If there was ever any doubt that agriculture would someday run headlong into the blockchain space, it was quashed on Sept. 24.
That was the day Walmart announced its leafy green suppliers would be required (in a year’s time) to participate in a blockchain-driven system providing full-chain traceability of their produce.
In recent years, Bitcoin and other types of cryptocurrency have received all sorts of publicity, but the blockchain technology behind it also has the potential to play a role in farm-to-fork transparency of food.
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But what does it mean for agriculture?
That’s a big question and not one that’s easily answered. But the implications — as Walmart’s recent move proves — could be major for everyone in the food chain, including farmers.
Verification and traceability
Blockchain technology can provide transparency on a number of fronts, said William Winkler, research and content director with the Energy Conference Network, a Texas-based company that puts on conferences on the role of blockchain in agriculture.
One of these is verifying certification claims.
“Alberta beef has a premium price on it and there are a lot of people who are selling Alberta beef, but it’s not verifiable,” said Winkler. “You just have to take the restaurant’s or the grocery store’s word for it that it is prime Alberta beef.”
Another driver for using blockchain is food safety. In the event of food contamination, using blockchain to discover its origin would take a matter of hours rather than days under current systems, he said.
“When there’s an outbreak of salmonella or E. coli, the affected product is pulled off the shelves because we have no real idea where the contamination took place,” said Winkler. “There are so many vendors along the supply chain that it takes from six to seven days to verify where a crop came from.
“But with blockchain technology, if there’s a head of lettuce suspected of contamination you can scan the bar code or the QR code that’s on the packaging and — just like an order from Amazon — you can see exactly where it came from, where it was shipped from, and have that whole supply chain of who was involved and where it was packaged — all the way down to the farm of origin.”
That was the reason Walmart gave when it told its leafy greens suppliers that using blockchain would soon be mandatory. It specifically cited an E. coli outbreak this spring in which romaine lettuce grown in Arizona sickened more than 200 consumers and resulted in five deaths.
“With a blockchain traceability solution, potentially you could scan a product and trace that product back with precision and accuracy to source in seconds — not days or weeks,” Frank Yiannas, Walmart’s VP of food safety, said in a video announcing the company’s new mandatory blockchain policy.
Privacy versus transparency
But others see another motive, including well-known food systems expert Sylvain Charlebois. He wonders if grocers such as Walmart want to use blockchain to establish leverage over its suppliers.
“Transparency in the context of blockchain is neither absolute nor unconditional. Different solutions will offer various levels of transparency depending on how the system is set up,” said Charlebois, a professor in food distribution and policy with Dalhousie University.
“This is likely why grocers are jumping on the blockchain bandwagon, to exercise their power with the supply chain and generate their own rules of engagement. This is likely making everyone else less comfortable, including processors and producers.”
This concern is founded on the fact there are different ways to set up blockchain systems. Bitcoin and other cryptocurrencies use a decentralized public blockchain to validate transactions through a process called mining.
However, a private business blockchain is different, said Elena Dumitrascu, chief research and tech leader with TerraHub, a Calgary company that helps businesses develop their own blockchain solutions.
Blockchain uses something called ‘distributed ledger technology’ to establish transparency. A blockchain can be as public or private as its designer wants it to be, said Dumitrascu. A supply chain-based version would likely only provide access privileges to private material on a need-to-know basis, she said.
“Maybe you see who bought what — but you don’t see how much they paid to receive, say, three head of cattle,” she said. “The consumer may be able to see what farm it came from and where it was processed. But some details about the transaction would still be kept quiet to retain competitive advantage and for other private business reasons — things that myself as a consumer don’t really need to know.”
TerraHub tells its business clients to use a private blockchain to ensure it’s not “creating any unnecessary business exposure.” In such a system, each participant only shares the data deemed necessary to make transparency work.
“We get to keep our own databases (private) while putting in pieces of information that helps us collaborate faster and make sure that collaboration happens in a way that’s beneficial to everyone in the network,” said Dumitrascu. “There could be a number of pieces of my business that never get transacted through the blockchain network.”
Charlebois compares the blockchain to a hockey rink.
“Everyone participating in a blockchain are in the stands and can see the ice where all the data is located. Boards protect the data so that it cannot be altered. The ice can tell everyone who is buying from whom, when, at what price, and volumes — which amounts to everything.”
Who pays?
Charlebois is not yet convinced all of the participants necessary to make a supply chain-based blockchain work will be ready to buy in.
“The challenge with agri-food is that you have a lot of family businesses and trade secrets, and I’m just not sure that some companies are willing to share everything at this point,” he said. “The concept itself has merit but the application of blockchain technology could really be challenging.”
That’s why he is concerned when a single party — such as Walmart — attempts to set the parameters of the blockchain.
“Right now we’re seeing retailers as major enforcers,” he said. “They’re basically setting the tone around blockchain technology because they need it and they want to set the rules of the system before anybody else does. They’re imposing this technology upon everybody else because they can.
“Over the next little while we should not be surprised to see the disruptive nature of blockchain technologies generate tensions amongst players as they are trying, once again, to cope with grocers’ wrath.”
However, Charlebois believes blockchain technology, or something like it, is an inevitability in food systems.
The key is something called ‘interoperable traceability’ — which allows separate computer systems (either directly or through software) to share data.
“Systems today are not interoperable,” he said. “Although all companies today have a traceability system, it doesn’t mean that the systems are communicating with each other. Blockchain technologies allow all of these systems to communicate with each other, but in order to work everyone has to participate from farm to fork.”
But that sort of data sharing costs money — and someone will have to eat those costs.
And this is something the farm sector needs to keep an eye on.
While the consumer is the obvious candidate to shoulder the costs, Charlebois is not convinced people will be willing to pay a premium for food safety. After all, that is something they already expect from existing systems, he noted.
There is a better case to be made for blockchain in the space of food authenticity, he said.
Blockchain systems could, for example, verify whether food marketed as ‘certified organic’ is what sellers claim it to be.
“Food safety was never going to do it for blockchain technologies,” said Charlebois. “Consumers expect safety without wanting to pay for it. It never had market currency, whereas food authenticity does.
“Fraudulent products can compromise brands and the viability of a company in a heartbeat. We have seen many cases already around the world.”
It’s hard to tell if consumers would willingly pay for food authenticity either, but what is clear is that blockchain is no longer just about Bitcoin.
And as Walmart’s lettuce suppliers have learned, the brave new world of blockchain can go from concept to reality very quickly.
