TE-FOOD: The World’s Largest Farm-to-Table Food Traceability Program
TE-FOOD is a farm-to-table food traceability solution on blockchain, which integrates supply chain companies, service providers, consumers and authorities into one ecosystem. TE-FOOD leads to less food frauds, mitigate the effects of outbreaks, and improves consumer trust.
TE-FOOD provides more than a blockchain infrastructure. It’s a complete, off-the-shelf solution with physical identification materials, client applications for food companies, consumers and authorities, and a blockchain ledger.
This structure enables us to provide solution for companies with various requirements and technological readiness. Whether they have internal software (farm management, ERP, etc.) or not, whether they want to store their data on our blockchain or on a third-party solution like IBM Food Trust, Vechain, Waltonchain, etc, they can use TE-FOOD.
Marton, thank you for taking the time to do this interview. To start off, tell us a little about yourself, the team, and why you created the project
The three co-founders have a long business history. With Erik Arokszallasi, we founded and operated two successful corporate IT service companies since 1996 which develop custom hardware and software solutions for enterprises. Our third co-founder, Trung Dao Ha is a successful enterpreneur in Vietnam, we know each other since the 90s.
We believe TE-FOOD is more than just another blockchain company, not comparable with companies which operate virtual collectible games or esports betting. Each year, 800 million people are hospitalized, and 400 000 people die from foodborne diseases — food traceability can literally save lives. For us, this goal is more than just a business, it’s a mission as well. Michael Porter, the famous economist said that companies can be better in solving certain social problems, because profitable solutions can be more scalable. We agree with that.
There are 37 people working at TE-FOOD, we have developers, project managers, food experts, trainers, and support people. As the team is small to work on several international implementations at the same time, we are working with professional implementation partners, currently in 14 countries.
Why is it important to use supply chain logistics to track our food?
There are many benefits of food traceability:
· According to statistics, 66% of consumers don’t believe the statements of food labels. TE-FOOD can improve the low trust levels towards food companies.
· TE-FOOD can reduce the path to find the source of contamination from weeks to seconds, thus it can save a lot of people from being hospitalized. Additionally, it can mitigate product callbacks during outbreaks, preventing huge regular losses for retailers.
· More and more countries implement food import regulations which require traceability data. With TE-FOOD, companies can comply with these regulations.
· Growing middle class in the emerging countries requires more effort from governments and food companies to ensure the food they consume is safe. TE-FOOD can help to fight off food frauds.
· Products of certain geographical indications and traditional specialties often tampered on foreign markets. TE-FOOD can provide a proof of origin.
· Governments get real time insight of the food demand and supply of regions, and act in time if there is an anomaly.
What benefits does using blockchain have over legacy systems?
We think the main advantage is the accountability of the food information we store, which enables trustless data management. Several companies tell you the terms and conditions of their services, but you have to trust them to keep their word. Blockchain with smart contracts makes it transparent, it can be publicly checked if they work the way they state. It’s a very important advancement in an industry which is full of distrust. But something has to be clarified: food traceability is done in the real world, and as long as people are entering data in it, there will be trust issues.
In the future, when IoT sensors will exclusively provide data to a blockchain based system, equipped by sophisticated AI algorithms to prevent anomalies, that’s when we will be able to call it completely trustless. Blockchain is a huge step in the right direction, but it can’t solve all problems of the food industry on its own.
Tell us about the TFD token and its use-cases
As a B2B service provider based in Germany, we can’t handle token usage as loosely as B2C oriented projects, which reside in tax heavens. If established food companies would think that our operation is not legal, that would be the end for our business.
When we worked out our token economics, we contacted the securities commission of Germany to ask for an opinion about it. We were surprised how responsive and helpful they were. We had to re-work the concept again and again, but eventually they gave a positive opinion, that based on its economics, the TFD token is not a security, it doesn’t need a licence under the German Banking Act, or the Payment Services Supervision Act.
We think this is a huge achievement, something we have never ever seen in this space. Certainly regulatory compliance required some limitations on what we can use the token for.
TFD is a tokenized software licence. All users accessing the TE-FOOD ecosystem need a certain number of tokens to perform their activities. Currently the main activity is tracking food items from farm-to-table, which requires several transactions. Transactions usually mean a business activity, like adding a feeding event for a certain lot (bunch of animals), adding fertilizer to an identified field, or creating a transport of items to the next stage of the supply chain, etc. Each token represents the licence right to enter a certain number of trasactions (It’s called transaction potential).
Later, as the ecosystem grows, there will be a lot more applications (e.g. the Deep Data Analysis module for farms, or the Meat Scan mobile app for consumers) which can be accessed by TFD based licencing. Third-party developers will also be able to integrate and offer their services or applications to the growing number of users in the ecosystem, which currently counts ~6000 food companies.
Having a token to use for single and bundled licencing offers more opportunities globally, than working with a lot of different fiat currencies. Besides this, a token enables other use cases in the future when regulatory requirements will be more clear on crypto usability.
Why did you chose to use the Ethereum blockchain?
Current blockchain technology is immature with a lot of technological limitations, but the development is very fast. We think many obstacles we see today (e.g. scaling, data privacy) will be solved in the next 12–18 months. Since our customers need a solution faster than that, we launch the first version of the FoodChain (on HyperLedger) with a 18 months expected lifespan. During this time we plan to work with frameworks like TomoChain on a potential next solution. Since mass adoption takes years to build, this way we will have a strong and mature technology background when scalability becomes a serious challenge.
TE-FOOD is a complete product with live operation which is something we rarely see in this space. Tell us about your product & existing customer base.
Our traceability system was developed in 2015/2016, and had an organic evolution, so this year we made a major refactoring to help our future goals.
https://medium.com/te-food/introduction-of-te-foods-technology-732cdd90bb16
The new structure of TE-FOOD allows much more flexibility in the implementations, it enables implementation partners to parameter supply chain processes and data sets quickly by using an existing template or create a new one.
It also enables us to use third-party blockchains like IBM Food Trust, Vechain, Waltonchain, to store traceability data if a customer requires it. Besides validating transactions, the masternodes can earn money for hosting our interfaces, so they can benefit even from use cases which don’t use our blockchain ledger. The business reason for this step is that unlike many blockchain based supply chain companies, TE-FOOD provides a top-to-bottom solution with physical identification materials, client applications for the supply chain, consumers and authorities, and the blockchain ledger. So it makes a viable use case to offer TE-FOOD for companies which want to use third-party blockchains to store their data.
The largest implementation of TE-FOOD is in Vietnam, where it has more than 6000 business customers, including international companies like AEON, Big C, Lotte Mart, or CP Group. While at first it required some work from the companies, food traceability became an advantage for them. Due to the built-in fraud detection algorithms in our software, we participated in several police investigations regarding possible fraud cases.
Certainly, as we provide a system aiming to make the food supply chain transparent, conflict of interest with some participants exists. Those who don’t want transparency, will fight such systems whenever they can. This is why blockchain is important, it helps to make clear for everyone how the system works, providing less possibility for attacks.
We are still not an active part of food product roll backs, but we hope soon we can work out the structure of this as well, because there are several advantages our system could provide. When the authority sees the start of an outbreak (growing number of people got ill, and they find the common product they consumed), we can help to trace back which farm was the origin of the potentially contaminated products. Authorities can investigate the case quicker, retailers don’t have to roll back the complete inventory of that product (just the ones from that specific supplier), and we can send a notification to the consumers’ mobile apps not to consume that certain product.
There are many areas we could expand, but it needs time, we have to carefully plan the business, legal, and technological aspects of each direction.
What are some obstacles right now for the project & what are you doing to solve them?
Despite we have decent adoption, huge international organizations as partners, and a token economics which is compliant to the regulations of our jurisdiction, certainly we face a lot of obstacles.
1. The cost sharing of traceability in the supply chains is uneven (one could say “unfair”). The majority of the costs has to be covered by the upstream supply chain (farms), while the downstream supply chain companies (food producers, retailers) are enjoying the majority of the benefits.
This is why we implement our Deep Data Analysis module, which incentivizes farms to enter data, and automatically gives them practical suggestions on how they can improve their productivity and profitability.
2. Data privacy is an important issue, as there are several information which could be used against a company’s business interests by its competitors.
We give the necessary tools for our customers to determine who can access the data they enter.
3. Lack of knowledge about blockchain technology makes adoption harder. Major companies of the food sector don’t know about blockchain and its advantages. When we talk to food companies, the question is not Vechain or Waltonchain or TE-FOOD, but “What exactly is Ethereum?”, or “What is the difference between Blockchain and Bitcoin?”.
A lot of eductaion will be necessary to overcome this obstacle, but as global awareness raises, sooner or later representatives of food companies will have the necessary knowledge.
4. Lack of IoT adoption makes the progress slower. IoT is important to remove the trust issue of the data entry. Despite the related hardware technology became much cheaper and better during the last couple of years, it’s still a decent investment for companies, especially in the emerging markets.
As the IoT technology evolves, there will be much more types of sensors, more reliable and cheaper than today, which will be more affordable for companies. We estimate IoT adoption will take 5–10 years to achieve its full potential in food traceability.
5. At each implementation, we have to fight with a lot of participants with a strong conflict of interest. This is a nature of such projects, that transparency is a disadvantage for those who utilize the lack of it.
As we have a lot of implementation experience, we faced a lot of participants of this kind, and know the practices to neutralize them.
What is the current roadmap of TE-FOOD?
On the 13th of October we launched our testnet. Soon, we will launch the operational version of the FoodChain with masternodes, then we start migrating our existing customers and pilot projects. As we serve hundreds of thousands of transactions each day in our centralized system, we have high hopes to become one of the top 10 blockchains (according to https://blocktivity.info/ ) in terms of daily transaction number. It would be a huge achievements, considering the exposure and size of the projects in the top 10.
We also see the game changing potential of security tokens, a structure which enables companies to tokenize virtual or physical assets. And while the legal structure of this space is still not completely clear, we are working on some innovative plans in this space with our partners.
Finally, we are working on onboarding new customers with new food segments, although we can’t disclose more information right now.
https://medium.com/te-food/the-te-food-ecosystem-from-a-business-viewpoint-31eaa31d2d99
Learn More About TE-FOOD
(Disclaimer: Author owns TFD tokens)