Food fraud exists since humans have been trading food. Brands initially were created to bring guarantees to the consumers. Engaging their responsibility, brands commited to bring safe and tasty products to the consumers. But as the industrial revolution came along, and food production intensified, it became more and more difficult for the brands to control the whole production chain, and food chains started to complexify.
With an average $30 to $40 billion annual cost to the food industry, food fraud is a critical issue today for major food producers and retailers. The Consumer Brands Association estimates that roughly 10% of commercially produced food and beverage products are affected by fraud. (1)
Over the past few years, blockchain technology has been making its way through the food industry, penetrating both small companies (such as the local French brand Juste), as well as the biggest agrifood giants like Mondelez or Nestlé.
Until now, few have spoken about its potential for food fraud reduction, focusing instead on the supply chain benefits or the commercial competitive advantage that it brings to their products. Yet, industry experts such as Gary Weber or Frank Yiannas are strongly arguing that blockchain can indeed be leveraged to help reduce food fraud. (2,3)
Blockchain is a technology that works as a shared ledger where all authorized participants are required to verify transactions. Each new transaction is permanently linked to the previous blocks of information, making it a chain of blocks, or a blockchain.
The primary thing to understand about blockchain is that it acts as a trusted third party: once information is recorded, it is impossible for one party to go back and change information without that change being visible and validated by their peers.
Lastly, there are different types of blockchains: public, private, or even permission-based blockchains. In the food industry, the most commonly used blockchain infrastructure is Hyperledger Fabric, which is a private, permission-based blockchain.
If you’re confused about blockchain, here is a video which covers the basics.
Blockchain for traceability and supply-chain monitoring
From the finance industry to pharmaceuticals, blockchains have proven to be very efficient in enhancing traceability. As a distributed ledger, it enables actors from different companies, entities, and even countries to securely share information regarding the data, goods, or financial flows between them.
Looking at the food industry and its complex and global supply chains, we can easily understand how this kind of shared ledger can help provide more transparency and improved supply chain monitoring.
Blockchain alone is not the total solution to food fraud
One key point to understand is that blockchain is an excellent tool for traceability, but its abilities to judge data quality are limited. The simple fact of recording information on the blockchain does not render it true. This means that if the initial data input is incorrect or from an untrustworthy source, blockchain alone cannot confirm the accuracy of the information, and erroneous information can end up being permanently recorded. This is why additional layers of smart technology are often needed to ensure the quality of the supply chain data.
Digital audits are a way to prevent adulteration, tampering, and diversion
One concrete example of how blockchain technology can be used to prevent food fraud is by coupling its traceability capabilities with a digital auditing module. The Connecting Food platform (the leading transparency solution for agrifood players) has a built-in LiveAudit® module, allowing users to verify that products respect their specifications at every step of the production process.
By running agricultural and production data through its different specialized algorithms, LiveAudit® can verify that a factory does not deliver more than what it can produce, that a group of animals were only fed with certified organic feed, or that all of the raw material used in a finished product are truly from a specific country or region.
Through the platform, which is used by agricultural cooperatives as well as manufacturers, alerts are sent out in real-time any time a product non-compliance is found, or if the data concerning a supplier is missing or unavailable.
This is a particularly pertinent concept in today’s post Brexit-era, where food imports and exports have slowed due to increased regulations and verifications, leaving many British supermarkets low on perishable items in the interim.
By using blockchain to safely and securely share data in real-time between food manufacturers, exporters, importers and even governments, customs procedures can be sped up as each actor of the food chain contributes to the system, providing their agricultural and production data in real-time. Combining this technology with real-time digital auditing renders it even more powerful, as it allows customs agents to focus their time on batches receiving the LiveAudit® alert, while compliant batches can be released in a timely and efficient manner.
At Connecting Food, we are convinced that blockchain will play a key role in reducing food fraud and improving food safety. But the technology itself is neither a lie detector nor an auditor. This is why agrifood actors should look for blockchain applications combined with digital auditing, allowing the true value of blockchain to shine.