Blockchain to the Rescue: Eliminating Global Food Fraud

“To put food safety to work, we need the whole industry to collaborate—from the suppliers to the distributors to the retailers,” Walmart spokesperson Rebecca Lui said of the blockchain pilot last year.

While a blockchain record may be immutable, creating it requires honest input from all participants. In other words, blockchain may be great for identifying who is in the system, but it does not capture the accuracy of what they did or did not do.

And this may be the chink in blockchain’s armor.

“Blockchain is dependent on individuals in the supply chain entering accurate and current information,” explains David Acheson, MD, president and CEO of The Acheson Group and a former FDA associate commissioner for foods. “What blockchain will not do is determine if a person in the supply chain caused the problem or followed proper procedures,” Dr. Acheson tells Food Quality & Safety magazine.

John Spink, PhD, assistant professor and director of the food fraud initiative at Michigan State University in East Lansing, concurs. “Considering a food fraud incident such as the U.K. horsemeat, how exactly would blockchain have helped reduce food fraud? In some cases, it would seem the fraudsters are trusted with entering authentication information into the system,” he tells Food Quality & Safety.

Countering Food Fraud

The need to prevent food fraud is becoming increasingly compelling, not only from the standpoint of public health but also from legal and financial concerns. Food fraud costs the global food industry about $40 billion each year, according to Dr. Spink. In addition, poor standards of food safety, antibiotic use, and environmental mismanagement in the Asian meat, dairy, and seafood sectors could lead to “financial food poisoning” in global investments. A new report from the investor network FAIRR warns that global pension and savings funds are at financial risk due to “dangerous factory farming practices” in Asia.

The report notes that in 2014, McDonalds and Yum! Brands lost $10.8 billion in market capitalization following reports that their restaurants in China had received and served expired meat products. “Simply put, a failure to reform the Asian meat and dairy industries in areas like food safety, could spell a nasty bout of financial food poisoning for global investors,” said Jeremy Coller, founder of the FAIRR Initiative and CIO of Coller Capital. “Investors must step up to the plate.”

While seafood fraud is a global issue, it is particularly worrisome in the U.S. where more than 90 percent of the consumed seafood is imported from other countries, with an estimated value of about $9 billion annually. In December 2016, the Obama administration announced a program to help prevent illegal fishing and seafood fraud. Effective Jan. 1, 2018, the Seafood Import Monitoring Program will require importers of record to report data from the point of harvest to the point of entry into U.S. commerce on certain fish and fish products that are vulnerable to “illegal, unreported, and unregulated” fishing practices.

A number of seafood traceability programs are being tested, including blockchain, to help comply with the regulation, which earlier this year survived a legal challenge by the National Fisheries Institute and eight seafood companies.

Other Blockchain Initiatives

IBM is far from being the only player to be experimenting in the blockchain food safety arena. A company called Ambrosus claims to have combined “high-tech sensors, blockchain protocol, and smart contracts” to build a “universally verifiable, community-driven ecosystem” to assure the quality and safety of food products, “from farm to fork,” according to Stefan Meyer, PhD, the company’s chief technology officer.

In addition, Chinese online retail giant JD.com, that country’s second-largest e-commerce platform after Alibaba, has been using blockchain technology to track production and delivery of frozen beef from Inner Mongolia Kerchin Cattle Industry, a beef producer. Consumers are able to access data stored by JD.com and Kerchin through their blockchain systems. Alibaba itself is developing a “Food Trust Framework” with AusPost, Blackmores, and PricewaterhouseCoopers (Australia) to explore the use of blockchain technology to combat food fraud.