The potential of blockchain in the agri-food sector it is increasingly clear in the USA - where Frank Yiannas' experience at Walmart inspires the vision of Food & Drug Administration (FDA) which looks to the Web 3 - and in Italy, thanks to startup benefit Wiise Chain.
Traceability of food products and electronic recording of self-control procedures in a incorruptible are the prerequisite for guaranteeing the reliability of a supply chain. Towards transparency on values and redistribution of the value chain.
1) Introduction. Blockchain. What, how, why
'The blockchain is a shared, trusted, public ledger that anyone can inspect, but no single user controls. Participants in a [public, ed] blockchain system collectively keep the ledger up to date: it can only be modified according to strict rules and by mutual agreement.(1)
Technology blockchain allows to realize decentralized and distributed over a multitude of server:
- users who join a platform blockchain insert data and documents according to shared criteria (proof of concept),
- the system validates the data and converts them into blocks of encrypted and unchangeable information, cd hash. (2)
The only one blockchain public - that is, based on a source code that anyone can verify (eg Bitcoin, the software based on the homonymous cryptocurrency) cannot be tampered with, since the encrypted codes - distributed over millions of server - are not replicable (hash value).
La blockchain public is a continuous cycle technological notary. Its users can enter data at any time and day of the year to obtain their authentication and encrypted registration in a technological safe.
External users they can check the integrity of the system (e.g. Bitcoin, Ethereum protocols), just as it is possible to verify the registration of a notary in the relevant register. Some users can access different levels of data visualization, based on what is defined in the system architecture.
The primary function area of blockchain public is to guarantee beyond any reasonable doubt the authenticity of the recorded data and documents. It is thus possible to increase trust in B2B relationships (business to business), B2C (business fo consumer), as well as in relations with the authorities.
They pose thus the bases for the fulfillment of the legal requirements, in existence and in progress (see next paragraph). And it is possible first of all to ensure compliance with the commitments undertaken by each in terms of safety, traceability, quality, certifications. Besides those on due diligence and ESG, today the basis for raising investments. (3)
2) Blockchain in the food industry, from Walmart to Food & Drug Administration
Walmart - first retailer of the planet, with 519,93 billion US $ in turnover, 10.902 points of sale in 27 countries (NRF 2020 data, National Retail Federation) - introduced in 2016 on an experimental basis a traceability system for pork supplies from China inspired by the blockchain, in collaboration with JD (colossus ecommerce Chinese), IBM and Tsinghua University in Beijing. Following validation, the system was then extended to a series of strategic international suppliers.
The traceability of food products was then developed as part of a 'blockchain private '(IBM Food Trust), collecting essential data - product ID (GTIN-14), lot / batch codes, purchase orders and date / time codes (collection, processing, shipping and receiving) - through GS1 standard communication (ex. EPCIS extension, Electronic Product Code Information Services). Up to embracing a series of supply chains and even involving all the couriers who transport food dictations in the Walmart Canada network (500 transports / year. See note 4).
2.2) Walmart, the ROI of blockchain
The ROI (return on investment) of Walmart on blockchain private is declared in terms of strategic advantages:
- empowerment of suppliers of products and services,
- prevention and mitigation of the effects of fraud,
- reduction of social injustices in some supply chains,
- more effective management of non-conformities (product withdrawal and recall),
- reduction of food waste, thanks to the selective management of food security crises.
Arming in the system of contracts with 70 logistics service providers and the automation of their invoices and payments - thanks to IoT devices (Internet of Things) inserted on the means - has also cut down the costs and delays of accounting management and data reconciliation. (4)
2.3) Food & Drug Administration, target track and trace
La Food & Drug Administration (FDA) followed up on the initiative New Era of Smarter Food Safety with a paradigm shift. The Blueprint for the Future, as we have seen, it provides for the use of IT (Information Technology) and AI (Artificial Intelligence) to ensure food safety in the USA. (5)
'Creating a digital, more traceable, & safer food system, TOGETHER'(Frank Yiannas, US Food & Drug Administration)
Frank Yiannas - FDA Deputy Commissioner with delegation a food policy and response, from 2018, after 10 years of vice presidency at Walmart with responsibility for the food safety - announced the publication, in November 2022, of new traceability requirements to be applied throughout the agri-food chain, from farm to fork. (6)
2.4) A digital ecosystem
The vision by Frank Yiannas - facing a digital ecosystem which many still struggle to imagine - is rooted in professional experience at Walmart. In 2016 he was the one who experienced the revolution, and the time to go back from the shelf in the USA to the farm in South America, in the case of a sliced mango, went from almost 7 days to 2,2 seconds.
In a global food chain like the USA - where 94% of fish products come from abroad - it is no longer possible to manage food safety with traditional tools (definition of standards, certifications and / or audit, rating suppliers, inspections). (7)
Video - The Role of Emerging Technologies, such as DLT, in Ushering in the New Era of Smarter Food Safety. Frank Yiannas, FDA.
Blockchain e distributed ledger technology (DLT or 'blockchain private '), in the vision of Frank Yiannas, are the game changer. A new digital ecosystem - decentralized and distributed among the operators of the supply chains - based precisely on the collaboration of all the players in the supply chain 'from seed to fork'. Global Food Chain. La Food and Drug Administration it does not intend to impose but to promote the use of electronic data recording tools. To optimize the management of the food safety, starting from the predictive analysis of the risk through Artificial Intelligence (AI) that the FDA has successfully experienced in over 2 years of work.
2.5) New economic paradigm. Web 3
Micro-enterprises are the first to be eligible for blockchain e distributed ledger technology. In his speech at the Hyperledger Foundation conference, Frank Yiannas highlighted how today in Africa the smartphone they are in everyone's availability. Digital technologies based on open-source software they can therefore guarantee the market access also to individual farmers.
'We must be more creative in the economic model'(Frank Yiannas)
A new paradigm economic must therefore be developed, and that is what Frank Yannas insists on. In the logic of redistribution that cloaks the idea of the Web 3, (8) the micro suppliers of agricultural raw materials must be able to access the market and participate more equitably in the value chain. Let's start connecting payments! From words to deeds, that's just what Walmart has experienced with couriers in Canada.
3) Wiise Chain, la blockchain Made in Italy for the agri-food chain
3.1) Startup benefit for a transparent supply chain
Wiise Chain benefit company - in the ecosystem Wiise benefits, where this site also operates website - it's the first one startup innovative to have introduced in Italy a transparent system of blockchain public.
The Bitcoin protocol is the basis of this system, interoperable with the most common ERPs and designed with attention to the specific needs of the agri-food chain. Besides inspired by the highest standards of governance was, thanks also to its integration with open-source software (OpenTimeStamps).
3.2) to blockchain of Wiise Chain, basically
The operators participating in the blockchain of Wiise Chain - like the one built for Noberasco - (9) enter the data (e.g. receipt of raw materials, processing, analysis, certificates, product shipping) that the system integrates into blocks of unmodifiable and encrypted information, distributed in a network di server in the 5 continents.
The information are made accessible in real time - with various levels of extension (taking into account the legitimate needs of confidentiality on news of commercial importance) - to the various circles of stakeholder (e.g. internal staff, partner commercial, supervisory authorities, consumers). The system can be developed with a modular approach, to record relevant data for the sustainability and transparency of the value chain. (10)
4) Blockchain, brief scientific review
Technology blockchain has numerous benefits for consumers and producers, according to the recent scientific review published on Journal of Food Science and Technology (Singh et al., 2022). The guarantees of traceability and transparency help to consolidate trust between the parties and to reduce numerous cost items, between management and intermediation. The current lack of its implementation is mainly attributed to the skepticism of some food companies, still unable to grasp the concrete potential of the system. (11)
Fig. 1. Main objectives and challenges of the agro-food market and related solutions (Singh et al., 2022)
The ESG (Environmental, Social, and Governance) can in turn be increased and promoted through the blockchain. Especially in the agri-food chain, as noted by FAO itself (2019) in a study on ultra-fragmented agricultural production such as India. (12) In order for technology to help achieve these objectives, it is therefore essential to overcome skepticisms and concentrate as many experiments as possible in the various production chains (Friedman et al., 2022). To validate the method and spread its use to all stakeholders. (13)
5) Provisional conclusions
The high strategic potential of technology blockchain in the agri-food chain it is still underestimated, also due to too many words lacking concreteness and the exorbitant management costs also proposed in Italy by IT giants unfortunately without concrete experience farm to fork.
The Wiise Chain solution may allow you to apply the blockchain at low costs, with the support of professionals who have been working in the agri-food chain in Italy for 30 years. (14) The ocean that separates us from Frank Yiannas' vision on Web 3 is not technological but bureaucratic, our goal is to cross it in the easiest and most economical way.
6) Horizon Web 3 in the agri-food chain
The Web Horizon 3, in the agri-food chain, is to restore value to those who produce agricultural raw materials and healthy and safe, authentic and sustainable foods, such as consumers also in Italian more and more appreciate. With a view, in the medium term, to establish telematic commodity exchanges based on blockchain. (15)
Footnotes to the story
(1) The promise of the blockchain, the trust machine. The Economist. 31.10.15, https://www.economist.com/leaders/2015/10/31/the-trust-machine
(2) Dario Dongo. Blockchain, true or false? Fraud on the corner. GIFTS (Great Italian Food Trade). 30.6.19/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/consum-attori/blockchain-vero-o-falso-la-frode-all-angolo
(3) Pictet, International Institute of Finance (2022). Bonds that build back better. The pivotal role of fixed income markets in the ESG revolution. https://am.pictet/-/media/pam/pam-common-gallery/article-content/2022/expertise/esg/esg-bond-market/esg-bonds.pdf
(4) Kate Vitasek, John Bayliss, Loudon Owen, and Neeraj Srivastava. How Walmart Canada Uses Blockchain to Solve Supply-Chain Challenges. Harvard Business Review. 5.1.22, https://hbr.org/2022/01/how-walmart-canada-uses-blockchain-to-solve-supply-chain-challenges
(5) Dario Dongo. Food security, US system modernization program. GIFTS (Great Italian Food Trade). 20.7.20/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/sicurezza/sicurezza-alimentare-programma-di-modernizzazione-del-sistema-usa
(6) Suman Bhattacharyya. FDA Official Says New Rule Could Boost Blockchain-Based Food Tracking. WSJ, 1.2.22, https://www.wsj.com/articles/fda-official-says-new-rule-could-boost-blockchain-based-food-tracking-11643711402
(7) Frank Yiannas (2018). A New Era of Food Transparency Powered by Blockchain. Innovations: Technology, Governance, Globalization 12 (1-2): 46–56, https://doi.org/10.1162/inov_a_00266
(8) Web3. 'The blockchain allows people to create cryptocurrency, without the permission of any country or bank. It could also, according to Web 3 advocates, allow them to build whatever they want on the internet, without having to rely on existing platforms like Google or Facebook, or tools like Amazon's AWS cloud computing services. And most importantly, the new services could be owned, in part, by the people who built and use them'(Peter Kafka. Web3 is the future, or a scam, or both. Recode by Vox. 1.2.22, https://www.vox.com/platform/amp/recode/22907072/web3-crypto-nft-bitcoin-metaverse)
(9) Dario Dongo, Gianluca Mascellino. Public blockchain, Noberasco at the start with Wiise Chain. GIFTS (Great Italian Food Trade). 11.11.20/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/innovazione/blockchain-pubblica-noberasco-al-via-con-wiise-chain
(10) Dario Dongo, Andrea Adelmo Della Penna. Blockchain, the opportunities for the agri-food and organic supply chains. GIFTS (Great Italian Food Trade). 1.11.20/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/innovazione/blockchain-le-opportunità-per-la-filiera-agroalimentare-e-quella-biologica
(11) Singh V. et al. (2022). Application of blockchain technology in shaping the future of food industry based on transparency and consumer trust. Journal of Food Science and Technology. https://doi.org/10.1007/s13197-022-05360-0
(12) Dario Dongo, Andrea Adelmo Della Penna. Public blockchain and agri-food chain, sustainability for those who produce and those who consume. GIFTS (Great Italian Food Trade). 28.2.21/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/progresso/blockchain-pubblica-e-filiera-agroalimentare-sostenibilità-per-chi-produce-e-chi-consuma
(13) Friedman N. et al. (2022). Blockchain as a sustainability-oriented innovation? Opportunities for and resistance to Blockchain technology as a driver of sustainability in global food supply chains. Technological Forecasting and Social Change 175: 121403, https://doi.org/10.1016/j.techfore.2021.121403
(14) Dario Dongo and Gian Luca Mascellino. Wiise Chain, the real Made in Italy blockchain at competitive costs. GIFTS (Great Italian Food Trade). 1.9.19/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/mercati/wiise-chain-la-vera-blockchain-made-in-italy-a-costi-competitivi
(15) Dario Dongo. An electronic commodity exchange to promote transparency and fairness in the agri-food chain. GIFTS (Great Italian Food Trade). 8.3.21/XNUMX/XNUMX, https://www.greatitalianfoodtrade.it/idee/una-borsa-merci-telematica-per-favorire-trasparenza-ed-equità-nella-filiera-alimentare
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.