- Category: Blockchain Supply Chain
Blockchain technology has revolutionized the industrial sector irrevocably and systematically because it brings on the table the ever-elusive transparency, security, inefficiency, and cost-efficiency – the pain points of any business. This disruptive technology has helped streamline the scattered and scrambled logistics and administrative data by storing it under the transparent, immutable, and decentralized, distributed ledger. Moreover, the implementation of blockchain in the agriculture sector can prove to be extremely beneficial. This cut-throat technology can provide a logical and holistic solution to the issues mentioned above faced by all business sectors.
Blockchain: An obvious solution to a long-standing problem
The use of blockchain in the food supply chain has been steadily increasing in recent years. The technology could help track items from farm to table and ensure they are safe from contamination or tampering, while effectively improving efficiency and reducing costs. In addition, via blockchain, it is feasible to keep track of the amount of food lost during distribution and storage. It will also create more accurate records about what was shipped and when it arrived at its destination.
The orchestration of the food supply chain
Supply Chain is a synchronized and coordinated set of operations that involves enterprises, individuals, activities, logistics, and information that work in tandem to move a product or service from supplier to customer. The food supply chain was put in place to tackle overall inefficiencies such as global malnutrition, food malpractices, and food waste problems. Over the years, the implementation of this system has helped bring down and stabilize the food prices and increased overall efficiency in producing, managing, and supplying food worldwide. The food supply chain comprises four major phases or stages that ensure a smooth flow of food commodities from their sourcing to consumption.
- Procurement of raw materials: The first step is obtaining agricultural and animal-based stock through local, regional or international sources.
- Food production, processing, and packaging: The next step comprises producing food items, processing them to make them edible, and finally packaging the finished product.
- Storing food supply: The finished food commodity needs to be stored properly keeping in mind the degree of the perishability of a food item.
- Distribution through wholesale and retail networks: The last and the most crucial step in the food supply process is an even and flawless distribution of food items to the end consumers. The wholesale traders buy the finished products and then supply them to retailers. From retailers, the food commodities directly go into the hands of households.
The challenges of the food supply chain
The complexities of the supply chain and the number of players involved are the biggest factors that hinder the efficient functioning of the food supply chain network. Each phase in the network has its own set of problems that disrupt and cause unnecessary loss of food commodities. According to UNEP‘s (UN Environment Program) findings, 30% of food production is wasted every year globally, which includes food loss and food waste. Another research says that approximately 1.4 billion tons of perishable food items go to waste because of disorganized and inefficient food supply chains.
The following are the defects found in the current food supply network.
- Tracking and transparency: The food supply network is a complex system with many stakeholders. The ills of the food supply chain are rooted in a lack of transparency and accountability in each food supply chain. Insufficient traceability in the supply chain is also a major concern, especially for the stakeholders of this highly complex and ambiguous network. All these mentioned shortcomings make it hard to administer the losses due to labor issues, transportation mismanagement, food tampering, miscommunication, and other such issues.
- Lack of data: There are way too many roadblocks in the way of the availability of authentic and complete data. From harvesting to production and the final consumption, the market players involved in food supply depend on unconsolidated and unverified data. Then again, supply chain data silos add to the woes mainly due to the unwillingness of companies to share data with their counterparts. Usually, different companies control each phase of the supply chain and have their vested interests. Such issues obstruct operational and administerial processes and lead to massive monetary and food losses and wastage.
- Food loss and food waste: When it comes to wastage and losses of food items, it’s a catch-22 situation. There is not just one but a bevy of problems that lead to astronomical amounts of food wastage. According to statistics, the USA alone disposes of 40 million tons of food annually. FOA ( Food and Agriculture Organisation of the United Nations) says that nearly 30% to 40% of produce is either lost or wasted in the initial phase of the supply chain network and never reaches the distribution level. ABR (antibiotic resistance) has become a global concern, especially in animal-based food products. The infected livestock leads to less supply which increases the gap in demand and supply leading to price inflation. Other factors contributing to enormous food losses and wastage are over or under-production of food commodities, supply of sub-standard or substituted food items, lack of proper infrastructure, and shortage of cold storage.
- Imbalanced food consumption and distribution: When it comes to food insecurities in the food supply chain, we can see major disparities in how food is produced, distributed, and consumed globally. Whereas the USA produces nearly 80% of global food, it wastes 40% of the produce annually. On the other hand, if we take another agriculture-based third-world country, we might see a distribution imbalance within the same demography. One region might see abundant supply while the other faces acute food shortage. Also, economic and political factors are major contributors that disrupt the food supply network.
- Food-borne illnesses and food insecurities: According to the World Health Organisation, 600 million people fall sick and nearly 420000 people die annually due to consuming contaminated food items that could be either adulterated or chemically induced or both. The malpractices that take place at international and regional levels remain mainly unchecked. The complexities of the food supply chain play a part in malnutrition and the overall health of the consumers in the most significant manner.
- The environmental impact of agriculture: Climate change and global warming have become a source of anxiety for individuals and businesses in the agricultural sector. The extreme climatic conditions have exposed the vulnerabilities in the agriculture sector, especially pertaining to the food supply chain network. For instance, lack of authenticated information regarding weather change is one such cause of concern among the companies and farmers alike. The sudden and erratic change in weather causes a reduction in productivity which gives way to price rise, food shortage, and diminished food quality. Also, due to problems in food supply management, waste food releases toxic gases into the environment, which majorly contribute to climate change, leading to a complicated paradox-like situation.
- Food recalls: Food recalls are the bane of the food industry that single-handedly can cause colossal losses to companies. Due to inefficiencies and meager monitoring in the supply chain, low-quality or spoilt food makes its way to consumers.
Use of Blockchain in food supply chain
Above mentioned issues in the food supply chain can be sorted by using distributed ledger technology. According to UNEP, the world population would be over 9 billion in 2050, and feeding such a large population would require an approximately 60% increase in global food production. This humongous task cannot be achieved if we don’t consolidate the unconsolidated.
Therefore, implementing blockchain in the food supply chain is not just an option; it’s an apparent solution to the corrupt and conventional legacy system. Adopting this technology will ensure an uninterrupted and fluid food operational process in the local, regional, and international food supply networks.
Let’s take a peek at how blockchain technology can bring around the nebulous food supply network, provide transparency, and increase overall efficiency.
Traceability and transparency: Upgraded blockchain databases will notably help keep track of food commodities from farm to grocery store by storing every important information online, visible to all parties involved. The transfer of data on blockchain will enable companies to track their supply chain more efficiently. Every single movement connected to each supply phase will be closely scrutinized and monitored. Transparency of blockchain will help root out both obvious and hidden glitches while highlighting the network’s weak points. Both T’s will also encourage accountability which usually goes untraced and widely ignored due to the traditional legacy system. The growing accountability will, in turn, help upswing IoT (Internet of Things) that will boost data sharing.
Storage of factual data on blockchain: All data concerning the food supply chain is scattered, fragmented, and incomplete. More often, the various administrative departments have either insufficient or no record of some actions during the supply of the commodities, especially in lieu of the manual labor in the network. The shared and immutable data on blockchain will also help resolve issues occurring due to data silos which are caused due to reluctance to share data amongst collaborators.
The consolidated, authenticated, and relevant data on the distributed ledger will benefit every stakeholder by filling up the gaps and allowing seamless functioning at every point of the supply network.
Food safety: Blockchain technology will ensure food safety, the biggest and most pertinent issue related to the food supply. The traditional setup with its many loopholes is unable to either regulate or control food supplies nationally or globally. Data on blockchain viewed and accessible to all local and global players will be another strike to the imperfection in the food supply chain. Here’s how this technology will help with food safety.
- Keep an account of when and where the food was grown for the benefit of suppliers.
- By providing easy access to the names and locations of farmers and distributors.
- By ensuring high-quality food is supplied to the end consumers.
- It will allow consumers to trace their food back to its origins as every relevant information from crop quality, transportation, packaging, processing, and distribution will be available online.
- It will reduce food fraud by making it difficult for someone to change records without leaving a digital footprint.
- Blockchain will boost quality control checks on the unregulated market that caters low quality or substituted food products, thereby mitigating food recalls.
- It will help keep track and stop imported or local adulterated, substandard food from reaching the end consumers.
- Blockchain data regarding livestock’s health will help isolate infected animals from healthy ones
Blockchain in the agriculture sector: The biggest gainers of implementing blockchain technology in the current setup will undoubtedly be agriculture. We have already mentioned the problems persisting in the agriculture sector due to current uncertainties related to climate change. However, difficulties in this sector are deep-rooted and long-standing. Let’s see how blockchain can help analyze and remedy these issues.
- Blockchain, the peer-to-peer network, will help in data integration and allow data sharing. Producers and farmers will be able to store all and any information on the blockchain using their mobiles. The farmers can provide the data on total yield, crop varieties, soil conditions, sowing methods, grain prices, livestock, irrigation methods, and much more. This information will be immutable and visible to other stockholders in the supply chain network.
- The Farmers will get accurate information on weather conditions that will help them strategize their production timeline. The prior knowledge will also help them regulate crop production and prevent wasteful production.
- The farmers could also upload photos of their crops from their mobiles that are processed by data analytics tools developed by blockchain owners. These real-time pictures will be forwarded to food processors and refinery owners to help them decide the yield quality. The blockchain will enable the refiners to bid on the crop of their choice. In short, blockchain incorporates KYS (know your customer) while corroborating the Genuity of the suppliers within the network on all ends.
- Smart contracts can be generated at every level of the supply chain network. Every player from farmers to consumers can check and track end-to-end processes. Through smart contracts, farmers will get assured and profitable returns on their production. Simultaneously, the set contract will ensure that provided information matches the preset regulations. On the other hand, the processors and refiners will get authenticated and verified information on their bid crops.
- The quality checks in the initial stages of the food supply chain will ensure that only the best quality product reaches the end consumers such as households, hotels, and restaurant owners.
Blockchain in the agriculture sector can irrevocably change the whole process of the food supply chain for the better. By analyzing data stored on the blockchain, the players involved can scrutinize and decide on the variables such as percentage of crop production and which crop to be produced that will insure minimize wastage and food loss.
Even distribution of food commodities: The logistics behind the transition and supply of food commodities, locally and globally, could be better handled with the availability of accurate supply details stored on the blockchain. It will ensure the transparent and even distribution of food commodities which is in synchronization with demand.
Use of smart contracts in transactions and insurance payouts: Smart contracts are the holy grail of blockchains. Apart from supplier-receiver advantage, they will also help execute immediate transactions. In addition, insurance schemes generated via smart contracts will assure promised payouts to farmers, while for the insurers, guaranteed and regular premiums, thereby nullifying any discrepancies in the process.
SofoChain: A holistic solution to all problems in the food supply chain
Embracing blockchain in the food supply chain is the need of the hour, and it’s high time that the food industry sits up and smells the coffee. Sofocle is way ahead of its competitors and an established brand in the blockchain industry. We are committed to providing well-aggregated solutions to various industries. SofoChain is another feather in the cap developed on our reliable and advanced blockchain technology. It is designed specifically to address and target the weak points of the current, not-so-efficacious food supply chain. SofoChain intercepts everything from food safety to trackability. So, get in touch without further ado, and leave the rest to us.