The potential of blockchain in the agribusiness sector is becoming increasingly clear in the U.S.-where Frank Yiannas’ experience at Walmart inspires the Food & Drug Administration ‘s (FDA) vision of Web 3-and in Italy, thanks to startup benefit Wiise Chain.
Traceability of food products and electronic recording of self-control procedures in an incorruptible database are prerequisites for ensuring the reliability of a supply chain. Toward value transparency and value chain redistribution.
1) Foreword. Blockchain. What, how, why
‘The blockchain is a shared, trusted, public ledger that everyone can inspect, but that no single user controls. Participants in a blockchain [public, ed.] system collectively maintain an up-to-date ledger: it can only be changed according to strict rules and by mutual agreement.‘ (1)
1.1) What
Blockchain technology enables decentralized and distributed databases on a multitude of servers:
– users who join a blockchain platform enter data and documents according to shared criteria(proof of concept),
– the system validates the data and converts it into encrypted, unchangeable blocks of information, so-called hashes. (2)
The public blockchain alone-that is, based on a code-source that anyone can verify (e.g., the Bitcoin, the software behind the cryptocurrency of the same name) cannot be tampered with, as the crypto codes-distributed across millions of servers-are not replicable(hash value).
1.2) How
The public blockchain is a technology notary in a continuous cycle. Its users can enter data at any time and day of the year to have their authentication and registration encrypted in a technological safe.
External users can check the integrity of the system (e.g., Bitcoin, Ethereum protocols), just as it is possible to check the registration of a notary public. Some users can access different levels of data visualization, based on what is defined in the system architecture.
1.3) Because.
The primary function of the public blockchain is to ensure beyond a reasonable doubt the authenticity of recorded data and documents. It is thus possible to increase trust in B2B(business to business), B2C(business fo consumer) relations, as well as in relations with authorities.
This lays the groundwork for fulfilling the legal requirements, in place and in the making (see next section). And first and foremost, it is possible to ensure that everyone’s commitments to safety, traceability, quality, certifications are met. As well as those on due diligence and ESG, today the basis for raising investments. (3)
2) Blockchain in the food industry, from Walmart to the Food & Drug Administration.
2.1) Walmart
Walmart – first retailer of the planet, with US$519.93 billion in sales, 10,902 stores in 27 countries (2020 NRF data, National Retail Federation) – introduced in 2016 on an experimental basis a pork supply traceability system from China inspired by the blockchain, in collaboration with JD (giant ecommerce China), IBM and Tsinghua University in Beijing. As a result of validation, the system was then extended to a number of strategic international suppliers.
Food traceability was then developed as part of a ‘privateblockchain ‘ (IBM Food Trust), collecting essential data – product IDs (GTIN-14), lot/batch codes, purchase orders and date/time codes (harvesting, processing, shipping and receiving) – through standard GS1 communication protocols (e.g., GS1. EPCIS, Electronic Product Code Information Services). Even to the point of embracing a number of supply chains and even involving all couriers carrying food dictates in Walmart Canada’s network (500 thousand transports/year. See footnote 4).
2.2) Walmart, the ROI of blockchain.
Walmart’s ROI (return on investment) on private blockchain is stated in terms of strategic benefits:
– Empowerment of product and service providers,
– Prevention and mitigation of the effects of fraud,
– Reducing social injustices in some supply chains,
– More effective management of nonconformities (product recalls and withdrawals),
– Reduction of food waste through selective management of food security crises.
Inclusion in the system of contracts with the 70 logistics service providers and automation of their invoices and payments-thanks to IoT(Internet of Things) devices placed on the vehicles-has also lowered costs and delays in accounting management and data reconciliation. (4)
2.3) Food & Drug Administration, objective track and trace
The Food & Drug Administration (FDA) followed up its New Era of Smarter Food Safety initiative with a paradigm shift. In fact, the Blueprint for the Future, as noted, envisions the use of IT(Information Technology) and AI(Artificial Intelligence) to ensure food security in the US. (5)
‘Creating a digital, more traceable, & safer food system, TOGETHER‘ (Frank Yiannas, U.S. Food & Drug Administration)
Frank Yiannas – FDA deputy commissioner with delegated authority to food policy and response, as of 2018, after 10 years as vice president at Walmart with responsibility for the food safety – announced the publication in November 2022 of new traceability requirements to be applied throughout the food and beverage supply chain, from farm to fork. (6)
2.4) A digital ecosystem
Frank Yiannas’ vision-facing toward a digital ecosystem that many still struggle to imagine-is rooted in his professional experience at Walmart. In 2016 it was he who pioneered the revolution, and the time to get from the shelf in the U.S. to the farm in South America, in the case of a sliced mango, went from nearly 7 days to 2.2 seconds.
In a global food chain like the U.S.-where 94 percent of seafood products come from abroad-it is no longer possible to manage food safety with classical tools (standard setting, certification and/or audits, supplier ratings, 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
and distributed ledger technology (DLT or ‘privateblockchain ‘), in Frank Yiannas’ vision, are the game changer. A new digital ecosystem – decentralized and distributed among supply chain actors – based precisely on the collaboration of all supply chain actors ‘from seed to fork‘. Global Food Chain. The Food and Drug Administration does not intend to mandate but rather promote the use of electronic data recording tools. To optimize food safety management, starting with predictive risk analysis using Artificial Intelligence (AI) that FDA has successfully pioneered over 2 years of work.
2.5) New economic paradigm. Web 3
Microenterprises are the first to benefit from blockchain and distributed ledger technology. In his own talk at the Hyperledger Foundation conference, Frank Yiannas highlighted how smartphones are in the availability of everyone in Africa today. Digital technologies based on open-source software can therefore also provide market access for individual farmers.
‘We must be more creative in the economic model‘ (Frank Yiannas)
A new economic paradigm must therefore be developed, and this is what Frank Yannas insists on. In that logic of redistribution that cloaks the idea of Web 3, (8) micro suppliers of agricultural commodities must be able to access the market and participate more equitably in the value chain. Let’s start connecting payments! From words to deeds, this is precisely what Walmart has been experimenting with couriers in Canada.
3) Wiise Chain, the Made-in-Italy blockchain for the agribusiness supply chain
3.1) Startup benefit for a transparent supply chain
Wiise Chain benefit company
– in the Wiise benefit ecosystem, where this website also operates – is the first innovative startup to have introduced a transparent public blockchain system in Italy.
The Bitcoin protocol underlies this system, which is interoperable with common ERPs and designed with attention to the specific needs of the agribusiness supply chain. In addition to being inspired by the highest standards of governance it was, thanks in part to its integration with open-source software (OpenTimeStamps).
3.2) The Wiise Chain blockchain in practice.
Operators participating in the Wiise Chain blockchain – like the one built for Noberasco – (9) enter data (e.g., receipt of raw materials, processing, analysis, certificates, product shipment) that the system integrates into unchangeable, encrypted blocks of information distributed across a network of servers on 5 continents.
The information is made accessible in real time-with varying levels of extent (taking into account legitimate needs for confidentiality of commercially important news)-to different circles of stakeholders (e.g., the internal staff, business partners, regulators, consumers). The system can be developed with a modular approach to record data relevant to sustainability and value chain transparency. (10)
4) Blockchain, brief scientific review
Blockchain technology has numerous benefits for consumers and producers, according to the recent scientific review published in the Journal of Food Science and Technology (Singh et al., 2022). Indeed, guarantees of traceability and transparency help to consolidate trust between the parties and reduce many cost items, including management and intermediation. The current lack of its implementation is mainly attributed to the skepticism of some food companies, which are still unable to grasp the system’s real potential. (11)
Fig. 1. Main agribusiness market goals and challenges and their solutions (Singh et al., 2022)
ESG(Environmental, Social, and Governance) can in turn be augmented and promoted through blockchain. Especially within the agribusiness supply chain, as noted by the FAO itself (2019) in a study of ultra-fragmented agricultural production such as India’s. (12) For technology to help achieve these goals, it is therefore essential to overcome skepticism and focus as much experimentation as possible in the different production chains (Friedman et al., 2022). To validate the method and spread its use to all stakeholders. (13)
5) Interim Conclusions
The high strategic potential of blockchain technology in the agrifood supply chain is still underestimated, partly due to too many words lacking concreteness and the exorbitant management costs proposed even in Italy by IT giants unfortunately lacking concrete farm to fork experience.
The Wiise Chain solution can enable blockchain to be applied cost-effectively, with the support of professionals who have been working in the food supply chain in Italy for 30 years. (14) The Ocean that separates us from Frank Yiannas’ vision of Web 3 is not technological but bureaucratic; our goal is to cross it in the smoothest and most economical way.
6) Web Horizon 3 in the agribusiness supply chain.
The Web 3 horizon, in the agribusiness supply chain, is to return value to those who produce agricultural raw materials and food that is healthy and safe, authentic and sustainable, as consumers even in Italy increasingly appreciate. With the medium-term perspective of establishing blockchain-based telematic commodity exchanges. (15)
Dario Dongo
Notes
(1) The promise of the blockchain, the trust machine. The Economist. 10/31/15, https://www.economist.com/leaders/2015/10/31/the-trust-machine
(2) Dario Dongo. Blockchain, true or false? Fraud in the corner. GIFT (Great Italian Food Trade). 6/30/19, 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, modernization program of the US system. GIFT (Great Italian Food Trade). 7/20/20, 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 permission from any country or bank. It could also, according to Web 3 advocates, allow them to build anything on the Internet they want without having to rely on existing platforms such as Google or Facebook, or tools such as Amazon’s AWS cloud computing services. 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. GIFT(Great Italian Food Trade). 11.11.20, 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 food and organic supply chain. GIFT (Great Italian Food Trade). 1.11.20, 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 the food supply chain, sustainability for producers and consumers. GIFT(Great Italian Food Trade). 28.2.21, 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. GIFT (Great Italian Food Trade). 1.9.19, https://www.greatitalianfoodtrade.it/mercati/wiise-chain-la-vera-blockchain-made-in-italy-a-costi-competitivi
(15) Dario Dongo. A telematic commodity exchange to promote transparency and fairness in the food supply chain. GIFT(Great Italian Food Trade). 8.3.21, 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.
