How blockchain could revolutionize food supply chains—and lower your grocery bill

Consumers have good reason to worry about the frailty of the global food supply chain. This is not because of lack of food, but because—as we’ve recently seen—supply-chain breakdowns can drive up prices. Logistical hold-ups, factory closures, climate change and labour shortages in the agriculture and agri-food sectors create a domino effect that strikes all levels of the system. 

As this crisis worsens, with no end in sight, food-industry juggernauts like Walmart Canada are experimenting with ways to increase efficiency using blockchain, a technology whose reputation tends to be shrouded in the hype over cryptocurrency. 

These applications have nothing to do with Bitcoin, and everything to do with increasing the level of safety, transparency and traceability of food from farm to table. Even though these applications are still in the early stages of development, pilot projects have been promising enough that blockchain aficionados envision a future where—similar to the internet—it could be hard to imagine life (and food) without it. 

What exactly is blockchain? 

First things first. A blockchain is a decentralized network that records, stores and encrypts blocks of data. These blocks are chained together using a branch of mathematics called cryptography—used to protect transaction information, secure user privacy and encrypt communication between parties—to form a chronological digital ledger. 

The blocks of data in a blockchain are verified by a network of devices and computers called “nodes” that all have a copy of the same data. There are often thousands of nodes that form the infrastructure of a blockchain. Nodes enable blockchain technology to be decentralized since the network does not rely on a centralized server. 

“We need trusted records so ubiquitously through everything we do in society, so I think there is enormous potential for blockchain to become that architecture of trust for society,” said Victoria Lemieux, an associate professor at the University of British Columbia who leads the Blockchain@UBC research cluster. “[Blockchain] could be as widespread as the internet.” 

Blockchain is considered both a foundational and disruptive technology for its potential to create new processes for economic and social systems. Applications of blockchain have already unlocked possibilities for individuals, large corporations and governments. Digital currencies, for example, could soon be a viable payment method recognized by financial institutions. 

Isn’t Bitcoin and cryptocurrency the same thing as blockchain? 

A common misconception. While it makes cryptocurrencies like Bitcoin possible, blockchain has other applications could help large businesses increase efficiency and digitize archaic practices. 

Non-fungible tokens (NFTs) built on the open-sourced Ethereum blockchain network can be used to prove the ownership of both digital and tangible goods. Other  uses are already in the works: by large companies to secure personal identification, and by the Estonian government to verify health records. 

“Not every blockchain application is trying to eliminate the intermediary,” says Harish Krishnan, a professor at UBC who specializes in the uses of blockchain in supply chains. “Some applications of blockchain are trying to make the intermediary more efficient.”

How can blockchain be applied to food supply systems? 

The process of getting food from farm to table is complex, especially so for food that travels long distances and is available year-round (in Canada, think sweet potatoes, watermelon, avocados and rice). 

At the beginning of the food supply chain are farmers, growing and harvesting crops. Yet farmers often lose visibility of the harvested crop once it is processed and distributed, as it passes through many players in the supply chain including trucking companies, manufacturers, ports, carriers, importers, exporters and government agencies until, finally, it makes it to retailers. 

If problems arise—say, a safety issue requiring a recall—it could take weeks to track the origin of the specific batch of affected food, leaving the suppliers and producers no choice but to discard all of that product, most of which is perfectly fit to consume.

Replacing current processes with a single digital ecosystem run on a blockchain “would not be revolutionary but evolutionary,” says Erik Valiquette, the president of the Canadian Blockchain Supply Chain Association. It could be used to store timestamped activity and verify transactions throughout the food supply chain, says Valiquette, while working in synergy with other technologies like artificial intelligence, robotics, scanners and the internet of things to create an infrastructure more efficient and transparent than the one currently in use.

Will the average shopper care about this?

Shoppers are more and more discriminating. They know, for example, that products on grocery store shelves are labelled as having come from a specific place, or produced under a subset of ethical guidelines.

But some players within the food supply chain can still deceive as to the origin of the crop or product. This remains a significant problem, most recently affecting a slew of tomato products marked as being made from Italian-grown tomatoes. An investigation by CBC Marketplace, Investigative Reporting Project Italy and the Guardian revealed that the tomatoes actually originated on a farm in Xinjiang, China that used the forced labour of ethnic minorities, including Uy​​ghur Muslims who have been subject to mass detention and torture in what has been described as a campaign of genocide by the Chinese government. 

While blockchain does not protect against what the old adage describes as “garbage in, garbage out”—that is, the input of inaccurate information that is propagated throughout a system—it could play a role in holding accountable those who enter the bad information. If everyone in the supply chain could trace back the absolute origin of goods in real time, the information on food products would be much more difficult to alter, overwrite or tamper with. 

“All players will be forced to take a step back, look at their processes and make sure that the data-entry mechanisms are accurate,” said Valiquette. “Will that keep an actor from putting in bad information? Probably not. But by automating certain processes, talking with industry partners, and building a system together, the chances of bad information are greatly reduced.”

Could a food supply chain run on the blockchain address food security?

The inefficiencies at all levels of the supply chain have hit Canadians directly in their wallets, with overall grocery bills increasing more than four per cent, edible fats and oils rising 18.5 per cent, and domestic pork products like bacon and ham jumping 15.5 per cent from a year ago, according to Statistics Canada. There is an adequate supply of food in this country. But if prices continue to rise, rates of food insecurity will almost certainly continue to rise with them. 

Blockchain could be used to lower food prices, decrease food waste and increase food safety, says UBC’s Krishnan, but those intentions must be factored in when developing and creating the infrastructure: “A blockchain is a tool, and how you use the tool and for what purpose you use the tool really determines how helpful it is going to be to address certain problems.” 

While companies could design a blockchain that contributes to food security, they could also have other goals in mind, says Krishnan, such as “selling premium foods, and commanding a higher price for it.” 

Premium foods on the blockchain? 

You heard that right. Most consumers already pay a premium for organic, free-range and sustainable products. In the years to come, they may be able to trace such features themselves through blockchain.

Companies could choose to put certain information on a public blockchain that could be accessed by consumers through scanning a QR code provided on the packaging. This extra layer of verification would give consumers the ability to trace the origins of the food, or determine whether the company used forced labour and followed good practices. They might view which, if any, pesticides and chemicals were used (or not used) to grow or manufacture the food, or timestamps showing the exactly when the food was processed. 

When will blockchain be used in the food supply chain?

It is still an emerging technology, so these applications are still years away from mainstream adoption. Although large tech companies and a slew of startups have made impressive headway on creating efficient private enterprise applications, universal literacy on blockchain and its applications is necessary at all levels of the food supply chain—from farmers to consumers—before it can be properly implemented. 

Currently, the research and development of blockchain-powered solutions in the food supply chain are mostly funded by companies—like Walmart and IBM—that already hold a high concentration of market power. These are so-called “private permission” blockchains, which are more centralized than public, “permissionless” blockchains (like Bitcoin and Ethereum). All of the nodes powering a private blockchain system are controlled by a single provider. 

It is likely, then, that the large companies fronting the cost of investment in blockchain processes within the food supply system would have control over who can participate in them and who can decide what gets recorded on the ledger.

But adopting blockchain systems is costly, meaning small-scale farmers and independent grocers may be shut out. Krishnan and others warn that this would entrench the power of the bigger players—especially if smaller players have little choice but to use a blockchain database governed by the larger companies.  

Experts say that, with federal government intervention, a blockchain could be rolled out that is designed to create a more equitable food system, decreasing waste and increasing the bargaining power of small farmers.

That puts us at something of a crossroads. “People underestimate the power of these tools,” said Krishnan. “If we are not careful about insisting that they are governed in ways that are going to contribute to certain things that as a society we value, we are abdicating our responsibility.” 

Nathan Sing writes about food security and hunger issues in Canada. His one-year position at Maclean’s is funded by the Maple Leaf Centre for Action on Food Security, in partnership with Community Food Centres Canada. Email tips and suggestions to [email protected].