Blockchain in Agrifood: Transparency and Security Along the Food Supply Chain
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Exploring the potential of blockchain technology in combating fraud and improving traceability of agricultural products: applications, benefits, and future challenges.
Blockchain technology is emerging as a revolutionary innovation in the agrifood sector, promising to enhance transparency and security throughout the entire agri-food supply chain. This article aims to explore the potential of blockchain in combating food fraud and improving food traceability, providing a comprehensive overview of its applications and benefits. Let’s begin by making the concept of blockchain more accessible; we could assert that the keyword underlying this technology is “cooperation.”
Blockchain Origins
The embryonic roots of the blockchain concept can be traced back to the KAD network, a system that emerged around the 2000s along with other peer-to- peer projects like Napster and eMule. These systems share the goal of eliminating centralized controllers and enabling each peer to actively participate in the network.
The year 2008 marked a turning point in the evolution of blockchain technology with the creation of Bitcoin by Satoshi Nakamoto. This event not only represents the official birth of the first blockchain network but also introduces the concept of “Distributed Ledger Technology” (DLT), revolutionizing the way transactions are managed and validated on a decentralized network.
How Blockchain Technology Works
While the technical specifics of blockchain, various types of networks, and consensus algorithms represent broad and complex study topics, it is essential to understand for this discussion that blockchain is essentially a distributed, encrypted, and immutable record-keeping system. At its core, a consensus algorithm harmonizes and validates data input by multiple network participants, ensuring the integrity and security of transactions.
The harmonization “stitched together” by the consensus algorithm of a blockchain allows unreliable data from many actors to be made reliable, thus reconciling them and calculating the reliable hash to establish the creation and sequence of each block.
The strength provided by the consensus algorithm allows a Blockchain network to be free from the control of a single entity, such as a single company.
Understanding these fundamental characteristics of blockchain highlights why this technology has recently been adapted for validating logistics traceability data and origin traceability within the supply chains of the agrifood sector.
Traceability and Transparency
In the agrifood sector, especially in high-quality products, issues related to counterfeiting and product quality can arise. This scenario can lead consumers to purchase products they believe are high quality but, unfortunately, turn out to be of lower quality.
So the crucial question is: can blockchain technology allow us to protect the agrifood supply chain, countering the multiple frauds that threaten high-quality products?
An increasingly common opinion is that companies in the agrifood sector can make a decisive choice by implementing blockchain technology in their future. There is a significant increase in proof of concepts and developments by numerous companies in the agrifood sector.
Numerous initiatives developed for product traceability systems have demonstrated the potential of blockchain technology as a tool to support PGI (protected geographical indications) and PDO (protected designation of origin) certifications.
If used well, this type of technology can revolutionize the agrifood sector, offering an innovative solution that fits well with traceability management methods and for controlling the authenticity of products, especially for high- quality products such as those with PGI and PDO. Already, these certifications are born to be tracked “farm-to-table” but, by implementing blockchain, every stage of production can be accurately recorded and verified, ensuring even greater transparency throughout the entire supply chain.
This not only strengthens consumer confidence in the origin and quality of products but, as mentioned earlier, can also help combat potential fraud and counterfeiting. Additionally, thanks to advanced cryptography, information on the blockchain is protected from manipulation, archived, ensuring data integrity with a “certified date” guaranteed by the inherently immutable and sequential nature of the blockchain. Once a block has been added to the chain, it is impossible to modify the block without being detected by the network. Consequently, the hash written on a blockchain at a certain point in time provides a certain proof of the existence of the original data at that precise moment, providing a reliable “timestamp” for digital documents, so with blockchain, the agrifood industry can achieve new standards of excellence.
Blockchain’s Strategic Challenge
It should be noted that adopting blockchain technology still represents a strategic challenge that requires medium and long-term planning. Initially, the gap between efforts and benefits may be significant, but with the expansion of the network and the increase in suppliers wanting to participate in the supply chain, not only can set goal be reached, but future scenarios can also be opened that may exceed all expectations.
The implementation of this technology should not be considered solely to improve transparency in the agrifood supply chain, but as a tool that offers a distinctive competitive advantage for those who adopt it. This advantage is not limited to marketing and corporate image but can offer a real ‘extra edge’ in terms of operational efficiency, security, and consumer confidence.
Smart Contracts’ Efficiency
Regarding ‘Smart Contracts’ embedded within the blockchain, it is important to emphasize that the term ‘smart’ can be misleading: smart contracts are not intelligent contracts themselves and do not involve the use of Al technology. Rather, they consist of a series of computer instructions that allow nodes to manage, accept, reject, and validate data. Although these computer programs are not inherently ‘intelligent’, they can perform ‘smart’ operations, allowing the system to react autonomously to certain situations.
Consequently, these tools are crucial in improving the efficiency of a company’s daily work, reducing the time taken by users, and minimizing potential human errors. Additionally, they simplify the management of data related to internal operational processes, thus contributing to optimizing the entire company’s workflow.
Blockchain network, by its nature of cooperation, is based on mutual cooperation, and precisely thanks to this fundamental principle, it is clear that all actors in the supply chain participating in the blockchain can be subject to a ‘computer disciplinary code’ to which they must comply.
Enhanced Supply Chain Transparency
A practical example: if a supplier were to distribute counterfeit products through a company’s internal traceability system, it would be possible to identify the problem and stop collaboration with the supplier. However, this information is limited to the company’s internal ERP environment, making it endogenous. With the implementation of blockchain technology, this information becomes exogenous, as the supplier directly inputs data into a shared, public, and immutable register. Consequently, the data becomes visible to all actors in the supply chain, ensuring greater transparency and facilitating the detection and resolution of problems. Additionally, this data cannot be manipulated and will remain accessible, constituting a crucial branch of traceability.
Likewise, the opposite is also true, if a supplier were to distribute a product of guaranteed and certified origin, the blockchain-based traceability system could confirm such information. Thanks to the implementation of this technology, there would be double validation of the data, the supplier inputs the information into the blockchain, and the various actors in the supply chain subsequently validate this information in an unchangeable manner. This ensures a secure and transparent supply chain, reinforcing consumer confidence in the origin and quality of products.
Smart contract and automation
Last but not least, the decision-making process regarding order management and packaging, currently semi-manually handled by users, should be considered. With the implementation of blockchain technology and smart contracts within network nodes, this decision-making process can be delegated to the platform, making the company’s IT system even more efficient and effective.
Implementation challenges
It is easy to anticipate that in the coming years, more and more traceability data in the agrifood sector will be recorded on nodes based on blockchain technology. Consequently, not only is it plausible that this technique can offer significant benefits in multiple areas, it is likely to become the primary challenge for companies aiming for future innovation. From a personal standpoint, as a professional in the IT sector and a blockchain technology enthusiast, my personal experience leads me to think that this type of technology is not merely a method or an algorithm, but an entire management process that starts from an idea and evolves into a dense network of nodes and actors sharing strict rules for data validation.
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