Underwriters of Supply Chain Risk Will Love This Application of Blockchain

Consumers are increasingly interested in eating organic and understanding the path of their food. One technology making advanced supply chain tracking a reality is blockchain.
By: | March 6, 2019

Consumers are increasingly interested in eating organic and understanding the path of their food from farm-to-table. But new technology is taking it to the next level, according to this Wall Street Journal report.

“Our growing appetite for this information comes from a lack of trust in the global supply chain, fueled by revelations about contamination, fraud, animal welfare and safety-inspection loses,” said the Journal. “But the industry is investing heavily in technology — from internet-connected sensors to geolocation data and blockchain — that will help producers, shippers, regulators and consumers know where our food is at every step.”

Farm-to-Table Tracking Gaining Traction

The Journal offered plenty of examples of how tracking technology is used in the food industry:

  • GoGo Chicken, developed by ZhongAn Technology (and a subsidiary of a Chinese insurer) is using tracking devices to record a chicken’s every move. It also uses sensors to monitor environmental conditions like temperature and humidity. Consumers can access a wealth of data about each individual chicken through a smartphone app.
  • Glanbia, an Irish food products company, uses sensors to gather data about its milk and route the shipments to specific places. Milk with a high cream count goes to its cream processing facility. Milk with less goes to its nutritional supplements plant.
  • Driscoll’s, a berry distributor, uses sensors and RFID chips to monitor “shock events” — which create large vibrations during shipping that hurt the product’s shelf life.

The Blockchain Effect

One of the paradigm shifts making advanced tracking a reality is blockchain — secure ledgers with data inputted from multiple sources and stored in a variety of places.

The Journal explains: “Every time a bushel of apples moves through a link in its supply chain, information about its steps would be recorded, including who moved it, when, why and what resulted from the movement.”

It goes on to say that “anyone in the system can check on the status of a shipment independently. The technology has many applications within the food system, including fraud prevention, food safety, recall tracking and identification of illegal food production such as the use of slave labor or environmentally unsustainable practices.”

But, how this gets implemented is anyone’s guess. The food industry will have to agree on universal standards regarding food supply chains. Who makes the rules? Who governs the process? That’s all up for debate.

Transparency in the Supply Chain

Advanced tracking could make supply chain insurance underwriting far more accurate. Knowing how food travels from farm to fork would allow unprecedented transparency and likely cut down on food-borne illnesses, which infect 10 percent of people each year, according to the World Health Organization.

In 2017, Marsh surveyed professionals across food and beverage companies, finding 70 percent said their company’s risk management and risk transfer program addresses food borne illnesses — yet 57 percent aren’t sure if their companies have secured product recall insurance and 43 percent aren’t sure if their companies participate in role play drills to respond to a food-safety event.

Further there are still data security concerns: “Food companies may use our personal data to push items that our insurance companies and employers want us to eat. Are we giving up too much privacy in exchange for a transparent, trusted food system? That depends on who you ask, but be prepared for some inevitable pushback,” said the Journal.

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Jared Shelly is a journalist based in Philadelphia. He can be reached at [email protected].