Can blockchain alone guarantee traceability in our food system?

Chiara Corbo, Filippo Renga are directors at the Smart AgriFood Observatory of the School of Management, Politecnico di Milano and the University of Brescia, Italy. Dana Bonaldi is a coordinator for EU Funded Projects at the Digital Innovation Observatories, Politecnico di Milano.

The views expressed in this guest article are the authors’ own, and do not necessarily represent those of AFN.

In 2021, we examined the opportunities in blockchain for the agrifood sector. At the time, many agrifood companies wondered about the real benefits of the technology. Could blockchain guarantee transparency, traceability and immutability to data in the supply chain, or would it just be a trend?

After three years of research, in a world upset by deep economic and social changes, we rely on our data to try and answer such questions, starting with research conducted by the Smart AgriFood Observatory of Politecnico di Milano and Università degli Studi di Brescia.

The contribution of blockchain to the agrifood sector

The agrifood sector continues to show interest in blockchain and distributed ledger technologies. In 2021, agrifood was the fourth-largest sector in terms of application of such technologies, accounting for 6% of overall pilot and operating projects.

Europe has the highest concentration of projects (28% of 106 identified projects), followed by Asia (17%) and America (16%).

There are four main reasons agricultural and agrifood companies adopt blockchain technology:

1. Objectives linked to commercial and marketing opportunities

In 54% of the 106 worldwide projects we analyzed, blockchain is mainly chosen to exploit commercial and marketing opportunities. Since blockchain has been the subject of media hype, many companies use it to try to demonstrate to consumers transparency and traceability information about their products. The final objective is certainly to gain a larger share of consumers, who are increasingly interested in food quality and traceability. Moreover, some digital instruments able to increase the user experience (in particular, QR codes and NFC tags) are used with a communicative purpose.

2. Objectives linked to the effectiveness of the supply chain

Blockchain’s characteristics of immutability and transparency are used to improve coordination among supply chain players by increasing the visibility of information and subsequently the effectiveness of the whole supply chain (47% of projects analyzed).

3. Objectives linked to sustainability

Environmental and social sustainability is becoming more and more relevant, according to 26% of the projects (up 2% compared to 2020). In most of these cases, companies try to keep track and to give visibility to their sustainability practices.

4. Objectives linked to food safety and anti-counterfeiting

Another use of blockchain concerns food safety objectives (13%), making the procedures of product recall more efficient and effective, especially in the large-scale distribution sector. There are also uses related to anti-counterfeiting (11%); blockchain allows stakeholders to keep track of data and its modification over time, making overwrites particularly difficult.

It is important to highlight the number of projects aimed at improving payment and economic transaction processing, which represented just a residual part of projects in the past and today accounts for 11% of cases analyzed.

How blockchain can benefit the agrifood value chain

Despite its increasing spread, blockchain’s benefits for the agrifood sector are not always clear to users, and there isn’t a unanimous opinion about them. According to a survey conducted by the Smart AgriFood Observatory on 1,034 consumers, only 6% have heard about blockchain applied to the agrifood supply chain; most of these (60%) don’t know this technology at all. Among those who are familiar, only 51% believe that it can provide more reliable information and only 45% think that it can guarantee greater safety to products.

Transparency, immutability and sharing of data throughout the whole supply chain are considered the main benefits of this technology, together with the speed in finding information about each product, particularly in case of food recalls. On the one hand, all this is allowed by the specific consent mechanisms of each platform, which make it impossible — or at least very difficult — to modify the entered data. On the other hand, it’s enabled by the distributed ledger that makes data accessible on a continuous, real-time basis. These characteristics have a further effect of increasing consumer confidence or, more generally, the confidence of whoever can access the data. That said, questions remain around how much this can translate into effective commercial benefits for companies.

Does blockchain alone guarantee traceability?

Another important element that emerged from our research is that blockchain technology by itself cannot guarantee the traceability of a product. Instead, it must be placed in a wider context of technological solutions at the service of traceability.

Considering the phases characterizing the traceability process — identification, data acquisition, data recording, data management and processing, and finally transmission and communication — blockchain is mainly used, in different ways, in the second part of the process (data recording, management, and transmission).

Moreover, while guaranteeing that the entered data have not been modified, this technology does not attest that data are truthful and consistent with the reality they refer to. In order to solve this problem, more and more solutions integrate blockchain with other technologies such as the “Internet of Things” (IoT), though this is also still a developing field.

Blockchain and agrifood

Exploiting blockchain’s full potential around traceability requires us to think of the technology as a tile to be integrated with other available solutions.

Mapping of traceability-focused technological solutions carried out by the Smart AgriFood Observatory shows that 18% of 157 mapped solutions offered in Italy are enabled by blockchain, marking an increase of 59% compared to 2020. Furthermore, it is important to point out the growth of mobile apps (25% of solutions, up 65% compared to 2020) and IoT (16%,  up 47% from 2020), in many cases used in combination with blockchain.

Blockchain is undoubtedly becoming a very important technology for traceability, in the food industry and elsewhere. There are still doubts about the real benefits it can bring to the agrifood players along the supply chain, but research shows that the number of blockchain projects is increasing, especially in sectors as animal products, coffee and cocoa and beverage.

As usual when dealing with an innovative technology, it is important that agrifood companies do not rush into implementing blockchain solutions without nurturing the right skills in their teams, in order to avoid the “trend effect” with a consequent dispersion of resources that in many cases is inefficient. Moreover, it is crucial to understand how to integrate blockchain technology within existing technology systems to take full advantage of its potential.