Blockchain: An innovative tool for keeping the global food supply chain safe and ethical

8 minute read
29 April 2019


The modern food industry has grown into a complex and global network of food producers, processors, distributors, and others throughout its supply chain. While Canadians have the pleasure of an immense selection of international foods, such selection has not come without its challenges. Concerns of food safety and foodborne illness have become increasingly important given Canada had two separate romaine lettuce E. coli outbreaks in 2018. Indeed, when the origin of a foodborne illness outbreak cannot be identified quickly, regulators order the recall and destruction of all products on the shelf to protect the public. Thus, a single contaminated batch can result in significant financial and reputational losses to innocent parties throughout the entire food supply chain. Other concerns in the food industry relate to food labelling claims, ethically-sourced foods, and third-party certifications (i.e. non-GMO, Fair Trade, organic, etc). But perhaps the most compelling of these supply chain concerns is a contemporary phenomenon that is often hidden from mainstream public awareness: modern slavery.

Although it may be hard to believe that this reality exists in 2019, modern slavery-an umbrella term that includes slavery, illegal and harmful child labour, debt bondage, forced labour, and human trafficking-is a disturbing reminder of the tragic situation at the end of many supply chains. According to the International Labour Organization, as many as 25 million people are suffering in forced labour and as many as 152 million children are victims of child labour and 73 million of them are doing hazardous work.

Today there are global pressures on businesses requiring them to be more aware of, to be more transparent about, and to take more responsibility for human rights issues and unethical activities in their supply chains. More and more of the world's biggest investors are recognizing the risks to investee companies that are not properly managing human rights and ethical issues in their businesses and their supply chains and are linking these concerns to the long term value of their investments in these companies. At the same time, there is a growing global trend in many western countries to require companies to disclose how they are addressing the risk that there is modern slavery in their business operations and their supply chains. Legislation in the U.K., the State of California and most recently, Australia, compel such disclosure. Businesses to which these laws apply must post online or file an annual statement detailing what efforts (if any) they have taken to ensure that modern slavery is not taking place in their businesses or in their supply chains. Other legislation in the E.U., France and other European countries[1] require different disclosure on human rights issues and, in some cases, mandatory due diligence.

Given the pressure on businesses to find out more about their supply chains and to make related public disclosure, businesses are looking for better ways to be able to map their supply chains, to trace products, and to conduct due diligence and monitoring with better integrity, accuracy and efficiency. The emerging use of blockchain technology has the potential to deliver improvements in each of these areas by offering a way to reliably trace back products to their source of origin, and provide consumers and investors with a greater confidence that these products were sourced ethically.

How could blockchain be leveraged to achieve this? In simple terms, a blockchain is software that manages a ledger of information. Unlike traditional database software which stores information only in one place and is typically controlled by a centralized source, a blockchain allows for information to be maintained in multiple locations across a decentralized network of computers, or 'nodes'. Each node maintains a copy of the blockchain. Each new 'block' of information on the 'chain' can only be reflected once a complex cryptographic calculation is solved. One reason blockchain technology is ideal for tracking supply chains is that it allows for a higher degree of transparency. Parties do not need to trust one another or depend on a centralized authority to maintain the information. They only need to be comfortable that the information stored on the blockchain is accurate. Because of the decentralized nature of the blockchain, once information is entered on the blockchain, it cannot be erased, changed or altered without creating a new record on the blockchain. This means that there is a permanent record of every transaction committed to a particular blockchain since its inception.

Generally speaking, there are two types of blockchains, public and private. For public blockchains, such as Bitcoin and other cryptocurrencies, anyone can add to the ledger. A private blockchain restricts access to only select parties. For the purposes of tracking food supply chain information, it is predicted that we will see mostly private blockchains of information. A consortium composed of industry regulators, vendors, suppliers, transporters and independent monitors could maintain a private blockchain and decide levels of access and participation on an individualized basis. Different types of information could be made available to members of the consortium depending on their role. With a higher degree of confidence in timeliness of supply chain information on a blockchain and on its integrity, parties would have greater incentive to participate and comply with specific tracking and disclosure protocols.

Certain companies have already identified blockchain technology as a useful tool in verifying food information-origin tracking, labelling, pesticide-free, cruelty-free, free-range, organic, etc-and have deployed blockchain technology in exciting ways. A Walmart-IBM partnership, for example, pilot-tested blockchain technology in its traceability initiatives, reducing the tracing time for the origin of mangoes from seven days to mere seconds. Other companies are investigating the use of the technology to verify third party claims and labelling. For example, IBM has teamed up with Kroger, McCormick and Company, McLane Company, Driscoll's, Tyson Foods, Golden State Foods, Unilever, Nestlé and Dole, among others, to implement distributed ledger technology. The next logical steps include leveraging blockchain technology to address consumer and investor concerns respecting ethically-sourced products, thereby helping improve the humane treatment of animals, and even more importantly, helping identify and address modern slavery issues throughout the global food supply chain.

While a transparent record of any supply chain is undoubtedly a useful tool in the struggle against fraud and abuse, it does not provide the full answer. Blockchain alone cannot ensure that the information inputted at the source of the chain is the full truth; gatekeepers and protocol are still necessary at the inception of these supply chains to ensure that producers and manufacturers are not profiting from exploitation, and that the correct information is recorded on the blockchain. Nonetheless, blockchain technology is an innovative and important tool that has the ability to empower governments, international organizations, and industry participants to take the next necessary steps to ensure that the food on our tables is safe and ethically sourced.

[1] For example, Directive 2014/95/EU of the European Parliament and of the Council; France: L. n° 2017-399, 27 March 2017 relative au devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre; Netherlands: Child Labour Due Diligence Law (Wet Zorgplicht Kinderarbeid), currently awaiting Senate approval.

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