As of 2021, the world's population stood at 7.9 billion. By 2030, it is expected to reach 8.5 billion, and by 2100, 10.9 billion.
As our population grows, more and more people will need to be fed every day. To keep pace with this fast-growing demand, the global food supply chain will need to function more efficiently, accurately, and quickly.
This system ensures that food from the farm reaches our plates. However, manual interventions have their limitations. The use of blockchain has the potential to transform and optimize the food supply chain in multiple ways.
What is Blockchain Technology?
Blockchain technology is a decentralized, digital ledger that makes it easy to record transactions and track assets across a business ecosystem. Assets can include tangible ones such as houses, cars, land, and cash and intangible ones such as intellectual property and patents.
The unique selling point of blockchain is its immutability, i.e., it is not easy for any stakeholder who has access to the information to make changes without the other stakeholders being instantly notified. This makes it impossible to tamper with information in a blockchain-based transaction ecosystem.
Blockchain technology is being extensively used in the payments, healthcare, and cybersecurity spaces and is gradually revolutionizing the traditional agriculture sector.
The global blockchain agriculture and food supply chain market size is estimated to grow to $948 million by 2025 at a compound annual growth rate (CAGR) of 48.1%.
Challenges in the Food Supply Chain
The spectrum of processes that make up the food supply chain includes food production, processing, distribution, consumption, and waste management.
Tracking the movement of food on its journey from production to disposal is a mammoth task. Here are the top challenges faced by companies in the food supply chain industry:
Lack of food shipping traceability: Food, in any form, is susceptible to contamination, theft, and other consequences. It is especially difficult to track its trajectory when shipped in large consignments due to low traceability standards. A large amount of food wastage: Approximately one-third of the world's food is wasted every year due to inefficiency in the food supply chain. This amounts to 1.3 billion tonnes. It is a loss for farmers, food makers, and consumers. It also results in a lot of food going into landfills. Poor communication between food supply chain partners: The food supply chain has multiple players. Miscommunication between them leads to various consequences, such as compromised food quality, loss of business, low trust, and reduced profits. Food fraud: Cases of food fraud can range from incorrect ingredient lists on the packaging to the selling of counterfeit products, which affects consumer trust even in legit businesses.
How Blockchain Makes the Food Supply Chain More Efficient?
One of the most beneficial capabilities of blockchain is its ability to track the movement of food and ownership records in a tamper-proof way. These capabilities address multiple challenges of businesses and other stakeholders in the food supply chain industry.
Here are four ways it is bringing efficiency to the food supply chain:
Tracking the Flow of Food Resources with Transparency
This is one of the most important capabilities of blockchain, thus helping restore trust in a broken food supply chain.
Information is stored in blocks of data, and every transaction has its code, making it easy to maintain precise records. Also referred to as a time chain, the chain of information blocks is like a timeline of events.
There is no potential for duplication, as all parties have access to only one source of truth for a transaction, thus bringing transparency into the system. Blockchain has the potential to enable $31 billion in global food fraud savings by 2024 through effective tracking and reduction of compliance costs by 30%!
A by-product of the superior tracking capabilities of blockchain includes being able to predict the freshness of a harvest, thus bringing more efficiency to aspects like inventory management.
Blockchain technology also enables the filtering of demand and supply, thus leading to less waste. It is fueling the growth of Just-in-time, or JIT, an inventory management approach where food products can be received from suppliers based on real-time needs.
Enhancing Food Safety
Lack of food safety is one of the major concerns of all stakeholders in the food supply chain.
Leveraging blockchain enables businesses to track the movement of food with more accuracy. They can make buying and selling decisions in real-time based on the accuracy of the information generated by the blockchain.
For instance, supermarkets marketing fresh produce on a large scale can ensure its quality accurately by tracking it with the help of blockchain technology.
Increasing Efficiency via Automation
The food supply chain workflow comprises multiple players. Blockchain enables companies to automate transactions with the use of smart contracts.
The system triggers the creation of new contracts if the right conditions are met, thus avoiding delays and bringing efficiency into the supply chain.
As more businesses in the global food supply chain embrace block technology, this shift will contribute significantly toward building a robust aggrotech industry. It will lead to less food wastage, better waste management, better quality of food for consumers, and higher profitability for businesses.
A key challenge for businesses is transitioning food supply operations to a decentralized system. The best approach is to partner with a provider of the full stack of blockchain developer-friendly APIs, accompanied by hassle-free integration.
Stakeholders that have made the shift to blockchain are already seeing more efficiency, security, value, and return on investment in their businesses.
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Spydra is a next-generation API driven Decentralization-as-a-Service platform to enable business and developers to leverage the full potential of Blockchain and the Decentralized Web Infrastructure.