Understanding blockchain in the food industry

What is blockchain?

Blockchain is an example of a distributed ledger technology (DLT). The key thing about this technology is that it is a ‘distributed’, as opposed to ‘centralised’, system. Therefore, rather than having one central system that is owned by one body, a blockchain system means that all of the data is recorded in many places, each of which is owned by the actors within the blockchain.

For example, rather than having a single central system that is controlled by the government or a brand, the model is distributed so that all of the actors, suppliers and customers accessing the supply chain have their own copies of the records. But only if they are allowed. So, a blockchain is open, easily allowing anyone on, but private in that membership is controlled.

Why is blockchain useful in the food industry?

Blockchain can be used in the food industry because, fundamentally, it is about helping to manage the food system, which is itself a chain, or set of linked chains. There are many actors in that chain; there are suppliers who are providing the food, and there may be aggregators and retailers and people who are ultimately selling the food, but it is all about the supply chain. Blockchain, as the name might imply, is very much aimed at helping to manage a chain of actions and consequential transactions. Although not 100 percent tamper proof, the technology that underpins blockchain is extremely secure and lends itself to the food system.

How does blockchain work?

If every single transaction is being shared with everybody across the chain, the actors on the chain become self-regulating and able to manage their own chain. So, if one node is attacked and compromised from a security point of view, all the other nodes are still there. It is much more resilient, and everybody can see that the chain has now been compromised and, therefore, something has gone wrong, allowing the relevant bodies to act.

If tampering did occur, this would create a different block – one that you can see has visibly changed. It is designed so that every relevant body would be able to see that A had become B, at a specific point.

Blockchain is different to something like Bitcoin, which is using similar technology. Bitcoin is open to anybody – anyone in the world can decide they want to buy some Bitcoins and see all of that data about the Bitcoin. On the other hand, whilst it is sharing visibility and is transparent, blockchain is only transparent to those people who have joined that blockchain. So, when you join you effectively have a contract to say: “I’m joining the chain, I’m becoming a member of the group.” It is a bit like having a cooperative. I am going to become a member of the group and therefore I see everything that I am allowed to see within the group, but it cannot be shared with the general public – it is not that open and transparent – but it is open and transparent within the controlled group.

Who regulates the chain?

Control of the whole chain is where it becomes slightly more complicated and interesting. The work that we have done in the Food Standards Agency (FSA) explored the application of blockchain in two areas. One was in relation to cattle going into an abattoir and the need for the data about the cattle to flow into the abattoir and the need for the data about the carcass to flow back. So, there is a use-case with lots of different actors and that worked really well. Everybody was happy, it was easy to deploy, and it was relatively cheap technology-wise. Everybody got value from it…what’s not to like?

But we had the same question…who – which one of the actors – should own this chain? Is there a third party that coordinates this? Or, again, is it a little bit like a cooperative in how it operates? And that sort of operating model question is one of the outstanding questions that we are now faced with.

The FSA kicked off that pilot, paid for it, and commissioned the development of the system, but the FSA then said: ‘ We found it very valuable, we get access to the data that we need and we are using data that has already been entered. So, it is very cost effective. But the FSA’s role is not to establish blockchains for every single step in the UK food supply chain.’

So that question around operating is one we are still looking for answers for. We are talking with others, such as the US Food and Drugs Administration (FDA) and HMRC in an effort to find that answer.

The other conclusion that we can draw is around trust. For a body to join a chain, all parties involved should be able to trust that body. The trust is then demonstrated and maintained through the performance of that body on the blockchain.

Can we trust blockchain?

There are different levels of trust. One is the original entering of the data, and the other is agreeing that the data is going to be shared, and that is where some people say, ‘I am not sure about that. I don’t want you to see this data. It is commercially sensitive’ for example. And that is not only people saying they do not want to share data with me, the regulator, it may be a supplier that does not want to share data with a retailer, or a retailer that does not want to share data with another competitor.

Julie Pierce

We are now looking at something called ‘data trusts’, which is a way of sharing the data in a very controlled way – in other words it has limitations as to who can see and do what with the information.

Then, when considering the actual entry of data, one thing to consider is that someone might ask: ‘The data on the blockchain is only as good as the data that is being entered. Who is saying that that carcass did actually come from that animal? And who is saying yes that carcass is fit to eat, or has these problems, or it is this weight? The blockchain cannot physically know that that carcass is the one it is said to be, so how can I be confident in the data on the blockchain?’

Well, two things: one is the fact that it is no worse than it is today. Your existing IT systems would be in exactly the same place. The second is that there are other pieces of technology such as IoT sensors, that allow you to do that final step to connect the blockchains to something that says: ‘I can physically guarantee that that is that carcass.’

Do you have any examples of successful blockchain implementation?

The FSA carried out another pilot focused on pork. The aim was to provide confidence in provenance data in relation to pork being exported to China. Similar to the beef pilot, it was easy to deploy this trial, it was quick and there were no technical problems. But, again, it raised the question around the overall operating model.

The third pilot we have been working on is with HMRC, and this is two regulators working together for the import of wine from Australia. If the Australians are exporting wine to the UK, the data that they provide on their blockchain about the wine is used by UK business, and by different regulators, us and HMRC, but we all do it once on one system. This is more efficient for each of us, and there is less confusion as to what exactly is the correct data.

There are also a number of other examples; Walmart is one of the biggest examples – the supermarket is using blockchain to join up the teams within an organisation. Rather than using blockchain across organisations, it is implementing it internally as a way to join up its own supply chains within the company. This allows the company to understand what is going on in its supply chain at speed. As it is an internal operation, it also negates the issue of ‘who is the control of the chain’.

A helpful use case of blockchain I can envision for a business would be for recalls, as it will enable a company to trace back to the source and follow the food on its journey in real-time. This could mean that recalls could occur in near to real time too, minimising the amount of product recalled, and sorting the problem quickly.

Is there a blockchain alternative?

The alternative to blockchain are traditional style IT systems. You could say: ‘I can just carry on my existing IT system’ and it does a fair amount of what blockchain would do. It is not to say it is a clear competition between these types of technologies – it is more complex than that. I think much of what we are seeing in our learning is that it is not about the technology, but it is more about operating models and trust.

There are different levels to the technology and there are various types at the underpinning technology level, it is more how these operating models are constructed, and how they are used. We want to ensure several things. One is that we, and industry, do not get locked in. We do not want there to be a single supplier of this technology. Government should do its best to try to avoid that from happening.  

The other thing is that the regulator is another actor in this space, so if blockchains are established, the regulator would like to ensure that it is an actual secure blockchain. The regulator should not have to be there all the time monitoring the data that flows through, but, as and when required, have rights to access data.

Another thing to consider is data standards. A blockchain, or any other technology that will join up the supply chain, requires standards to allow each chain, each element, to be able to talk to each other. That is absolutely critical and something that regulators must work with industry to focus upon.

What is the future of technology and food integrity?

There are many promising emerging technologies, and we will continue to monitor them as they appear; we will continue to undertake our own research and explore what the various technologies might be able to offer.

A priority for the FSA at the moment is in relation to analytics – using data for predictive analytics. I think it will be important for the food system as a whole, and although it is already doing a lot, more can be done to really understand what is going on, analyse trends, see things going wrong and better predict the future. And again, as the regulator, it would be beneficial to be able to see what the risks are that might be impacting consumers, either today or in the distant future.

Food Integrity will be taking place on 18-19 March, 2020 – click here to register today. The full agenda can be viewed here.