The Effect of Blockchain Technology on the Food Supply Chain

In the current food system, blockchain ownership record-keeping and tamper-resistance qualities have the potential to solve significant problems. These concerns include food fraud, safety recalls, inefficient supply chains, and lack of food traceability. In light of these challenges, the purpose of this blog is to go more deeply into the possible benefits that blockchain technology could bring to the food ecosystem. Therefore, setting a greater price would benefit one’s finances in the long run. In the meanwhile, several financing strategies could solve the motivation problem. Multiple companies providing Blockchain Wallet development services are creating inventory financing models that enable businesses to obtain revolving credit lines using goods as collateral.

Blockchain Technologies

Food Accountability

Recent food safety concerns have centered on food traceability, particularly after the advent of blockchain applications. Due to perishable goods, the food business is prone to mistakes that endanger human life. When foodborne pathogens pose a concern to public health, the initial step of root-cause analysis is to identify the contamination source definitively.

Traceability is therefore essential for the food supply chain. Due to the present communication structure within the food ecosystem, traceability is time-consuming because certain parties still track information on paper. Due to the properties of blockchain, each participant in the food supply chain will generate and securely share data points to establish a system of accountability and traceability. Rapid and unaltered collection of voluminous data points with labels indicating ownership. Therefore, the record of a food item’s path from farm to table is available for real-time monitoring. To reap more benefits from this opportunity, read Our blog on How Will Blockchain Identity Management Deliver Standout Performance In The Upcoming Future?

Enhanced Market Access

In the food industry, blockchain has applications beyond food safety. In addition, it adds value to the market by creating a network ledger and balancing market pricing. Instead of relying on the knowledge provided by the complete value chain, the traditional price mechanism for buying and selling is based on the parties’ opinions. The availability of data would provide a comprehensive picture of supply and demand. Applying blockchain technology to transactions could alter conventional commodity trading and hedging. Blockchain enables every food supply chain participant to securely communicate verifiable transactions, thereby establishing a highly transparent market.

Despite the numerous promising applications of the technology in the food industry, its implementation in the food supply chain is delayed by the persistence of several challenges and questions.

Blockchain Challenges

System Complicatedness

The initial obstacle for businesses joining the food market is overcoming the ecosystem’s complexity. The implementation of blockchain technology in a conventional agricultural production facility needs a specialized system and improved data entry processes. Agricultural products come in various sizes, storage methods, handling procedures, and data recording types.

Multiple platforms and language not synced are frequent obstacles to adapting the food system. The food ecosystem consists of multiple parties (distributors, purchasers, and wholesalers) and intricate systems, including terminal markets, distribution networks, and trading platforms. Implementing blockchain at scale necessitates significant modification at the granular level, including farm operations, working around an existing ERP system, and altering the data collecting procedure.

Data Transparency

Those who oppose the deployment of blockchain technology in the food industry are also worried about the integrity of data. Disclosure of data would establish accountability for trading activities and agricultural operations, confirming claims such as “organic” and “fresh.” Correct information may be analyzed and utilized to incite a backlash against businesses during a mishap. It is challenging to elicit the voluntary revelation of information, especially when sensitive information could be detrimental to businesses. Consumers may devalue or reject a product in agricultural production if a pesticide is applied to treat plant disease during processing. Farmers may be cautious about adopting blockchain technology if rivals conceal some products or manipulate data to obtain a competitive advantage.

The ability of blockchain to manage huge amounts of data, particularly trading data, is an additional concern. The deployment of blockchain technology in trading, where more consequential economic effects are likely to occur, has received the least attention to date. First, large organizations are especially interested in blockchain technology because they have the infrastructure – technical systems and data – to facilitate the automation of farm-level data processing. In addition, as one of the limitations of the blockchain, the structure and scale must be carefully studied, as each added transaction will increase the database size. A smaller ledger (each node cannot carry a complete copy of the blockchain) or a more centralized control structure should be implemented into the network. Before implementing blockchain technology, therefore, enterprises must conduct lengthy pilots to prove its limits.

Solutions

In recent years, blockchain technology has grown and become widely accessible, potentially revolutionizing several industries, including the food industry. Innovation abounds in the blockchain business. Growers and other participants in the supply chain can employ the SaaS platform for data sharing and monitoring progress.

IBM Food Trust, ChainTrade, Farm2Kitchen, Ripe.io, Arc-net, Avenues-GT, Owlchain, and TE-Food are a few further pioneers in the business. ChainTrade and Avenues-GT are developing a decentralized trading platform for tokenized goods, while Arc-Net focuses on trademark protection and validation. They overcome the aforementioned obstacles and develop future blockchain applications from diverse perspectives.

Blockchain Technology’s Potential

We argue that there is a lack of monetary incentives for overcoming obstacles and worries. Numerous parties in the food ecosystem are frequently impeded by the up-front expenditures and time commitments necessary to use blockchain. The technology must either increase prices or lower costs to be commercially viable. Even if more customers battle for transparency and food safety, industry participants have little incentive to do anything if the price does not warrant the effort.

The recent expansion of the organic industry serves as a great example. The acceptance of organic foods by consumers and producers has advanced significantly. However, when the additional cost is substantiated and justified by certification, the incentives for food companies and farmers to migrate to organic become readily evident. Nevertheless, customer pressure is typically insufficient to inspire systemic improvements without a clear revenue opportunity.