Blockchain and Food Traceability in China

In China, different links in the food supply chain utilize different ledger systems. As traceability standardization has not yet been realized on a national level, and provincial systems offer inconsistent coverage, food traceability in China is still a major food safety goal. China's current patchwork of provincial systems and internal enterprise systems is still extremely fragmented and lacking the cohesion that an integrated national traceability platform would provide. In recent yearsthe arrival of Blockchain technologies and its suitability to solve China's traceability conundrum has seen it garner increased industry interest, particularly given China's penchant for early adoption of new technologies and the ability of Chinese enterprise to quickly leverage existing supply chain facilitating technologies e.g. QR code, cashless payment systems, GPS tracking etc.

BLOCKCHAIN TECHNOLOGY & FOOD TRACEABILITY

In 2008, an anonymous software developer, called Satoshi Nakamoto, invented bitcoin and implemented the world’s first Blockchain. Blockchain is a digital decentralized ledger with a growing list of records, called blocks, which are linked using cryptography.

So what makes Blockchain suitable for the food industry? All the data on the chain will be permanently stored and impossible to be altered. If the responsible person of each link in a supply chain uploads the food information and data to the chain, other people (like customers and supervision authorities) can access this chain and can view the data on both the product lifecycle and the product chain of custody throughout the entire supply chain.

In 2017, Walmart US, together with IBM, made a mango supply chain fully traceable using Blockchain technology. The result showed that it only took 2 seconds to trace one bag of mango (including information like place of original, production number, date, processing manufactures, safety certificates, etc.). Before this the process took several days or even months.

DEVELOPMENT OF BLOCKCHAIN TECHNOLOGY IN FOOD INDUSTRY

Since 2016, IBM has cooperated with Walmart to reduce food pollution with Blockchain technology. Later, around August, 2017, more companies cooperated with IBM, including Dole, Kroger, McCormick and Company, McLane Company, Tyson Foods, Unilever, Driscoll's and Golden State Foods.
In March 2017, Alibaba and PwC worked together and developed a test project for food supply.
In June 2017, JD along with AQSIQ (SAMR now), MIIT, MOFCOM, MOARA and other brand owners set up a quality traceability & anti-counterfeiting alliance. At the same time, JD opened the traceability & anti-counterfeiting platform to platform companies for free.
In December 2017, "Rice Chain", the first domestic traceability project by Zonergy and Zhiwang Fintech about agricultural products was launched in China.
In August 2017, Tmall Global announced the launch of its global traceability project, to trace imported goods.
In December 2017, Walmart, JD, IBM and Tsinghua University National Engineering Laboratory for E-Commerce Technologies formed the first Blockchain food safety alliance focusing initially on pork traceability.
In February 2018, Tmall Global can trace the whole import procedures of cross-border commodities with Blockchain technology from production to quality inspection.
In April, 2018, Alibaba Cloud released a Blockchain solution. The Luxury Pavilion of Tmall launched the first authentication traceability function with Blockchain technology.

On Sept. 13th, 2018, the first International Blockchain and Food Safety Seminar was held in Beijing. During the seminar, Walmart shared its practical experience developing food supply chain transparency powered by Blockchain. Meng Suhe, President of Chinese Institute of Food Science and Technology, said "Blockchain can enhance the transparency of food supply chain and increase consumers' confidence. The government has been researching the technology already, but major progress has been primarily realized on an industry level".

CASE STUDY: "GO GO CHICKEN"

In its application in China's food sector, Blockchain is really about solving the problem of consumer confidence. "GO GO CHICKEN" project by ZhongAn is a good example of how Blockchain technology is being utilized at an industry level in China. Consumers can buy this chicken on JD.com, which is RMB 238 yuan per chicken (1kg-1.5kg) (the price of an ordinary wild chicken is about RMB 60 to 80 yuan). Once you get the chicken, you can scan the QR code on a device bound to the chicken to check its information.

They attach devices to each chicken to ensure its IoT ID. Through this device, you can see the location of this chicken, movement data and other data of breeding, processing, transportation, etc. Information and data will be recorded on the chain. Once the device is dismantled, it is destroyed. In this way, customers can ensure this is a "go go chicken". When you get the chicken and scan the QR code, you can view transparency information. You can know how many days it lives, and other data in its life.

SHORTCOMINGS OF BLOCKCHAIN FOOD TRACEABILITY

Although Blockchain technology seems a perfect solution for food traceability and anti-counterfeiting, it is still underdeveloped.

1. Technical Shortcomings: As we mentioned above, all the data on Blockchain cannot be altered or deleted. We can ensure the integrity of the data AFTER it is uploaded on the chain, however we cannot ensure the accuracy or authenticity of the data BEFORE it is uploaded on the chain. Falsifying data before uploading is still a major issue.

2. High investment Cost: Besides the cost spent on Blockchain technology research, developing the infrastructure in terms of data collection, manpower and IoT devices all require significant investment. COO of GO GO CHICKEN Project said the usage of Blockchain technology indeed increases the product price, however as the technology gains traction and consumer demand increasingly influences market forces we can expect prices to decrease.

3. Lack of traction at both a consumer and industry level: It's not easy for consumers to accept the high price so quickly. Lots of enterprises won't explore Blockchain projects for this reason. JD.com one of China's largest ecommerce companies found this fact out first hand when despite opening its Blockchain development platform for free found that many brand owners were simply not interested.

INFLUENCE OF BLOCKCHAIN ON FOOD TRACEABILITY IN CHINA

Actually, in some application scenarios where the authenticity of the original data has been ensured by multiple techniques Blockchain is proving to be a game changer. For example Blockchain is proving to be useful in cases where the company puts a GPS device in the package before printing the QR code allowing uploading of real-time GPS data to the chain to ensure the authenticity.

Even if there is no effective way to put an end to counterfeiting yet, one thing we're sure is that increased use of traceability technology like Blockchain will increase the cost of counterfeiting. For industry sectors like the infant formula sector where consumers are less price sensitive and extremely conscious of both safety and quality, the increased costs associated with using anti-counterfeit technologies will likely be offset by consumer demand for guaranteed authentic products.