Blockchain In Agriculture | Digitalising The Food System

Was this food ethically sourced? Was it made using sustainable practices? How did it get here? These are legitimate questions we all have about the food we buy, but no matter how much research we do, we still have to take products in good faith that they are what they claim to be. That's a problem, and that's where blockchain comes in.

A few years ago, cryptocurrencies such as Bitcoin and Ethereum captured our imaginations.  As digital currencies, they lie outside the authority of any government or bank and so represent a way of empowering people to take control of their own money. But the technology they are based on has applications far beyond the financial sector, and as it has steadily evolved, it has started reaching into all walks of life - including the world of food production. This technology is called ‘blockchain’, and it might just help solve the problem of transparency in our food system.

Food transparency - where does our food come from?

Due to the sheer size and complexity of the food supply chain, food fraud and even just plain old mistakes are common. That creates a big problem for consumer trust, making us ask - “where does our food come from”? A famous example is the UK’s horsemeat scandal of 2013, where horsemeat ended up mixing with beef and being sold to the public.¹

But what if we could see the entire history of the product we’re buying - the very minutia of how it was produced and how it travelled through the chain from farm to supermarket shelves? With blockchain technology, food transparency is possible. Seeing all that information could be as simple as scanning a QR code with your smartphone. You could examine the origin and journey of the food you are about to buy in great detail, and make an informed decision on whether to buy it or pop it back on the shelf.² And crucially, you would know you could trust that data, as it would have come from everyone in the supply chain, not just the company that makes the product.

What is blockchain technology?

In order to track transactions between buyers and sellers, we record each transaction on things called ledgers. Traditionally, a neutral, trusted third party  - like a company, a bank or a government - writes the ledger, and everyone agrees to trust their records.

Blockchain takes a different approach. Instead of one trusted ledger, the blockchain is a public ledger that everyone has a copy of and that everyone can add to - but no one can edit. When everyone’s ledger is the same, you know you can trust that it’s correct - but fraudulent transactions can be spotted when one person’s ledger differs from everybody else’s. 

Ultimately, blockchain is all about trust - instead of trusting a company, a bank or even a government, it works on the principle of ‘trust by consensus’. By offering complete transparency, it makes it possible for us to simply trust one another. 

With so many moving parts in the food system, trust is currently scattered across the industry. Blockchain would openly store the entire history of a product online, which would allow us to see every move our food has ever made, from farm to fork. This would provide the consumer with something they’ve never truly had – provenance. Knowing the history of an item - its origin, who owned it, when they owned it and for how long - would create unprecedented food transparency, empowering us all to make more informed decisions about what we buy and what we eat than ever before.

Retailers Are On Board

Such advantages don’t just apply to the consumer: sellers can benefit greatly from using blockchain, too. One of the most valuable assets for food companies is their brand, and in recent years, consumers have come to value transparency in how products are made- according to a survey conducted by Label Insight, 73% of consumers are willing to pay more for products that demonstrate transparency.³ Companies can use blockchain’s innate transparency to their advantage, showcasing their sustainable approach and adherence to best practices and enhancing their brand to the consumer. 

This isn’t made any clearer than on IBM’s very own blockchain platform, Food Trust.⁴ The biggest food companies in the world - household names like Walmart and Carrefour - are now signed up to this network. Why? To improve efficiencies in the food supply chain, sure, but also to earn the trust of their customers.

Limitations of Blockchain Technology In Agriculture 

Of course, there are disadvantages to this new dawn of traceability. First, embracing blockchain technology in agriculture requires us to break down the systems we currently have. While rewriting the rule book would benefit us all, it would inevitably leave some people behind. For example, in a food world run through blockchain, the need for regulatory agencies falls away, as the network is so transparent it becomes self-regulating.⁵  It’s a more efficient way to manage our food chain, but the livelihoods of people working in such agencies would be at serious risk. And what about small-hold farmers? Transferring all records from paper files, databases and email records onto the blockchain may be too big a leap for some, especially for those still using traditional methods or who don’t yet understand or trust blockchain technology.

Blockchain isn’t a ‘free’ alternative either - it consumes a gargantuan amount of power when running on a grand scale. When Bitcoin was at full tilt, the power consumed running its blockchain operations was equivalent to that of a small country.⁶ So, despite the peer pressure blockchain could exert on companies to be sustainable, negative effects on the environment may seep out of the system regardless.

Future of Blockchain in Agriculture

The future of blockchain in agriculture is still unclear, but it appears to be here to stay. Only last month, Nestlé (the world’s biggest food company) incorporated its luxury Zoégas Coffee Brand into IBM’s Food Trust blockchain,⁷ and other, smaller companies are following suit in droves - almost 300 new suppliers have joined the Food Trust network since its inception in October 2018. As adoption of blockchain increases, companies like Nordic salmon-farming company Kvarøy Arctic are finding benefits beyond just improved food transparency - the technology is helping them better serve their customers, too.⁸

Widespread adoption of the blockchain in our food system could bring about an unprecedented change in how we trade our food. With the big guns already signing up and indirectly strong-arming their competitors to do the same, it’s possible that change could happen sooner than we might think.