Passionate about Sushi? Blockchain Can Tell You Whether it’s Real
Recently, BANKEX Managing Director Constantine Kurbatoff wrote an article about how blockchain technology could be useful for the supply chain industry. In this article, we go further and discuss how the use of blockchain in supply chain management can solve real-world problems, such as cutting down on overfishing, or minimizing deforestation.
It’s not uncommon when buying seafood to want to know where the seafood came from or how fresh it is. You may want to know if the seafood was farmed or wild-caught? When was it caught? Was it caught legally?
Health experts are constantly recommending to include more seafood in our diets as part of a healthy lifestyle, yet, we are most often completely oblivious about the origin of the seafood.
Should We Care?
Actually, you should. If you like sushi and you’re at a sushi restaurant, it may be a good thing to know whether you’re getting real tuna in your sushi or perhaps they’re serving you escolar and calling it “super white tuna,” or “king tuna.” Escolar, sometimes known as “snake mackerel,” “butterfish,” or “oilfish” can be very buttery and delicious, but consumers beware. It’s warned that if you consume portions of more than 6 ounces of escolar, you may have some gastrointestinal problems, which may cause you some unpleasantries.
It may shock you to learn just how common fraud is in the seafood industry. From 2010 to 2012, Oceana, an organization that focuses on studying oceans, conducted a study exploring fraud in the seafood industry. Based on Oceana’s findings, as much as forty-four percent of all the retail outlets visited in the US sold mislabeled seafood. Shocked?
The same Oceana study also found that 84% of the white tuna samples were actually escolar. Ouch?
If we take a look at the impact of illegal fishing, the WWF puts global losses up to $36.4 billion each year.
Now, let’s think of a situation when you’re at the grocery store and with a click of a smartphone app, you’re able to confirm that the fish you’re buying was neither mislabeled nor was illegally caught. This is what blockchain potentially offers consumers and the fisheries industry.
The Evolution of Blockchain
Blockchain is evolving way beyond just being the platform that powers cryptocurrencies. Most of the thanks for this evolution is owed to Vitalik Buterin, who designed a new blockchain protocol (Ethereum Plasma) that offers a lot more functionality than Bitcoin’s blockchain. The difference between the two is that Ethereum is a ledger technology that companies are using to build new programs, whereas, Bitcoin is nothing more than a digital currency used for making transactions.
The beauty of blockchain is that it is a decentralized platform for tracking records of volume. This means that everyone on the network can see the ledger and verify it which means no one individual can alter or delete information on the ledger. This makes the system much more transparent which is good for everybody, except for thieves and criminals.
Blockchain and the Fishery Supply Chain
We know blockchain as evolved, but how can this help the fisheries industry? The following table shows a simplified verse of the fisheries supply chain. For simplicity purposes, the supply chain is broken down into six stages.
From the table above it can be seen that getting the seafood from fisherman’s vessel to the final consumer may be an arduous process. Issues with the current supply chain include:
- Record keeping of the seafood is very manual, and thus, susceptible to errors.
- Seafood is often improperly stored.
- Fishing practices are often illegal, unreported, and unregulated.
- Fraud, which includes mislabeling is not uncommon. (see Oceana study)
What’s important for us is that these issues can seriously impact the global economy, consumer trust and natural resources in the following ways:
- Compromised food security and product quality.
- Threatens the seafood industry’s economic security.
- Does not promote sustainability of the industry.
- Creates a lack of supplier and consumer trust.
Implementing Blockchain solutions for the Fishery Industry
- The caught seafood will be registered on the blockchain through radio-frequency identification (RFID) e-tagging and scanning fish.
- The sensors will continuously transmit data about time and location to the blockchain.
- The information contained on the blockchain will be tracked which can show possession changes as the seafood goes through the different distribution channels.
- The buyer will have access to a comprehensive record of the seafood’s provenance.
What makes blockchain particularly useful is that the seafood is tracked through every step of the supply chain, even if the seafood changes hands multiple times. This means more transparency for consumers and less illegally caught seafood. This should cut down on overfishing, and thus, making the fishing industry more sustainable.
Blockchain for other Industries?
If blockchain can be used in the fishery industry then think about its potential for other industries. This is what makes blockchain attractive, because of its ability to be modified based on the needs of the industry. The following are four industries which could benefit from implementing blockchain solutions, including retail, utility, palm oil, and pharmaceutical industries.
1) Retail
Food safety is a huge concern for grocery stores. As an example, when there was an E. coli outbreak affecting lettuce sold at Walmart, what did Walmart do? They did what any good grocer would do: they emptied the shelves just to be safe. Unfortunately, this meant that a lot of lettuce not at risk got thrown away as well. The issue for retail grocery stores is that they cannot be exactly certain where every food item comes from. Now, suppose Walmart had been using blockchain, then Walmart would have been able to instantly know from which farm the contaminated lettuce had come from. Walmart would have then only pulled the lettuce at risk, thereby saving the company time and money, while also protecting the public from contaminated lettuce. Because of blockchain’s capability, going forward, Walmart is going to insist that suppliers of leafy greens trace their products all the way back to the farm using blockchain technology.
Many retail companies, like Walmart, are starting to get on the blockchain bandwagon. They are studying how they might also be able to use blockchain to keep records among a wide variety of parties — like the number of parties involved in moving lettuce from the farm to the grocery shelves.
2) Utility
The use of blockchain and smart contracts could improve process efficiencies, reduce IT costs, and elevate trust across the value chain for utilities. Blockchain could allow utility companies to trade electricity between themselves, while offering more personalized proposals, such as buying electricity from specific companies or producers of renewable energy sources.
3) Palm Oil
This industry is notorious the deforestation of tropical areas. Blockchain could be used to gather information on the location of the palm oil plantations, price, date of harvesting, etc. Blockchain could help cut back on the amount of illegally grown palm oil fruit, thereby, reducing deforestation.
4) Pharmaceutical
Concerning pharmaceutical industry, blockchain would be used for tracking drugs along the supply chain to ensure quality after delivery. It will also be used to fight counterfeit drugs.
Final Consideration
From the article, you can probably surmise that there is some serious money and attention going to promote blockchain as a potential foundation for supply chains. This is bare out in an IDC report which predicts that blockchain spending could reach $11.7 billion by 2022.
For its part, BANKEX is willing to work tirelessly with non-profit organizations such as the WWF to implement blockchain solutions so consumers have greater verifiability that the product they are buying was not produced fraudulently and companies have greater accountability from where they sourced the product.
BANKEX believes the potential for applying said technologies to supply chain can be significant. However, at this time, most supply chain projects are still in the pilot testing mode, which means that more time is still required for the potential of the blockchain to be realized.
