Innovation in secure data sharing adds value and transparency throughout the agricultural supply chain
Blockchain can be the solution to trace the entire food system from start to finish. Originally developed in the 1990s as a tamper-resistant document timestamping system, it had no real-world application until peer-to-peer cryptocurrency was launched in 2009.
The most common application for blockchain is a transaction book, but all information can be stored on a blockchain and there are plenty of applications outside of cryptocurrency. After Bitcoin’s much-publicized rise, the world’s leading commodity and food companies noticed the potential of blockchain for the food sector.
Although groundbreaking, the technology is relatively simple. Blockchain is a shared database that stores information in blocks of fixed storage capacity and links them together via cryptography or code. As new data becomes available, a new block is formed and linked to the previous block in chronological order.
Blockchain can be used to capture supply chain data such as area of origin, expiration date of ingredients, food safety guarantees and carbon footprint measurements.
Blockchain platforms may one day communicate the complete story of meat, poultry, dairy, fruits and vegetables, and packaged foods to consumers, who care more and more about where their food and its ingredients come from.
“There are good reasons to apply blockchain, or any technology for that matter, to digitize the upstream or downstream supply chain of agricultural commodities,” said Petya Sechanova, CEO of grain transportation platform Covantis. “Such applications already exist today for field level data mapping, crop data, traceability, sustainability, warehouse receipts and order payments.”
While still at an early stage, current applications in the food and agriculture sector indicate that end-to-end supply chain transparency may soon be achieved through expansion of blockchain platforms and users.
Blockchain application inspires transformative collaboration
The global grain trade remained relatively unchanged for a century, until the world’s top commodity traders – ADM, Bunge, Cargill, COFCO, Louis Dreyfus Co. and Viterra – came together to digitize the process.
Shipping without standardized digital processes creates challenges, such as:
- Inefficiency and risk of error — Slow and erroneous communication through the supply chain due to information opacity. Difficulty tracking the status of documents and cargo at all stages.
- High working capital and risk of fines — Document delays before discharge, demurrage risk, LOI, delayed document presentation and delayed payments.
- Security — No source of truth, lack of audit trail, information exchange through insecure channels, increased risk of forged documents.
To make shipping safer, more efficient and simpler, a joint initiative was established in 2019 with the aim of developing a blockchain platform. A year later, the Covantis Initiative was established as an independent legal entity in Geneva, Switzerland.
Covantis partnered with providers ConsenSys, Microsoft Azure Cloud and Cognizant, leveraging the best technology solutions and offerings to modernize the global agricultural commodities trading business.
“Blockchain is particularly useful in addressing the challenges around the lack of audit or a single source of truth, security – especially in a low-trust environment and for digital networks that bring together multiple actors who are both counterparties and competitors,” said Sekhanova.
Blockchain’s high security minimizes operational risk while increasing market efficiency for agricultural trade and shipping.
“Using standard and reliable encryption algorithms, the platform ensures the confidentiality of transaction data and the non-repudiation of messages and nominations,” said Sechanova. “Covantis access controls ensure that platform participant users can only access information related to their data and the interactions with other platform participants. In addition, all user accounts are secured with two-factor authentication.”
The initial scope of the platform included the shipment and fulfillment of bulk corn and soybeans to anywhere in the world from Brazil, later expanding to other markets. In early 2022, Covantis’ platform added shipping and fulfillment of all major grains and oilseeds from the US and Canada to anywhere in the world.
“We are planning expansion to other major exporting countries, such as Argentina, and other commodities, such as sugar, and more destinations,” Sechanova said. “We are also expanding our network of companies, commodity traders and manufacturers that use Covantis. With market feedback, we are constantly expanding and improving our product range to ensure we work on the things that matter most.”
The use of blockchain makes doing business for international commodity trading partners more efficient, less risky and cheaper.
Blockchain increases security for the foodservice industry
On the other side of the supply chain, food retailers and the food service industry have embraced blockchain for its ability to improve supply chain management and empower consumers to make informed decisions about the food they eat.
The FoodLogiQ platform is designed to track millions of data points daily, enabling supplier management, food safety compliance, quality incident management, recall management, and traceability of the entire supply chain on a single platform.
Companies on the platform are building a blockchain network that allows participants to exchange data between each other by submitting transactions. Each transaction is recorded in an immutable ledger within the blockchain.
Customers can share any data in the blockchain, from critical tracking events for farm-to-fork traceability or documents related to their suppliers.
It connects thousands of food companies around the world, as well as hundreds of growers, co-packers and fresh produce marketers. FoodLogiQ’s customers include retailer Whole Foods Market; restaurants Buffalo Wild Wings, Chipotle Mexican Grill, Five Guys Burgers and Fries, and Subway; and food manufacturers Hain-Celestial and Seal the Seasons.
Dean Wiltse, CEO of FoodLogiQ, said connecting the customer data collected on the platform with other platforms serving the food industry will provide a level of supply chain visibility the industry has never seen before.
Future implications for animal feed production
As a critical part of the animal production supply chain, feed mills of the future will be able to exchange data with suppliers upstream and downstream using blockchain platforms. For example:
- Measurements of the carbon footprint of ingredients
- Grain quality characteristics
- Temperature cable and sensor readings
- Information on recall of ingredients and feed
- Feed stock levels
- Compliance with the Food Safety Modernization Act (FSMA).
- Feed delivery transactions
- Order and payment receipts
Looking ahead, blockchain has the potential to dominate the digitization of supply chain traceability, but Sechanova said it will take time for end-to-end integration in agriculture.
“I certainly hope it will be less than 15 years, [but blockchain] is still at an early stage in its life cycle,” said Sechanova. “Change management takes time in terms of network building, acceptance, mindset about a different way of working and people’s agility and skill in using new digital tools.”
The security and transparency provided by blockchain transactions opens up ample opportunities for digitally tracing food ingredients throughout the supply chain, enhancing value and security for all stakeholders in the food industry from start to finish.
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