Blockchain in the food industry has the ability to increase trust between suppliers and customers, by acting as “an immutable digital ledger” that tracks movement within the food industry. Customers have criticized restaurants, including Chipotle and McDonald’s, for selling food that led to the outbreak of foodborne diseases. There are always difficulties for a company to track and isolate a product recall before it affects more people. This existing system to track the food system is difficult and costly.
With the implementation of blockchain into the supply chain, companies and restaurants can quickly locate the source of contamination. IBM and Walmart are working together to improve Walmart’s food tracking systems thoruhg IBM Food Trust. By using technology developed by the Hyperledger Project, Walmart is record the list of locations when the meat is moving along the supply chain. By having a constant record of the transactions, suppliers are able to see and provide evidence for factory data, shipping and expiration dates. If there is a problem with a food product, suppliers can easily track the origin of the issue and make sure to pull the produce off the shelves.
The blockchain also allows companies to be more efficient as well. When a product is contaminated, the supplier can immediately flag it on the blockchain network and the stores and restaurants can maintain their safety and regulation. With a unique identifier on each food container and package, the blockchain will immediately record the transaction and make it public. The ability to track a single piece of produce is easily done in seconds due to the single version of transactions and activities running through the supply chain.
Customers can also benefit from this blockchain system, by trusting the food product labels in grocery stores. Blockchain can verify if a product is truly organic or cruelty-free, by maintaining standards for suppliers. With this public system, suppliers need to register their certifications on the blockchain network, so customers can trust the source of their produce. This system will hold companies accountable, by making sure their claims are ethical and correct. Customers will definitely trust products from suppliers who choose to back their product labels via a traceable network.
This blockchain system will also provide huge benefits for producers and suppliers as well. Farmers will have access to real-time information about their crop prices and market data. With this data, distributors can remain competitive and place accurate prices on their foods. In addition to produce prices, farmers can also have access to loan interest rates, which the blockchain system will log.
However, there are limitations in the blockchain system. It will be difficult to verify the data within the system, as members of the supply chain update it themselves. In addition, blockchain does not provide the context of how and why food was handled in a certain way. Even though customers may desire foods that are pesticide-free, farmers may have reasons for why it is was used and how it compared to other pesticide brands. Some critics argue that blockchain may not be the best method of tracking the food system, but it provides the most verification and transparency compared to other current technologies.
Blockchain will help consumers make better food choices for themselves and their families. It can provide the transparency so customers can make informed decisions about their food and produce. Because of the immutable and public nature of blockchain, supplies are backed by this technology and are held accountable for their production.
With these new applications of blockchain disrupting the food industry, I am excited to see how the companies that we visit in New York City will use blockchain to promote transparency. Co-founder of Two Sigma, David Siegel, recently talked about the benefits of blockchain within his company and the finance industry in general. For banking and finance companies, this extra level of regulation would attract clients and help them build a trustworthy reputation. The companies from the Fintech panel that we will visit have already found ways to guarantee extra precautions for its customers.
In addition to extra security, start-ups are able to raise money and funding through blockchain methods rather than the traditional venture capitalist route. This use of cryptocurrencies in funding Initial Coin Offerings (ICOs) has affected VC firms, including Bessemer Venture Partners. Investors of these start-ups will have to remain astute when offering to fund a firm’s ICO, in order to avoid any possible scams. On this trip, it will be interesting to see the contrast between start-ups who utilize blockchain for funding and VC firms that are against it.
After learning about the benefits of blockchain in class, I am excited to see how firms are utilize this disruptive technology to their advantage. Blockchain has the capability to transform industries by promoting efficiency and trust. Companies and consumers can benefit from blockchain, and I hope to see applications of this tech in the companies that we visit in New York City.