Originally Appeared in New Hope Network’s Idea Xchange, December 2018
How an Emerging Technology Can Be Used in Food Safety, Supply Chain Transparency and More in the Natural, Organic and Nutritional Products Industry
By Steven Hoffman and Sam Kressler
If you were following the news over Thanksgiving, you’d have heard about romaine lettuce being pulled from grocery shelves nationwide due to an E. coli contamination warning issued on Nov. 21 by the U.S. Food and Drug Administration and the Centers for Disease Control. For those paying closer attention, you also would have heard about how the use of blockchain technology could be a food safety solution for the leafy greens and fresh food industry. Blockchain also has the potential to provide traceability and transparency and prevent fraud in the supply chain for food, beverage and nutritional products makers – and ensure consumers that a product is exactly what it claims to be. Originally invented for the Bitcoin cryptocurrency, blockchain is still an emerging technology. This primer takes a brief look at blockchain – what it is, and what it offers as a tool for the natural products industry.
What Is Blockchain Technology?
In order to explain blockchain’s potential applications, it is helpful to understand how the technology works. Despite foundations built on some pretty complex math, the concept of blockchain is surprisingly straightforward. Every blockchain implementation is at its core a giant, decentralized database that acts much like an accounting ledger. Transactions are debited or credited among users on the platform but unlike traditional ledgers, the transaction record doesn’t reside in a single location. Rather, as a “shared ledger,” there are copies of the ledger -- and each transaction -- simultaneously residing on potentially millions of computers, or “nodes,” around the network that are continuously updated in real time. Since the blockchain is a database, entries can never be erased, only updated, which means that even if someone attempted to falsify information, the previous records would always be available, residing on every machine across the network and therefore publicly accessible to everyone on the platform. As a result, data is immutable and inherently trustworthy, unable to be falsified or manipulated once it is in the system.
Because of the inherent immutability of any blockchain platform, the implications for improving response time to and transparency during recalls is substantial. Currently, Food Safety and Quality Assurance (FSQA) teams within the food industry work off of a “one-step up, one-step back” model; in every step of the supply chain, each link is responsible for knowing where they procured an item (one-step back) and where it goes after it leaves their hands (one-step up). Currently, while digital records often (but not always) exist, they are isolated from each other at each link in the chain, slowing down response time and obfuscating transparency.
In a recent experiment, Walmart collapsed the time it took to determine the identity of the farm and farmer of a fresh, sliced mango sold in its stores from nearly seven days with existing technology down to 2.2 seconds using a blockchain implementation built by the IBM Food Trust. In light of the recent recall of romaine lettuce, let’s think about the implications; the tainted lettuce could be identified, recalled, and traced to its source almost instantaneously instead of what will most likely be a multi-day or multi-week search for the source of contamination. Instead of a national warning against eating any and all romaine, the affected pockets could be isolated and controlled discreetly, minimizing public health implications, as well as avoiding consumer fear, confusion, and lost revenue for growers, distributors, and retailers.
The fact that Walmart and IBM are working together is quite significant. In order for a FSQA blockchain implementation to be effective, every link in the supply chain needs to be involved. A system-wide rollout "will be led by the big guys because the infrastructure is so complicated," according to Bryan Armentrout, CEO of The Food Leadership Group, an FSQA consultancy based in Loveland, CO. The smaller players that dominate the natural products industry would be hard-pressed to gain the necessary traction with their production and distribution partners, or to corral the necessary level of funds required for implementation, for that matter. To that point, the IBM Food Trust has brought on the likes of Walmart, Kroger Co., Driscoll’s, Dole, Golden State Foods, McCormick and Co., Nestlé, Tyson Foods, Unilever, Carrefour, and Wakefern Food Corp. as partners. Beyond the sheer authority of their collective market-share, these producers and retailers control some of the planet’s most complex – and least transparent -- supply chains.
On Sept. 24, 2018, Walmart released a letter to its leafy green suppliers mandating adoption of its new blockchain platform. This is all ultimately a boon to the natural products industry. With the potential for overlap at the procurement, co-packing, manufacturing and distribution levels, as well as a robust platform that already exists with the IBM system, future hurdles to adoption for smaller businesses will be lowered significantly.
Challenges remain, however. For example, how does the platform ensure that producers at the beginning of the supply chain (think: mango farmers in Ecuador or cacao growers in Madagascar) have access to the technology required to upload necessary data to the blockchain? Likewise, just because certificates and other FSQA data can’t be modified once inputted to the blockchain doesn’t mean that falsified information can’t be uploaded by unscrupulous actors from the get-go. “You can keep a trail of where goods are created," said Carlo Las Marias, COO of CoinAlpha, a blockchain-based financial products company, "[but] the downside is that you have to trust how the data gets onto the blockchain in the first place." Fortunately, the pilot programs being rolled out by the likes of Walmart and Unilever are small enough that these and other potential issues will intentionally be identified and addressed before any global roll-outs are enacted.
Traceability: Organics and Dietary Supplements
Organic is the most transparent, the most consumer driven and the most heavily regulated food system in the world, according to Gwendolyn Wyard, VP of Regulatory and Technical Affairs for the Organic Trade Association (OTA). Because of that, blockchain as a traceability tool in organic production and trade makes sense, she said at a seminar at Natural Products Expo West in March 2018. “OTA has a task force dedicated to preventing fraud in organic and is putting together a best practices guide for industry to adopt to ensure authenticity. Currently, we are working on a project looking at supply chain from farm to shelf and part of that is putting together a mitigation plan and strategy that would incorporate the implementation and use of blockchain,” she said.
Logan Peterman, Agricultural Research and Analytics Manager for Organic Valley, agreed that the organic industry is in the early stages with blockchain. “We are aware of some organic certifiers considering blockchain technology for international imports, particularly in terms of grain and other commodity markets where we have substantial issues with co-mingled products. They are looking at biological markers that they might be able to use to ensure integrity, but again, it’s all very early stage,” he said.
For dietary supplements, blockchain could present some unique advantages, said Trinanjan Gupta, CEO of the technology solutions company Dreamweaver, in a panel at Natural Products Expo West. “Ensuring transparency in the supplements industry requires capturing data with each supply chain partner and sharing it with your suppliers on one side and your customers on the other,” he said. “The supplements industry is interesting because it’s global in nature. With each transfer of ownership, we need to be sure that the ingredient and quality information is shared. From there, the certificate of analysis or any other ID document needs to be attached to each transfer of ownership as you share information in the supply chain,” Gupta added.
Challenges to transparency, according to Gupta, include “change management,” where companies need to insist on supply chain transparency, often with reluctant partners; attaching ingredient information to each transaction (“Easier said than done,” he said); data standards are not defined yet in dietary supplements; and “The first mile is always very complex,” Gupta said. “It’s happening at the farm somewhere in the world and it’s always difficult to get that first mile information. However, with smart phone technology, farmers in India and Africa are able to share data, he said.
“Now, in real time, we can send information to a cloud-based infrastructure – a farmer in the field in Africa can enter data into his mobile phone, and information can be captured instantaneously across the world. Ten years ago, a farmer could store the data but how could he share it? The cloud changes that. Blockchain now ties it all together and makes sure that this data is captured and shared between the farmer, processor, importer, manufacturer, distributor and ultimately the consumer. The end goal is to enable the consumer when they buy a product to be able to scan a bar code and at the click of a button instantly get all the information related to the product. That can only happen if you are able to link all these hubs in the supply chain,” Gupta said.
From a blockchain point of view, all this data now being captured at each transaction level is being saved and shared in what is called a distributed ledger. “This is a fantastic platform for supplements: the data is stored, immutable…and it is something which adds multiple levels of security. Additionally, blockchain makes fraudulent behavior very difficult to do,” claimed Gupta. “If there is data that has been stored as part of the blockchain platform, you cannot go back and change it; if someone changes it, it creates a new record and tells you that someone made a change there. So, there is an audit trail you cannot escape,” he said.
The opportunity for blockchain, he concluded, is that accurate information can be shared all the way back to the origination and that “each element in the chain can contribute to this full volume of information that can be transparent and contribute to your brand.”
Of course, even without blockchain, which can be a large investment for small businesses, supplement manufacturers can ensure full traceability using best practices and tools at hand, said Elena Lécué, EVP of Sales and Marketing for Gaia Herbs in Brevard, NC. Speaking of the company’s Meet Your Herbs™ consumer traceability program, “Our innovation is a unique code associated with every product batch, allowing us to have full traceability including certificates of quality without the need for blockchain,” she said. “Because we are committed to radical transparency, Gaia Herbs is certainly watching developments in blockchain technology, yet, we are a GMP certified business and fully FDA compliant. That requires lots of certification and we make test results for purity and potency of our products publicly available. You can make proof of quality and information about the provenance of the product available using current practices without relying on blockchain, if you are testing every batch.”
Blockchain, Fair Trade and Sustainability
Other players, including World Wildlife Fund (WWF) and Oxfam International, are exploring blockchain technology to ensure the protection of endangered seafood, and to ensure farmers in developing nations receive fair prices for their agricultural products.
Recently, WWF teamed up with blockchain technology and sustainable fisheries partners in the fresh and frozen tuna sectors of the Western and Central Pacific region to strengthen supply chain management and help stamp out illegal fishing and human rights abuses. In a report published in August 2018, WWF said, “More and more, experts view full supply chain traceability and transparency as the only way to ensure against the continued entry of illegally or unethically produced seafood products into the seafood supply chain. Blockchain can be a significant part of the solution. By providing this transparency and traceability, it can enable the market to both reward producers who engage in best practices, and exclude illegal and unethical producers.”
Oxfam, for its part, is working with small-scale organic rice farmers in Cambodia, and in November 2018 launched BlocRice, a project that “aims to test blockchain technology and its smart contracts, a digital three-way contract farming arrangement between primary producer, Cambodian rice exporter and retailer in Europe, to improve farmers’ livelihood and their supply conditions,” Oxfam said in a statement. The project will focus on introducing blockchain technology to the organic rice value chain by registering all chain actors with unique identification codes on blockchain; introduce smart (fair trade) contracts between farmers, agricultural cooperatives and exporters to ensure fair income and proper payments for farmers (women farmers, in particular); introduce cashless payment to farmers; and design a consumer communication component from Cambodian producers to consumers.
What Can Block Chain Really Do for the Food Industry, Forbes, Sept. 30, 2018
IBM Food Trust
Video: Blockchain and Food Safety with IBM and Walmart
Provenance: Social Mission through Blockchain Technology
Note: This article was co-authored by Steven Hoffman and Sam Kressler, founder of Stir Consulting, an innovation strategy and product development firm serving the natural foods, culinary and food service industries. Visit www.stir-consulting.com.