Transforming How We Consume
As we gain a deeper understanding of blockchain technology through our Blockchain for Business Video Series, we begin to understand the various capabilities of an advanced digital ledger (beyond using restaurant enterprise BI). These capabilities are being utilized and integrated as a core fundamental practice in various industries today, such as food service.
The dynamic nature of the food industry supply chain involves multiple transportation components, resource management, health consciousness and accountability. This multinational sector holds a tremendous responsibility in the health and satisfaction of perhaps the largest market in the world. However, due to the various moving parts of this industry, and the requirement for efficient product tractability, record keeping of consumable resources are currently poorly managed, and thus, not fulfilling consumer expectations.
In this segment, Director Matthew DiBona exposes the breakdowns within the food supply chain, and how integration of blockchain in the food service industry can transform the way humans consume.
Having trouble viewing this video? Watch on YouTube!
Blockchain in the Food Service Industry
Whether you work in the food industry or are just a casual diner, surely you follow the news when a foodborne illness outbreak occurs. Whether it’s the recent e.coli concern in romaine lettuce, or the large egg recall that occurred in April 2018, you certainly see these news stories broadcasted rather frequently. Beyond the foodborne illness side of things, there’s also the food provenance side. Consumers often find themselves in a common predicament; do I trust the food source provided, and is what the food producer is telling me actually true?
The end to end food value chain encompasses a complex global network of participants, from the farmer to the end consumer. At each hand off, the individual item is affected by that participate in some way. Each participant keeps records of what they have done, what they received, the processing that occurred, and what was handed off to the next participant. This complex network creates several challenges that can be overcome with blockchain.
Foodborne illness is a major problem. 1 out of 6 Americans get sick annually, which amounts to 48 million people every year. The World Health Organization estimates that 420,000 people die each year of food-borne illnesses, while 30% of these deaths occur in children under the age of 5. If you recall the large spinach recall that occurred in 2006, California farmers alone were impacted to the tune of 74 million dollars in losses due to the product needing to be destroyed. The reason for this is, they didn’t know the actual source of the problem.
More and more, consumers demand quality in the food that they eat. According to the Food Marketing Institute, 44% of customers want to know that their food has been produced ethically. Further, 75% of customers don’t trust what is listed on the food labels. Therefore, customers demand for quality and transparency currently isn’t being satisfied
The various records of our foods journey are currently poorly managed. Though 15% of the US food supply is imported, the FDA only requires each participant in the food supply chain to have visibility of ‘one up one down’. Meaning, they have to simply keep records of what they received and where it went. Therefore, no one has full visibility to this end to end journey. In times of crisis involving a foodborne illness, or to substantiate the integrity of a food product, it’s very difficult to pull together the records describing that food products journey.
There are several ways blockchain could improve the challenges the food industry is facing. First, participants could better monetize their production. Farmers could generate more sales through increased land use and distribution of their end-of-season overflow. Further, producers can increase the selling price if they follow more cost sustainable ethical practices, which would entail proving the integrity of their claims.
Next, food recalls could be targeted more quickly instead of blanketed. Imagine if we were able to identify not only the farm, but the particular field within a farm where an infected product came from. This would prove far more efficient, rather than simply saying all spinach must be taken off the shelves, or don’t eat romaine lettuce from Yuma Arizona, when none of the product is labeled from that area. Through smart contracts, handling the digital exchange of assets that are usually physically exchanged could dis-intermediate the hand-offs through middlemen in the food value chain. Thus, only those participants truly adding value to that food product would participate.
In conclusion, this would save time and cost for every purchase, including costs to the consumer. Because of the blockchains transparent nature, collaboration would become more open and transparent, ultimately driving consumer trust.