mangoes and also partnered with meat supplier Cargill to track turkeys. Now, as a member of the IBM consortium, Walmart may continue to expand its use of blockchain.
Blockchain Startups for Food Producers Although large companies like IBM have already captured a certain market share, many startups specializing in providing blockchain technology for the food industry have emerged. These startups establish themselves by offering more targeted products to food suppliers. They include: Provenance is a company that provides product traceability software to more than 200 food companies. Provenance partners with supermarkets to provide shoppers with data traceability, and has also partnered with seafood companies to register employee wages, thereby ensuring fairness and equality. On December 12, 2017, the company announced new partnerships with Unilever, Sainsbury's, and others to improve financial efficiency and public relations stability related to its supply chain. In August 2017, Arc-Net partnered with PwC Netherlands to address food fraud (intentional substitution, addition, tampering, or misrepresentation of food, ingredients, or packaging). PwC states that the global economy loses more than $40 billion annually due to food fraud. Other startups focus on supporting product traceability for smallholder farmers. These include the following companies: Brazil's Bart.Digital applies blockchain to financial document bookkeeping for small farmers, while Colorado's Bext360 focuses specifically on coffee trade. China also has such enterprises. Food优 (Foodu) completed a Series A funding of tens of millions of RMB in 2017. It innovates a model of "supply chain traceability + information notarization." Based on the immutability of blockchain data, it tracks each step in the food distribution process at fixed time intervals, allowing users to query in real time. Its blockchain (xcener blockchain) extensively uses smart contracts in the recording process. For example, in production, if water shortage in farmland is detected through hardware devices, the smart contract can automatically turn on sprinkler irrigation; in trade, upon confirmation of goods shipment, funds are transferred instantly; in process monitoring, if an accident occurs during circulation, the transaction is terminated promptly. The application of smart contracts in various links saves management costs for farms and brands. Xcener blockchain has now cooperated with more than 892 quality farms and brands in 17 countries, covering 872 types of products across agriculture, forestry, animal husbandry, and fishery, and has over 5 million product UIDs. In addition, Food优 uses blockchain to record production and sales data as digital assets for farms. When farms need bank loans or import/export trade, they can use the digital assets recorded on xcener blockchain to complete credit loans and trade circulation. It is reported that Food优 has established cooperative relationships with more than a dozen banks, including HSBC, China Construction Bank, Industrial and Commercial Bank of China, Sichuan Tianfu Bank, and some overseas banks. The following figure shows some blockchain startups for food and agriculture and their investors: However, to apply this revolutionary technology to the food field, these startups still face two layers of challenges. First, they must persuade large global food companies to adapt to new technologies and change their inherent supply chain processes. Second, they face competitive pressure from large companies with strong technological and capital resources (such as IBM), which have begun to offer their own blockchain tools. Their vast customer resources make survival even harder for startups. But at the same time, because blockchain is a relatively new technology, as the industry develops and startups rise, industry awareness increases, and this application may be adopted by more companies, thus having a considerable market size. If blockchain technology can be fully accepted and adopted, food companies and logistics companies will be able to save time and money by simplifying the document recording process in the supply chain, while also improving the quality of these records. They can also attract consumers by emphasizing transparency and strengthening the connection between global food suppliers and food sellers. Source: Xinghe Internet (ID: xinghehulian) -END-