TE-FOOD AMA with Wolf Crypto

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Wolf Crypto

12 min readFeb 16, 2018

We held an AMA with TE-FOOD in our public Telegram channel on February 16th. TE-FOOD is the latest food supply chain ICO to hit the crypto marketplace. It has a working product, thousands of existing business customers, and an established foothold in Vietnam and South Africa — all of which contributed to making TE-FOOD one of the most hyped ICOs of the year so far. Their public token sale will be held from 22.02.2018 to 22.03.2018.

Here is what Marton Ven, CMO, and Erik Arokszallasi, CEO, had to say in the AMA.*

*This AMA has been edited for clarity.

Hi, this is Marton Ven, CMO of TE-FOOD. Thank you for inviting us, we hope we can give you any information on TE-FOOD you require!

My name is Erik Arokszallasi, CEO of TE-FOOD. Nice to be here. Thank you.

MISSION

WC (Wolf Crypto Telegram Member)

Lovely to have you both here. I’ll get the ball rolling. What is TE-FOOD’s main mission — as in, what you trying to achieve?

Our main mission is to improve food safety around the world and change the way we approach food. It’s strange that we want to send rockets to Mars, change our genome with new ways like CRISPR, implement self-driving cars, but we cannot fight food frauds and outbreaks efficiently, and people die because of this.

We want to fight off the massive corruption in the food industry, mitigate the effects of frauds and outbreaks, and make food supply transparent.

ABOUT THE TEAM

How big is the team, and what strongpoints do you see there? This is always one of the most important aspects investors look at.

Our 21-year-old IT company, Erba Ltd. has 30 developers, from which 12 work on TE-FOOD. We have every type of developers ready to assist us in our tasks: front end, back end, blockchain, AI, hardware, system administration. On blockchain part, Abraham Endre (Silur), former member of zCash team, member of Monero team, and member of Ethereum Foundation’s research team is the most well known.

WHY BLOCKCHAIN?

Why is blockchain technology needed to implement this idea? Couldn’t you do it without blockchain?

We can. Indeed, we did — it is built as a centralized system. But as distrust in the food industry is as huge as here in the ICO industry, we always heard rumors that the data we (as a third party) provide can be corrupted by large industry players. Although it can’t be, we were looking for a way to make the data trusted and transparent, so no one can question its legitimacy.

TE-FOOD VS. ITS COMPETITORS

How do you see the competitors in the market and what differentiates you from them?

Hard question, as none of the known supply chain ICO projects (Wabi, Waltonchain, Vechain, Ambrosus, Modum) are direct competitors. We wrote several blog posts about it.

OriginTrail is the closest to a direct competitor, but their business model is quite different from ours. Origintrail works for specific supply chain companies to provide traceability. We integrate authorities, supply chain companies and consumers to provide farm-to-fork traceability for a whole region / country.

All others use cutting-edge RFID tags for identification. RFID — while easy to use — is unsellable in the fresh food industry on the emerging markets because of the 10x price compared to QR code-based tags. Additionally, RFID needs special equipment to read/write tags, which is an additional cost. The fresh food supply chain is very delicate. As profit margins are small, they are very price-sensitive.

In the U.S. the costs for a farm to tag cattle with an RFID ear tag is 2–5 USD. And this is only the farm’s cost. In case of TE-FOOD, the total traceability cost of the supply chain — farm, slaughterhouse, wholesaler, food producer, retailer — is below 1 USD.

Another difference is that we integrate supply chain companies, consumers and governments/authorities into one ecosystem, where each participant can add/request data for its activities.

SCALEABILITY

Scalability-wise, how will this hold up? When you have hundreds of million of different livestock.

Currently we handle more than 400 000 business transactions per day, and operate in South Vietnam, an area of 30 million people. So on a more global scale, yes, I think scaleability will be a challenge, but when we get there in some years, there will be solutions for this.

TE-FOOD’S TARGET MARKETS

What Asian countries will TE-FOOD try to penetrate? China, Korea, Japan, Malaysia, etc?

We focus primarily on emerging countries, since these are where we can best show the advantage of our product. Recently we opened a representation office in South Africa, and we have negotiations in Laos, Malaysia and Cambodia.

These are natural targets as the publicity of the Vietnam project is great in the area, and these countries in the ASEAN region want to export to China, but China requires traceability data to import. We also have negotiations with potential partners to implement TE-FOOD in West African countries.

However, as food trade is global, it makes sense to establish representation in developed countries as well.

An example: Vietnam is one of the largest Pangasius fish exporters. They export a lot to Europe and the U.S. as well. But since exports are done in bulk, and retail packaging is done locally, we need to contact and acquire the local importers and their food processing plants as customers to apply TE-FOOD label stickers on the food product packages.

This way, consumers in Europe and the U.S. will be able to check the origins of their food with the TE-FOOD Consumer mobile app.

How big is the potential market for TE Food?

We are currently thinking about emerging countries, however, such publicly accessible farm-to-table solution like TE-FOOD is not available in developed countries as well. Japan’s cattle traceability system is the exception. According to statistics, the size of food traceability market will be 15B USD in the coming years.

What is the potential dollar value of the food market and do you have government backing or are you in the process of it?

As we integrate governments, government bodies as well, backing from them is important. They have the power to regulate and enforce a market, as well as sanction those who don’t follow the rules. Also, they are the ones who can communicate to the population and NGOs to stand by the program.

The problem is that in most cases (acc. our experience), governments don’t know how to implement traceability on a regional / national scale. This is where we can consult them.

TE-FOOD’S USER BASE

Who will end up being the main “power users” of TE-Food tokens? Consumers, or the various companies in the supply chain?

Supply chain companies and consumers both have use cases. However, for a specific time, supply chain companies will be the primary users. But there are use cases like halal or kosher foods, where the consumers really demand to know the reputation of the food source.

Is there an incentive for organizations in the supply chain to adopt TE-Foods system/tokens, or simply they will save money and provide transparency to customers?

An important cause of failed traceability projects lies in the fact that most of the traceability costs are paid by participants which are in the beginning of the supply chain (typically the farms), while the companies at the end of the chain (retails) benefit the most from transparent traceability data.

To gain the support of companies which will provide the most traceability information to the system, we have to find a way how they can benefit from using it.

TE-FOOD offers the possibility that supply chain companies can buy/sell value added information to each other, so the farms can get additional income for the work they invest in the cooperation. There is a lot of information (e.g. antibiotics usage) worth money to supply chain companies later in the chain.

These direct transactions also can be made by using TFOOD tokens.

These are our system users:

The following groups are addressed as B2C system users:

End users (smartphone or mobile/web application users, who scan the QR code or other TE-FOOD identification materials for packaging, containers or documents to get notified of information on the food production chain).
Other consumers, buyers or users of food
Natural persons who use the TE-FOOD B2C app
Associations, organizations, authorities and institutions in the food sector

The following groups are addressed as B2B/ business customers:

Farms and agricultural production companies
Food manufacturers
Slaughterhouses
Food producers and processing factories
Wholesalers, chain stores, import/export businesses in the food sector
Logistics, transport and distribution operations or companies and persons in the support sector for food logistics
Veterinary, expert and scientific facilities
Authorities in the food monitoring sector
Other institutions in the area of food control and monitoring
Government-related institutions
Regional or national implementation partners of TE-FOOD International GmbH
Machine manufacturers, maintenance partners and packaging producers
Companies in the quality assurance sector
Organizations in the food or nutrition sector
Statisticians
Producers of machines, packaging and identification labels in the food sector

This includes employees of the aforementioned B2B customers who have access to the system and have been identified as registered users.

THE TE-FOOD TOKEN (TFOOD)

Does the total cost of $1 have an implication of where you want the token price to be as well?* 1) How many entries along the entire chain would one cow have from farm to shelf? (2) What would you like this to be at total cost? and (3) Would each entry require 1 token to “list” on blockchain?

*Editor’s note: This is a response to TE-FOOD’s statement that “the total traceability cost of the supply chain — farm, slaughterhouse, wholesaler, food producer, retailer — is below 1 USD.”

Our price structure and token economy is defined very similar to Ethereum. You must have ETH to use the system, but the gas price is low. This is what we have built up as well. Our token is a license, and everybody who use the system must have a license for every 5 transactions they make a day. Let’s say if they make 20 transactions, they must have 4 licenses. Even the B2C users must have a license to be able to use the public application.

In the case of cattle, together with farmers, authorities, and MLA (Meat and Livestock Australia) advisor Dr. Michael Platching, we have developed a process which contains all important steps and checkpoints until the meat arrives to market, or retail.

It is a very important mission for us to keep the traceability costs as low as possible to be able to reach as many people as we can in the future. We have the chance to serve 1 billion people within the next 5 years.

But will the token serve as both a license and as Gas? Holding 5 tokens will “allow” 5 transactions for one cow. But how much gas will be spent in doing this, and will that come directly out of those 5 tokens being held or do you have a different token from which “gas” will be taken?

Not really. The token is a license, each 5 transaction you must have one license. The transaction fee is additional.

Do customers using the product need to hold tokens to verify food origin? How does this work?

Yes, the local implementation partner should define how many B2C users will use the system locally in country or region. According to this, they should have buy the tokens for this estimation. If they exceed they have to buy additional tokens. Of course, all usage details will be stored on blockchain to be transparent.

Yes. All users must have a user license which represented in tokens.

How much does it cost per scan, or can users buy a subscription?

Holding one user license allows you to scan 5 product a day.

That’s holding one token?

The sold “TFOOD token” consists of 10,000 TE-FOOD sub-licenses or utilization units.

Each TE-FOOD sub-license or utilization unit holder is entitled to trigger a maximum of 5 transactions a day. By means of the transaction, data are retrieved or a tracking transaction is executed, i.e. a data set is written in the block chain (read or write access executed). This volume of access is referred to below as tracking potential or transactions potential “TP”. The transaction fee or tracking fee is charged for each read and write activity related to the TE-FOOD blockchain, in addition to the necessary license. The transaction fee — “TF” — is x USD per transaction.

Thanks for clarifying that. Do you think that this will be a problem in terms of adoption? Is there going to be an easy feature to buy a subscription within the app, and pay with a credit card as in other apps?

Yes, for B2B app, yes, we already have. For the B2C app, will be bought in bunch by our local implementation partner.

SAFEGUARDING THE SUPPLY CHAIN

How do you guard against QR code tampering? What preventive measures are implemented by TE-FOOD?

The time is too short to describe all built-in algorithms to detect anomalies which can be signs of food frauds.

One example: Fraudsters often want to avoid the required resting time of the livestock before slaughtering (resting time is important factor, because the animals get nervous during transport, and thus the meat quality will be worse). So they stop the truck mid way and inject the pigs with sedatives, which then remain in the meat when they enter the retail next morning. We can detect average time duration between farm A and slaughterhouse B and if the transport takes much longer, we would notify the veterinary which approves the transport to check it.

How can you guarantee source-to-store tracking when there are several parts in the supply chain that require re-labeling?

In the first stage, we are focusing on fresh food traceability. The transports and packages are getting the identification material, and in a later stage in supply chain where the end user packaging is done, they put the final (end buyer) QR code label on it. In case of relabeling, we have a special procedure to ensure the traceability chain.

FACIAL RECOGNITION TECHNOLOGY

How far along is the facial recognition that was being worked on for livestock?

This is brand new technology, but we think it will make the identification easier and cheaper. Of course this is just working for cattle, pig, lamb, sheep. We are working on this for months, and will release it in summer for piloting and testing. It will be used firstly on cattle in Vietnam.

REGULATORY RISK

I would be interested to understand what you make of the regulatory risk associated with the stance that the Vietnamese government is taking with the crypto ecosystem more broadly and how you feel this will impact you.

In Vietnam, the state of cryptocurrencies is delicate: Government is basically pro-crypto, but the state bank wants to regulate the use of it. The crypto community in Vietnam is larger than in many South Asian countries, and them keeping all their money in BTC as a means of currency is what the state bank wants to avoid, which is understandable from their viewpoint.

Is this their worry because of Vietnam’s VND inflation issues?

As far as I know, VND is connected to USD. Anyway, Vietnam and HCMC would like to implement blockchain technology, they already have a concept for this and we are there to help them with this issue.

TFOOD is a utility token used within our system only, and legally it is a software license.

PARTNERSHIPS

Can you please tell us more about your current partnerships, and how and where your system is used?

There will be some announcements pre-ICO and post-ICO about new partnerships.

The types of partners we will seek:

Sales/implementation partners from the food/IT industry in many countries (like in South Africa http://te-food.co.za )
Food/Trade organisation partnerships (like GS1)
Governmental/regulatory partnerships (like FAO, European Parliament)

CLOSING THOUGHTS

One last thing about the future plans post-ICO:

As we have a ready product, a deliberate implementation methodology, and a convincing business model, we can start expanding our markets from day one.

We have a development roadmap as well, but market expansion is the main focus.

Thank you, it was very nice to be here. We like the clever questions.

This project is looking very well put-together, even past the use case. We loved having you, thank you @marton_ven and @arokszallasi

Thank you for the opportunity to be here, and the help of the leaders of Wolf Crypto.

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TE-FOOD AMA with Wolf Crypto

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Written by Wolf Crypto