Case study: How blockchain is improving trust and transparency in the food industry

Case Study

Blockchain for consumer trust, faster product recalls
“According to studies, 66 per cent of consumers don’t believe the information displayed on food labels. Articles about food frauds are featured often in the media, resulting in a massive consumer distrust, which puts a growing pressure on the shoulders of food companies and food safety authorities. Farm-to-table food traceability on blockchain can be an efficient method to gain back the trust of consumers, but it is not the sole advantage of it. During food related outbreaks, it often takes weeks to find the source of contamination in the supply chain, which can contain hundreds of companies residing in several countries. With TE-FOOD, the complete history of a food product can be instantly seen on blockchain, so recalls can be managed quickly and efficiently. Authorities can respond quicker to mitigate the effects of outbreaks, while the food companies can make targeted product recalls.” – TE-FOOD Medium post (November 2018)

The challenge

“Adulteration or misrepresentation of food’s benefits, origin or quality for financial benefit – or food fraud – dates back centuries,” NFU Mutual retail specialist Frank Woods writes in the introduction to a 2017 report on food fraud. “The ways that fraudulent food can enter the food chain include falsified or inaccurate documentation, redirection of waste products and re-dating of stock, often through food brokers and internet sales.”

Such fraud is estimated to cost billions every year in the UK alone. And high-profile cases, such as Europe’s 2013 horse meat scandal have contributed to declining consumer confidence in food supplies. The NFU Mutual-commissioned study found that one-third of consumers were “less trusting of products and retailers than they were five years ago”.

Beyond hurting consumer confidence, food supply problems can also threaten public health. But with today’s complex supply chains, it’s difficult to identify the source of such problems quickly and recall products before many people have already been affected. That’s yet another reason why a growing number of organisations are looking to blockchain to improve food industry transparency.

Those solutions range from Oxfam’s BlocRice project in Cambodia to IBM’s Food Trust, which is being tested by Albertsons, Carrefour, Nestle, Smithfield, Unilever and Walmart, among others. Another company, TE-FOOD, piloted a blockchain system to track the durian supply chain in Vietnam and has now branched out to other markets.

The project
TE-FOOD is a startup founded by a Vietnamese company called TE Ltd. It partnered with Hungary-based Erba 96 Ltd for IT services to help develop a food traceability system, and in 2017 transferred its operations to TE-FOOD International GmbH in Europe.

The company launched its first blockchain pilot in Vietnam in 2016, testing a farm-to-table tracking system for durians. At every step in the supply chain, participants kept track of trees, individual fruits and fruit batches with the help of smartphones and QR codes. The end result: consumers can scan the QR tag on any TE-FOOD-tracked durian in a market, and quickly see the complete history of the fruit's journey from tree to final purchase.

The French retailer Auchan began using TE-FOOD’s system at its branch in Ho Chi Minh City in 2016, and recently announced plans to extend the use of that system internationally, starting with France, Italy, Portugal, Senegal and Spain.

The results
Launched as part of a government project, Auchan’s first tests in Vietnam have since grown to include tracking of 18,000 pigs, 200,000 chickens and 2.5 million eggs. The company has also added tracking for aubergine, mango and durian in Vietnam, and organic carrots, potatoes and chicken in France. Future plans include using the TE-FOOD system to track tomatoes and chicken in Italy, fruit and Iberian pork in Spain, and chicken in Portugal and Senegal.

“Consumers of the retail chain can scan QR codes on the products and view the food history with any mobile app which is capable to read QR codes,” TE-FOOD wrote on Medium. “The authenticity of all data will be verified on the FoodChain (TE-FOOD’s blockchain for global traceability information).”

In addition to working with Auchan, TE-FOOD also supports food tracking for many other organisations, including Islah Venture for a halal food blockchain hub in Malaysia, a Canadian collaborative venture for “Bock Chain” beer, and Vietnam’s Cofidec, which plans to track its processed food products.

Key benefits
TE-FOOD says its system provides a “top-to-bottom solution for all participants of the food supply chain”. For supply-chain companies, the benefits include a better ability to rate business partners, understand logistics data and buy or sell other value-added services from others on the supply chain. Consumers, meanwhile, gain the ability to verify the history of the foods they buy. And regulators benefit from more insights into supply chain data and a greater ability to control supplies and food quality.

The company adds that its solution, unlike some other blockchain systems, is unique because it’s designed specifically for the food industry, and provides a “complete, off-the-shelf solution” for companies working within the sector.

Final thoughts
TE-FOOD says new technologies are driving rapid change in food supply chains, and expects more such changes in the decade ahead. In addition to blockchain, other technologies likely to reshape the industry include the Internet of Things, big data, artificial intelligence and decentralised marketplaces. For example, the company says, “As a part of an R&D project, we are working on a machine learning backed mobile app, which helps consumers to know more insight about meats just by taking a photo of the meat.”

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