Blockchain's Role In Fighting Food Fraud: Is Your Food Lying To You?
Frederik Gregaard, CEO, Cardano Foundation Navigating blockchain's impact on global finance & governance.
Does the maple syrup you poured on your pancakes this morning actually contain just maple syrup? Or has an unscrupulous seller added in corn syrup, cane sugar or synthetic sweeteners that you would never choose to consume? What we eat has consequences for our health, well-being and finances, but even well-informed consumers can fall subject to food puffing or fraud.
Food fraud (the act of misleading consumers to believe a product is something other than it is) is one of the most widespread global crimes affecting both companies and consumers today, with some recent estimates putting the cost of food fraud at $40 billion annually. The effects for both the businesses who engage unknowingly with unscrupulous providers and consumers are far-reaching, affecting both consumer trust and potentially business reputation. In some cases, food fraud can lead to serious health risks. It is not a problem we can afford to ignore.
So, what can the average food or beverage provider do about this? Government regulation, though it catches some fraud, cannot combat all of it as much as government agencies might try. Notable examples in the past couple of decades of bad actors that agencies have caught and prosecuted include the melamine scandal in China, whereby kidney damaging chemicals were added to infant milk, or the widespread olive oil and horse meat frauds in Europe. For every notable case that gets uncovered, however, there are many more slipping under the radar.
Food fraud isn't a new problem: For as long as there has been food, there has been food fraud. As far back as the Middle Ages, records highlight vendors adding chalk to flour, lead as a sweetener or shells, stones or dust to spices. What is new, however, is our capability to deal with it. Evolutions in technology can give us an answer to food fraud that we have never had before. That answer is blockchain.
Why Blockchain Is Uniquely Suited To Combat Food Fraud
For those unfamiliar with blockchain technology, a simple explanation is that it provides a shared ledger that stores records across a wide computer network, making it one of the most transparent, immutable and tamper-resistant technologies in the world. While traditional and smaller businesses have sometimes been slow to adopt new technologies, blockchain is one solution that has the ability to revolutionize supply chain traceability and authentication.
Traditional supply chains, particularly for more traditional or long-established food and beverage suppliers, often rely on more outdated processes to conduct business: spreadsheets, email orders, manual intake forms, paper-based contracts and other difficult-to-trace processes. These processes make it hard to track products, ensure authenticity and understand transportation or storage conditions. In each of those processes, whereby information cannot be easily verified, the possibility of error or even outright fraud is introduced.
This is where blockchain really comes into its own.
An Ancient Product Meets The Most Modern Technology
In 2021, the Cardano Foundation, in partnership with Scantrust, was given the opportunity to showcase blockchain technology and solve a problem for a unique enterprise: How could small and growing wine producers in Georgia, thought to be some of the oldest wine producers in the world, ensure the authenticity of their products while breathing new life into the knowledge and appreciation of Georgian wine on a global scale?
We helped them leverage a bespoke supply chain traceability and anti-counterfeit solution that could allow artisan producers to meet digitally savvy consumers on a global scale. Initially rolled out in partnership with a family-owned vineyard, this solution highlighted how traditional enterprises can be enhanced rather than challenged by modern technology.
Built on a connected goods and products platform that provides digitalization for brand protection, supply chain traceability, and consumer engagement, the solution allowed potential customers to scan a QR code on the back of a bottle of wine. From that scan, the consumer could see proof of the wine's authenticity, from grape to bottling and sale. This increased consumer trust and ensured consumers that they were indeed supporting a family-owned and artisan operation as intended.
In return, these winemakers were able to connect metadata that might not otherwise have been collectible, meaning they could follow the wine along its journey and see exactly where it ended up. In this case, this included markets they had never sold in before, allowing the organization to extend sales and marketing reach in those areas if they so wished.
Similar success stories have been seen with major global organizations. French supermarket conglomerate Carrefour first piloted this technology with chickens in 2018. Siemens, too, has implemented blockchain solutions to help with seafood traceability.
Implementing Blockchain Successfully
Food fraud may never be fully eliminated, and blockchain, while revolutionary, is not a silver bullet. If you are vetting a solution that promises immediate gains without a bit of trial, error and training, be wary. As an emerging technology, "out-of-the-box" blockchain solutions are not ubiquitous, so partnering with a resourced and knowledgeable provider is essential.
As we experienced with our Georgian wine solution, with new practices, employee training and regular testing are essential to a smooth implementation process. This also demands buy-in from all stakeholders. If your entire team isn't on board—and up-to-date on how to use this new technology—you won't get very far.
These initial start-up challenges are not insurmountable, though. With some due diligence, it's possible to get past those stumbling blocks and start reaping the benefits of blockchain technology, a solution that I believe poses a modern solution to an ancient problem.
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