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How blockchain can revolutionize the food chain

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In essence, it could Uberize the agri-food sector by eliminating middlemen and lowering transaction fees. That should mean fairer pricing. And it should help smaller outfits get more market attention.

However, it will work only if the data at the source is accurate. Current industry practices are much more open to human error. Much of the compliance data is audited by third parties and stored on paper or in a centralized database. These databases are highly vulnerable to informational inaccuracies, hacking, high operating costs, and intentional errors motived by corruption and fraudulent behaviour.

With blockchain, mistakes would be traceable to individual culprits. Given recent food fraud scandals, this feature is not trivial.

The technology provides permanent records and data sharing between disparate actors in a food value chain. Many retailers have sold fraudulent food products unknowingly. Blockchain could put an end to that.

Blockchain technology offers an affordable solution to small, medium and large organizations.

However, there are noteworthy limitations. The amount of information that can be processed is limited. And confidentiality depends on securing contracts between several organizations. Balancing confidentiality with transparency will be tricky, since the agri-food arena is full of secrets. For many, then, blockchain is just a solution looking for a problem.

Blockchain is really in its infancy and most people are uncertain about its potential. But the innovation in blockchain architectures, applications and business concepts is happening rapidly. It’s a decentralized, open-source organism that is challenging to grasp for many, including governments.

In the food industry, innovation is always desirable until it becomes real. Once it manifests itself, guards go up. Some organizations move ahead while others wait to see what happens.

The marketplace is fuelled with confusion due to the Bitcoin phenomena, which many label as irrational and ridiculous. Cryptocurrencies allow for transactions to occur while using blockchain technology, but it remains just an option.

So the most important challenge for blockchain technology remains participation. All parties must adopt the technology in order for it to work. In food distribution, not all companies are equal — some have more power than others. A successful integration of the blockchain requires the engagement of all participating organizations. Walmart’s blockchain will likely be successful because it’s Walmart. But thousands of companies don’t have the same clout.

Food industry leaders should embrace blockchain, incorporating it in digital strategies now being employed across the industry. That would enhance agri-food transparency, productivity, competitiveness and sustainability.

But before we get too excited, research must create evidence-based blockchain solutions to democratize data for the entire system.

Sylvain Charlebois is Senior Fellow with the Atlantic Institute for Market Studies, dean of the Faculty of Management and a professor in the Faculty of Agriculture at Dalhousie University, and author of Food Safety, Risk Intelligence and Benchmarking, published by Wiley-Blackwell (2017).Distributed by Troy Media

This article was curated from Google News. You can read the original article here.

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