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The Internet of Things (IoT) and the shift to near real-time customer service and supply chain data have created a more complex landscape than ever, with global companies increasingly relying on internal supply chains to stay competitive.
This article discusses the need for blockchain technology to help create trust across this complex network structure for businesses and consumers in the agriculture and food industries.
Blockchain technology promises order in an industry that has become more globalized, providing transparency into where products come from and who is involved in their production process.
In addition, artificial intelligence (AI) and machine learning (ML) are transforming the industry, creating competition to ensure the supply chain is free from contamination and counterfeit products.
An advanced food and agriculture industry:
The Internet of Things (IoT), sensors, radio-frequency identification (RFID) technologies, and cloud platforms enable product traceability systems to provide immediate alerts about contamination.
The food industry is also turning to blockchain technology for tracking provenance and product safety through blockchain supplier verification.
A truly global marketplace has made innovation and cost-effectiveness a requirement for companies to remain competitive.
Unfortunately, with this rise in global sourcing has come a growing number of food fraud cases worldwide.
The FinCEN has tracked the number of money laundering cases in the US food industry from somewhere between $250 million and $1 billion.
It follows a report in China by state-run CCTV claiming that as much as 6.5% of food products sold domestically are illegal.
The recent increase in recalls due to food tampering and contamination within the United States, including tainted peanut products, chicken meat from Indonesia, pomegranates from Turkey, dairy products from Italy, and more, have all made it clear that fraud is a constant threat for all customers in all industries around the world.
Various companies are now turning to blockchain technology for tracking provenance and product safety through supply chain verification.
In detail, let’s discuss blockchain’s advantages in the food and agriculture industry.
Improved product data security:
The fact that about 91% of foodborne illnesses come from products containing pathogens like Escherichia coli, Salmonella, and Listeria has made it clear that malicious tampering with food products is a more significant threat today than ever before.
The shipping and transportation industry, the lifeblood of the food and agriculture industry, is most susceptible to external tampering and interference.
A recent report in Forbes suggests a lack of proper temperature monitoring at distribution centres as a possible root cause for fraudulent activities.
From April 2015 to March 2016, one-third of all recalls occurred in just five companies (Tyson Foods, Pilgrim’s Pride, Cargill Meat Solutions, Foster Farms, and Koch Foods).
In addition, users can use blockchain technology to embed a temperature monitoring system in edible products, giving them more safety and transparency.
A blockchain-based food supply chain network makes it impossible for anyone to change the data once it is updated to an immutable ledger.
As a result, it helps keep track of the entire production process, including packaging details, storage conditions and transport data.
Also, the wide application of RFID tags or “smart labels” on products can help ensure better communication with IoT devices at different supply chain points.
Food supply chain disintermediation:
Blockchain technology is decentralizing the global food and agriculture supply chain. As a result, global food companies face increased competition from smaller companies that can provide cheap, high-quality products.
Blockchain technology allows these smaller companies to keep track of their ingredients and verify the quality of their products in real time.
In effect, the technology levels the playing field for even the smallest suppliers in importing countries by allowing them to verify authenticity and quality at every stage of production, thereby maintaining food safety for all consumers across the globe.
In addition, blockchain is helping reduce costs associated with recalls by making it easier and quicker to isolate contaminated products within a supply chain.
Improved product visibility and traceability:
Blockchain technology increases transparency and traceability, improving food safety by minimizing the risk of fraudulent activities like adulteration.
Consumers can access information stored on a blockchain ledger to help them with decision-making at every stage of their shopping journey.
In addition, the information readily available on a blockchain ledger helps eliminate guesswork or confusion when determining where products come from or their safe minimum shelf-life.
The decentralized nature of the blockchain allows each party to verify information without involving any third-party intermediaries.
As a result, it leads to faster and more secure information-sharing between companies, producing an ecosystem with higher integrity than ever.
In addition, recent technological advances, like RFID tags and more advanced sensors, are allowing products to communicate with their environment and record specific data.
Other IoT devices for various uses can then access this data. For example, a packet of frozen meat can communicate with an IoT device at the supermarket to tell when a shopkeeper froze the product and when it should reach its expiration date.
In time, blockchain technology will also help companies improve the traceability and transparency of their supply chains by allowing them to track a product from its source directly to the consumer without going through any mediation party.
Profits in industries such as food and agriculture tend to be highly concentrated in small hands, leading to higher prices for fewer options.