For decades, the food industry has been reliant on inefficient, paper-based recording systems, causing transparency and traceability issues. Counterfeit foods, contaminated products and pressure from the FDA are prompting organizations across the supply chain to re-evaluate current tracking and registration models. Some are already turning to blockchain as a solution. While still in its infancy in the food industry, blockchain has shown promise among manufacturing and financial industries, which have already widely adopted the technology. From end-to-end visibility to tamper-proof data, a number of industries are realizing the technology's advantages.

Benefits of Adoption

By implementing blockchain, the food industry will be able to more readily solve the problems it’s currently facing — especially issues related to transparency. Not only are consumers demanding to know where their food comes from, the FDA is demanding supply chain transparency via the Food Safety Modernization Act. Blockchain makes data easily shareable and permanent — increasing the credibility of the data on any food product and reassuring customers and regulators that the food has a detailed account of its path through various organizations.

This goes hand-in-hand with the issue of traceability, or tracing the passage of products through the supply chain. Blockchain provides everyone in the system with a view of a product’s records, so that they can see every transaction of a food product — from start to finish or from farm to grocery shelf. Additionally, the technology requires consensus among network users in order for data to be verified and distributed to others in the network in a read-only manner, which provides a tamper-proof verified history of a food product.

Both the transparency and traceability aspects of blockchain technology far outperform the onerous, inefficient, paper-based systems that most companies along the supply chain are currently using. Such systems can cause confusion, missing data and lack of visibility into the end-to-end supply chain — all of which can lead to regulatory fines, contamination issues, counterfeit foods and jeopardy of consumers’ health.

Barriers to Adoption

While some food & beverage industry leaders, such as Cargill, are promoting the benefits of blockchain, many people in the industry don’t understand the technology, just yet. According to a Deloitte survey, 40% of senior executives of large companies know little to nothing about blockchain, yet many view the technology as a top priority for 2017. This data suggests that one of the first barriers to promoting widespread adoption of the technology in the food industry is basic education about how the industry can benefit from blockchain.

Currently there are no definitive standards or regulations that could point food companies in the right direction. The array of competing blockchain platforms and various capabilities can seem overwhelming to companies who have little knowledge of the technology in the first place. The federal government has not introduced legislation that promotes the use of blockchain within the food industry. Instead, it has left it up to individual states, creating murky waters for heavily-regulated companies that are looking for definitive guidance.

Moreover, the food supply chain involves so many different companies and agents, it would require serious collaboration in order to instill blockchain technology across the entire supply chain. In order for the technology to actually solve food industry issues, every single actor in the supply chain — from farmers to restaurateurs — would have to buy into the blockchain.

In the end, the food industry will be far better off adopting a technology that can immediately cut down the challenges it currently faces, but until widespread adoption occurs, it will be hard to estimate the true ROI of blockchain in this industry. In the meantime, we can look to the financial and manufacturing industries, as well as IBM’s partnership with Walmart, to project the way blockchain could increase transparency within the food supply chain.