Blockchain Traceability in the agrifood sector: the unstoppable growth of a transformation
By Luisa Fernanda Martínez Gómez
Followed by the finance and sanitary sector, the agri-food sector is the leading field of enterprise blockchain development in Europe and the world. Its impact on several aspects of society has made it a key sector for advancing Industry 4.0 in the next five years.
Agri-Food sector In the EU and the world
In the European Union, the food industry is the most important sector of the economy. With almost 300,000 companies and a turnover of more than 1,093 billion euros, it stands for 14% of the market.
The Spanish food industry ranks fourth in terms of turnover (10.9%). The first is France (19.5%), followed by Germany (16.9%) and Italy (13.3%), according to the latest Annual Report on the Spanish Food Industry 2020-2021.
In Spain, the agri-food sector contributes with almost 10% to the GDP and its conformed, on their most by small and medium-sized industries. A 96% of the industry which is conformed with more than 30.500 companies are on the group referred before (Agriculture, Fisheries and Food Ministry, 2022).
The agriculture sector is also the world’s largest employer. It supplies livelihoods for 40% of the world’s population and is the largest source of income and employment for the poorest rural households, according to the UN.
Moreover, the world population is growing exponentially, global food consumption is set to grow by 70% by 2050 in a context where resources are even scarcer.
Digital transformation challenges of the agri-food sector
Given the need to advance in the agri-food sector, during the last decade has been introduced technological tools and solutions for the automation of processes that have driven the overall growth of the market. Like most industries, this is aimed at optimizing resources and reducing costs. Thus, as in their own specific case, to respond to the sustainability and food safety requirements and regulations issued by governments.
Food traceability and its certification, following the laws and regulations of each country, has been the ultimate tool for controlling compliance with these aspects, as it allows food products to be traced at all stages – production, processing and distribution. However, the trade union has realized that traceability alone is not enough to respond to the new challenges of the food industry.
In the digital transformation arise these fundamental needs:
- Advance on the digitalization in all the stages of the value chain in a homogeneous and certified method.
- Connect all the actors securely and easily.
- Create a global information system that standardizes the application of product traceability.
This Standardization and a certified traceability open publicly, transparent and incorruptible, speed up the administrative procedures carried out by regulators, likewise the accreditation and certification proceedings of food during the import and export process of the different countries.
The post-pandemic and the evolution of the consumer
The crisis generated by Covid-19 made it necessary to immediately address the issues that the world has left unresolved from a while ago and which are set out in the 2030 Sustainable Development Goals: Stopping the advance of climate change, ensuring the food security, decrease world widely the hunger to 0 and reduce the social inequality.
Those problems are no longer exclusive concern of activist groups and ONGs, they had become a matter of public interest.
It is true that there was already a segment of consumers moved by “the real food” organic and eco-friendly, nevertheless, In the face of recent global events and catastrophes, the growing awareness for the environment is undeniable.as well as the health and the safety of people, reflected on the the increase in outbreaks of microbial contamination, pesticides and bio stimulants used, they are an important matter which is driving the consumer and the regulators to new interest and preferences.
Therefore, the origin of the products, the life condition who has the animal, the packaging materials, the way food is processed, the support of local producers, and the carbon footprint, are aspects that are having increased importance to 50% among consumers on the purchasing decision.
Blockchain as a key tool to revolutionize the agri-food sector
As a result, once overcome the issue- at least among experts-, that the Blockchain goes beyond of the cryptocurrency world and its potentialities were discovered in other areas and industries, this technology integrated with other disruptive technologies as IoT, began to be seen as the method that would enable the challenges of the digital transformation of the food industry and the demands of the new world.
Evidence of this transformation is the launch of new blockchain traceability projects in the agri-food sector around the world. The aim is to provide complete traceability of foodstuffs, from the origin to the end consumer, in order to respond to new consumer demands and to meet the social and environmental changes required by the planet.
An alternative to guarantee the food safety
According to the World Health Organisation (WHO), One in 10 people (600 million) gets each year a food-borne disease, causing 420,000 deaths, of which a third are children (140,000). The origin of more than a half of the cases are in households, in most of the cases are for improper handling and incorrect storage methods.
In Europe 40,000 cases of food poisoning are reported annually, resulting in 3,300 hospitalisations and around 20 deaths.
Every year, approximately 1 of 6 person in the USA (or 48 million people) get sick, 128,000 are interned in hospitals, and 3000 die cause food-borne illnesses.
Using the blockchain technology, in case of food contamination, food traceability verification could be accelerated and go from an average of six days to seconds, withdrawing the products on the market much more quickly. In the moment the QR is scanned, it could advertise the consumer to not consume the product, directly reducing the risk for them and indirectly for companies.
¿Why the blockchain traceability is viable to overcome the challenges on the agri-food sector?
The Blockchain is the most practical tool to optimize the supplies chain and improve the traceability of the agri-food sector due to the unique characteristics it offers.
Decentralization: The blockchain is a decentralized system which allows the global interconnection of all their users without any intermediaries. The operations are verified by the participants of the chain trough of consensus.
Traceability: Enable the connection, localized and trace all the information registered in the chain, allowing the view of all operations done, it makes possible the collaboration and synchronization of the information.
Immutability: The registered data cannot be modified. All recorded information is part of the product history and can be kept intact from beginning to end. This prevents fraud, falsification and possible manipulation by third parties.
Transparency: Provides the products with digital identity so that they carry their own information. The control of product traceability and authenticity supplies transparency in the processes and therefore to the end consumer
Security: A cryptographically recorded copy of the information is generated at each node, making it almost impossible to hack the system or manipulate the data
Blockchain as a new paradigm
The new Blockchain technology is a new paradigm which revolutionizes t traceability as it has been done so far. It becomes an information channel, Non-invasive, that allows to easily connect all the members of the chain to share information quickly and securely.
Beyond providing product information, it allows access to real-time food information. For example, currently a label on a tray of chops offers very limited information about the origin of the meat. With Blockchain technology the consumer can access information such as the actual origin, the processes it has gone through, certifications and even, if what is wanted is to show the environment conditions and how the animal has lived, which give even more added value to producers, companies and distributors who want to gain an advantage on the market over the competitors.
Being able to control these components could be an opportunity to improve the conditions of macro-farms or intensive livestock farming (which are constantly criticized for animal abuse) and to fulfil the animal welfare certifications that are on the rise.
Greater involvement of the chain actors
Furthermore, it is believed that the application of this technology will enable greater participation of farmers and consumers in the supply chain, as well as new forms of product distribution. This reason will benefit both producers and farmers, who are making a great effort to contribute to the environment and offer a quality product along with consumer who want to eat better.
Also, it has another big disruption which consist in create an interconnected system with all chain value actors to achieve one of the major challenges, keeping the continuous flow of data at each stage. This system would ensure intelligent, safe and reliable auditing throughout the entire life cycle of a foodstuff.
Blockchain traceability application in the food industry
Currently blockchain traceability is being implemented on the food industry to certificate:
Sustainability: Demonstrating sustainability seals and certifications. Also processes that favour the circular economy are algo beginning to be implemented, such as recycling packaging, reducing food waste and optimizing resources.
Designation of origin: Demonstrate quality certifications, special and differentiated characteristics of a premium product. Being the Blockchain the guarantor of trust, the slogan of the industry is:” from the farm to tables”.
Food safety: Demonstrate food safety, present details such as refrigeration condition of a product, animal feed, nutritional table, licenses, among other aspects that guarantee public health.
Ecological Products: The harvesting of a product must go through a period of transition and adaption to the standards to be qualified as eco-friendly, so during that conversion period, it cannot be sold under this category. Blockchain application allows both producers to certify the process, and consumers to finally verify if the product is truly ecological.
Access to the end consumer: Consumers can scan a QR code through their phone to verify all the factors mentioned above. Also, consumers can access extended Information such as harvest date, cultivation place, landowner, certifications, denominations of origin, production processes, transport time, and more.
If you want further information about this topic, you can read: Food Traceability and blockchain technology: an investment against the fraud and in favour of consumers
If you want to know more about this topic, you can also read: Food traceability and Blockchain technology: an investment against fraud and in favor of consumers.
The current state of the industry and how Blockchain traceability in the agri-food sector is expected to grow over the next 5 years
The global blockchain in the agricultural and food industry was valued at $139,6 million in 2020. It is expected to grow with an annual compound rate of 51,0% and hopes to reach $1488,0 million in 2026, according to data from Blockchain’s reports in the agri-food sector: a global and regional analysis by ReportLinker. (ReportLinker, 2022)
As defined in that same report, the drivers of the Blockchain application growth in the sector are:
- The necessity for greater transparency in the food supply chain.
- Government initiatives for Blockchain promotion.
- New norms and regulations to meet sustainability requirements.
Key players who are implementing Blockchain traceability
A PwC report revealed the next 12 top countries that will lead the global Blockchain economy in the upcoming decade. China and the United States top the list, followed by Germany, Japan, the UK, India, and France (with profits around 50 million and 100 million dollars)
In terms of applying Blockchain traceability in the agri-food sector, the United States leads the way. North America generated the highest revenue with 81,2 million dollars in 2020. They conquered the Blockchain innovation scenery in the region, holding into the maximum quantity of investors and pilot projects. This region is hoping to witness a significant growth in CAGR of 48.5% throughout the course of the forecasting period 2021-2026 (Report Linker, 2022)
Moreover, Western Europe does also play a crucial role in this context. Proof of this is their investment figures that are expected to have an annual growth of 47% until 2024, a year in which it is estimated to reach 4.000 million euros, according to data from IDC Research Spain.
Investments in Blockchain projects were also affected by the pandemic crisis in 2020. However, “Blockchain’s growth curve remains very relevant”, especially in the development of services linked with this technology, with an average annual growth of 52,6% until 2024, as noted in that same research. (It Reseller, 2021)
The key players in the market include providers of blockchain technology solutions, retailers, food processors, agricultural OEMs, food distributors, and traders of primary agricultural products.
This is how the market is moving towards the application of Blockchain traceability:
In the world
The Food and Medicine administration of the United States- FDA- has among its plans the establishment of a new regulation that could facilitate the implementation of Blockchain in the food industry.
This regulation could also benefit system failures of the actual traceability, and overcome market challenges, such as data standardization and management, generation of awareness, digitalization levels, and technical understanding.
It is expected that around 20% of the ten most relevant global food retailers will use blockchain technology by 2025 (Pictetct, 2021), which will enable them to deliver greater value to clients and present customizable solutions.
These are some of the cases of the most well-known and major department stores in the market for being pioneers in the application of Blockchain traceability in the food industry.
This large retailer, in partnership with IBM and its platform Food Trust, began implementing Blockchain technology to track their shrimp supply chains sourced from India.
In addition, Sam’s Club, a Walmart subsidiary firm based in China, partnered with the supply chain monitoring platform VeChain (VET). In order to ensure food preservation and safety while providing greater transparency for consumers in the country.
Carrefour, throughout their supermarkets, was the first case in Europe of Blockchain implementation at large department stores. As a founder member of the IMB Food Trust platform, its first attempt was in 2017, when they applied Blockchain traceability in Auvergne chickens.
The French retailer extended this implementation for tracking the supply of all sorts of products such as meats, eggs, dairy, and fruits. In this manner, they have managed to meet their clients’ needs for acknowledging more about the origin of their products, which has resulted in an increase in sales.
Relying on the current budget accepted by the Spanish government that will drive the digital transformation in the agri-food sector, the adoption of Blockchain technology seeks to remain growing.
The government approve the Strategic Project for Economic Recovery and Transfromation –PERTE- (Proyecto Estratégico para la Recuperación y Transformación Económica), which will assist with the competitiveness, digitalization, sustainability and traceability of the agri-food sector.
With a public investment of around 1.000 million euros until 2023, it is expected to encounter social and environmental challenges in the next decade. Among them, is the fight against climate change by promoting a conscious use of natural resources through the digitalization of all production processes in the food supply chain. Moreover, reinforce food safety through traceability.
PERTE is expected to generate an impact of 3.000 million euros in the national economy and generate a net sum of 16.000 jobs, according to the Ministry of Agriculture, Fishing, and Food (Ministry of Agriculture, Fishing and Food, 2022).
On the other hand, according to reports from the Institute of Foreign Trade-ICEX- the Foodtech sector in the country experience remarkable growth in 2021, with respect to 2020 with an increase in investments of 220% (Cárnica, 2022).
Foodtech seeks to apply leading-edge technologies to foods in all steps of the supply chain, such as robotics, blockchain, artificial intelligence, and big data, allowing to build a strong and sustainable food system.
In accordance with ICEX, the FoodTech ecosystem in Spain is the fifth major investment in Europe, with more than 400 tups working along for the innovation of the agri-food value chain. It is followed by Germany, the UK, France, and the Netherlands.
Blockchain traceability application cases for the agri-food sector in Spain
Different segments of the agri-food sector all around the alternative regions in the country began to implement blockchain technology. From wineries in La Rioja, to Asturian cheeses, up to Basque mussels:
Carrefour – IBM Trust Food
In 2018, Carrefour’s platform emerged as the first system for food traceability in Blockchain used in Spain, which began certifying their free-range chicken breaded without antibiotic treatments.
By the end of 2021, Navidul celebrated their leadership in the transformation of the Iberian ham sector for implementing Blockchain technology on their ham shoulders. This way, consumers will be able to access all the information granted by all providers who had participated in the production while being an active part of the value chain.
Another blockchain project to highlight in the vegetables and fruits segment is eTIC4FOOD in Andalusia. This project arises from the alliance between Caparrós, Hispatec, Tecnova, and the Technological Scientific Park of Almeria (PITA), with the aim to develop tools for intelligent labeling of the sustainable horticultural production.
Created in 2018, the project was developed after the circumstance that reading a label is “almost like an impossible mission” and will be launched this year with products like Watermelon Premium and Caparrós’ Lobello cherry tomatoes. This solution expects to enable consumers with a simple reading of labels while granting greater access to the information.
Cattlechain 4.0 is a proposal originating in Madrid as a global solution for agriculture and livestock sectors that seeks to improve agricultural productivity and ensure the welfare of livestock with Blockchain technology.
All thanks to the integration of devices (ear tags and necklets) integrated with Artificial Intelligence (A.I), Internet of Things (IoT) algorithmics, and Blockchain technology. With that, the system can monitor in real-time the location and condition of the animals in the field and always guarantee their well-being.
SigneBlock – Gouze
Finally, we cannot miss mentioning Signeblock, a pioneer in the application of Blockchain traceability around the different sectors in the country, and especially in the agri-food sector, through or platform Gouze.
Thanks to Gouze, the cold meats firm “Sabores Sierra de Madrid” can fully trace their production process and is able to collect information in a secure, transparent and immutable manner. This was worthy of the ANICE Innovation Award- National al Association of Meat Industries in Spain-
Gouze provides them easy accessibility to Blockchain technology and assures them of the Denomination of Origin and the source of raw materials the firm uses in their chorizo, with IGP Sierra de Guadarrama certification.
Signeblock features a series of additional technologies and services that in conjunction with Gouze, unlock a wide variety of innovative and differential possibilities in the agri-food sector.
Academics and science also promote Blockchain
The University of Almeria (UAL) along with the University of Granada, throughout investigation groups, are bringing contributions to Blockchain technology, focused on providing reliability to consumers and guaranteeing food safety.
On one side, they are endowing sensors with information to, once they are in the field, provide correct and solid data, which will allow the final consumer to expand their knowledge and help providers in their decision-making. And on the other, a dynamic labelling is being developed with an enormous capacity to offer legitimate information regarding the product state.
This label applied to any packaging has the capacity to demonstrate, through chemical reactions, whether a product is in poor conditions, regardless of its expiration date. According to Professor José Álvarez, a member of the investigation, this seems to be a considerable innovation, because different components can be evaluated and provides greater guarantees regarding the state of a product (ABC, 2022).
Another case is in Castilla-La Mancha. The autonomous community will apply Blockchain technology in the wine industry in order to ensure the quality of their wines by means of a digitalization project. The project will connect members of the sector with the public administration, counting on a 2.6 million euros investment and will be conducted by the Technological and Scientific Park of Castilla-La Mancha (PCTCLM). They will also constitute a team with professionals from the Graduate School of Computer Engineering of Albacete.
Coming soon: how is Blockchain envisioned in the agri-food industry.
The need for moving forward in the digital transformation in order to meet sustainable development challenges, grant transparency to society and consumers, create a more competitive agri-food industry and keep up with norms and government standards for its adequate development results in all conditions for the agri-food sector to evolve and transform itself forever.
Blockchain technology suggests a new food traceability model that enables such evolution, from which governments and organizations around the world are willing to invest and develop new projects over the next five years.
Everything suggests that the global blockchain applied in the food industry will remain growing. The United States, expects an annual growth of 48.5%, while in Europe expects an overall growth in Blockchain of 47%.
The most recent PwC (PriceWaterhouseCoopers) report indicates that the tracking and location of products will be one of the principal uses in the next 10 years. Deliberately, in 2020 it was estimated that the use of traceability and provenance of Blockchain in Spain would have an economic impact of 600 million dollars in 2021 and hopes to generate profits of around 24.300 million dollars by 2030 (Observatorio Blockchain, 2020).
Would you like to remain informed and know more about this topic? Find out at Signeblock how we help companies to access Blockchain technology.