Meeting Changing Customer Requirements in Food and Agriculture Through Application of Blockchain Technology

Abstract

This document summarizes research supporting the implementation of blockchain technology in the food and agriculture industry in Ontario. First, our research indicates that blockchain technology based solutions are an existing and proven set of technologies, where it has already been proven that the source of food items can be identified in seconds where previous processes required days and weeks of effort. Second, we also describe how blockchain based supply chain provenance information has many more benefits than its current use for food safety and product recalls. Consumers are willing to pay premium prices for food based on reliable supply chain information that matches the consumers expectations and values. Costs related to blockchain technology based solution development and implementation will be relatively small in comparison to revenues generated through increased market share by organizations providing useful information to consumers, and other stakeholders in the food supply chain. Third, we recommend that costs for development of blockchain based solutions should also be distributed across stakeholders, and apportioned by the relevant industry associations. Implementation of smart contracts can be used to guarantee a pre-arranged distribution of revenues and costs across stakeholders across the food supply chain. A consortium approach will reduce individual organization related risks, and will ensure that complete end to end supply chains participate in blockchain based technology solutions. Our research indicates that adoption of blockchain technology in agriculture will be achieve critical mass earlier when the industry applies a consortium approach, in a regulatory environment that is supported by government. Finally, this report also makes recommendations relevant to the integration of blockchain technology with per item labelling, one of the core competencies and strengths of the project partner, Accu-Label Inc.

Instead of each organization attempting to navigate their own path through the different choices in technologies, we recommend a consortium approach where a blockchain technology based solution is selected and implemented through existing industry associations. Industry associations by design address the needs of their members, and therefore have a built-in relationship of trust with their members. This preexisting trust between industry associations and their members will enable pre-arranged distribution of costs and revenues related to implementation of blockchain technology between different stakeholders. Industry associations can pilot simpler low cost blockchain based solutions to reduce the risks developing more complex and expensive solutions. Blockchain based smart contracts provide an additional layer of assurance by pre-defining conditions of revenue/cost distribution, and automating the process.

Summary of Recommendations:

1. Pilot different blockchain technologies to determine the best fit for the industry and organization.

2. Determine information that is of value to stakeholders in the supply chain, such as end consumers, and that they are willing to pay for.

3. Distribute the costs of blockchain technology development across different stakeholders in a consortium approach through industry associations.

4. Ensure that a robust mechanism exists to bridge information flows with physical food product flows.

Keywords: Blockchain, Distributed Database, Software Applications, Information Technology, Food, Agriculture

JEL Classification: Q13, Q16, Q17, Q18, O31, O32, O33, O38, L11, L14, L15, L51, L66, L86