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Block Chain Technology for Organic Food Chains

Blockchain technology is the latest digital innovation that holds huge promise for the future. It works as an algorithm with prior consensus from all participants, that creates information/data blocks and goes on building a chain. It is in the form of a distributed ledger that builds the data from the pre-decided data points to complete the transactions. All participants have access to their own data and have their data ownership. The completion of task is assigned certain events as a proof of work. Participants have a predefined stake which is established with a proof. Participants have assigned authority; these are the keys that are used as logic. Such openly pre-agreed logic builds the transparency in the block chains. Computation results are verifiable by all nodes. The result is self-executable smart contracts. The pre-agreed terms based on the events, auto-trigger the execution without human interventions. The transactions automatically progress allowing all parties to work on a shared platform.

Block chains need demystified data; thus, it builds clarity and transparency in all directions of pre-agreed events. Blockchains prove their utility in the industries and sectors where today mist exists. Thus, food supply chains stand to gain the maximum from such technology. Food products are complex in nature. Food supply chains can be disbursed, multiple and disconnected. They may have breaks in traceability and may suffer from lack of transparency by the participants. Moreover, the traceability practices followed by the industry are outdated and over rely heavily on extensive paperwork. Tracing products across the entire chain may take few days if not weeks. There may be serious gaps in the supply chains which may it highly vulnerable. Despite the best efforts, even today, more than 30% of the food ends up into trash.

Foods chains are intrinsically connected with farming chains on one side and retail and consumption chains on the other side. Food travels from farms to the dining tables. As the food travels, freshness of the products diminishes, and shelf life reduces. The food chains can be global and may cut across continents. They could be complex. The travel time may be few weeks depending upon the product, locations, and mode of travel. The transit time can eat up as much as 50% of the shelf life. These long complex supply chains may have few blind spots which can be the dens of food fraudsters. Poor visibility can create losses. End-to-end traceability has been the most important lifeline for food supply chain managers.

Since the advent of block chain technology for crypto currencies, business innovators have explored many new applications for block chain technology. The food supply chains applications have been one of them. The merits of blockchains exactly addresses the requirements of food industry. The blockchain pre-supposes digitization of the operation by creating secured data entry points. This avoids the chances of inadvertent movement of food stuff.

“Purchasers of the organic ingredients and food products have higher curiosity about the details of farming, storage, and handling details before committing to buy them. Blockchains provide these answers seamlessly.”

- Joseph Tan, Managing Partner, Kokan Organica LLP, Philippines

The issue becomes more interesting for Organic foods. Organic food is gaining popularity. Consumers have clear preference for organic food. The global market is growing at CAGR 14%, is estimated to be USD 211 Billion by 2025. During the year 2019, organic food has reported the retail sale of USD 55 Billion in US market. This was up by 5% from the previous year. Organic is a higher level of quality platform of foods. It needs more secured transaction integrity to maintain its sanctity.

Often a question that crosses minds of consumers is that ‘ Is the Organic product 100% Organic?’. The organic label fetches a premium in market, thus is an inviting opportunity for the food fraudsters. To ensure ‘organic sanctity’ many control points are needed to be ensured. Whether the farmers used organic seeds? Whether the farmer fed organic feed to his livestock? Whether the pest was controlled using the organic methods of control? Whether the farming project has a valid scope certification? Purchasers of the organic ingredients and food products have higher curiosity about the details of farming, storage, and handling details before committing to buy them. Blockchains provide these answers seamlessly. Block chain technology helps secure the trust in organic food products and transparency in the transactions. Organic products command premium in market. Customers are willing to pay more for the food grown with responsibly with positive social and environmental impact.

Block chain initiative may fly through air pockets while dealing with farming side of the chain. Land records, legal ownership status, crop details could have difficulties in capturing data from larger spectrum on to a common platform. Agriculture by nature would have various methods of farming techniques, storage, and handling methods. These variations may pose a challenge in getting them on a common data format. Organic nature of farming will have additional monitoring points over conventional agriculture. On a positive side, organic products’ traceability will certainly derive strength from blockchain capabilities. Blockchain’s ability to monitor life of product all through the Farm to Fork journey can improve predictability of freshness and shelf life. It would help avoid false claims of freshness. This will ultimately help reduce wastage and losses. The blockchains empowered with Cloud technologies and data capture points well equipped with IOT technologies will make a formidable solution. The auto execution of smart contracts will ensure immediate payments to farmers without any need to pursue for it.

Block chains will bring the qualitative jump in the traceability of Organic food chains improving its credibility. It will declutter the fuzz of ambiguous land/farming status and bring data literacy to farming sector. Establishing the block chain technology solutions for Organic supply chains will digitize and demystify the farming sector. It will improve the efficiency of food transport and logistics sector and make the shelf life more predictable leading to wastage reduction. It will fortify consumer confidence on Organic products.

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Joseph Tan

Managing Partner, Kokan Organica LLP, Philippines