Blockchain has become one of the most discussed supply chain management technologies. for its ability to provide transparency and traceability across a number of supply chains.
The United Nations Food and Agriculture Organization recently published a report entitled “Blockchain application in value chains for seafood“(Use of the blockchain in marine food supply chains) to raise awareness among the government and the international community the role of blockchain in the fish industry.
The key points highlighted throughout the document point to the regulatory concerns that arise from world trade, the cases of appropriate use of blockchain, and the challenges – such as scalability and interoperability – that need to be addressed the blockchain widespread acceptance.
Why the blockchain for fishmongers?
According to the message, Fish and fish products are among the most commercialized foods in the world. In 2016, around 35% of global fish production was exchanged internationally. Since then, international trade in fish and fishery products has increased, and developing countries like Indonesia, where shrimp are widely traded, have played a key role.
However, as the seafood market continues to grow, several companies have started to publicly enforce guidelines for sustainable seafood sourcing. While food safety has always been a priority, ensuring sustainability has become an important goal that would enable companies to promote the benefits of their products, such as fair trade.
Unfortunately, it has become a challenge for seafood suppliers to effectively track the origin of their products while ensuring sustainability. While most seafood companies rely on outdated paper-based registration systems, the United Nations report notes this Blockchain could be used as an effective tracking solution for the seafood supply chain.
According to the document, an ideal tracking solution would be included Automatic identification and registration of a product upon entering a supply chain, all transactions in the supply chain and all transactions related to products that leave the supply chain.
Products must also be registered in real time, with all transactions being registered and verified. In addition, an electronic platform could also force operators to comply with regulations, eliminating the need for national law enforcement agencies to participate in world trade.
The report points out that a centralized online platform used in this case would only create challenges because not all scenarios in the supply chain could be considered when tracking every transaction. Centralized platforms are also often expensive to use and can lead to property confusion.
In this case, the advantages of blockchain outweigh those of a centralized database. By serving as a distributed ledger, A network in the blockchain guarantees that every entity in the supply chain knows all the transactions that take place in the network. In addition, no single agency has control of the network because the information is distributed among the participants.
In addition, smart contracts, which are computer codes within a blockchain network, are automatically executed when certain conditions are met. Third parties intervene less often. The report also mentions that blockchain networks could be integrated into existing digital tracking systems.in the following words:
“Almost all existing tracking systems that use blockchain technology use it as an immutable data warehouse and as a means of facilitating data exchange based on digital tracking systems that use centralized databases.”
Blockchain for sustainable fishmongers
The UN report also found that the fish block chains most commonly used in fish supply chains are those of Ethereum and Hyperledger. Ethereum is a public blockchain, while Hyperledger Fabric is a private network and one of the most commonly used blockchains for food traceability. As mentioned in the document, public and private blockchains have advantages and disadvantages:
“”In a public blockchain, the authorities could facilitate the verification of these claims by comparing all paper documentation with the documents recorded on the blockchain. In a blockchain from an authorized consortium, the authorities would have to be participants in the consortium to access the blockchain and would therefore use it to facilitate verification.“”
It often happens that large companies prefer private blockchain networks to ensure the protection of sensitive data. For this reason, the report mentions that the IBM Food Trust network that works with Hyperledger Fabric is the best example of a blockchain solution for the entire company. The IBM Food Trust network offers a collaborative ecosystem to growers, processors, wholesalers, distributors, manufacturers, retailers and even consumers who want greater visibility and accountability across the food supply chain.
To demonstrate this, the document highlights the Sustainable Shrimp Partnership, which joined the IBM Food Trust network in May 2019, to ensure transparency and traceability for shrimp grown in Ecuador to reduce food fraud. and poor quality products.
Ramesh Gopinath, Vice President for Blockchain Solutions at IBM, told Cointelegraph that there are currently more than 250 members in the Food Trust network and more than 19,000 products in the system. He also found that 24 million transactions were made over the network.
The provenance was also cited as one of the first blockchain pilot projects for shellfish after a project to track yellow fin tuna fillets and skipjack used in canning in Indonesia in 2016. With the help of the public blockchain, the mobile app and the smart tags from Ethereum, Provenance was able to track tuna from catch to landing to the factory and to the retailer.
Anglers and providers registered in the Provenance app were able to register their catch as an asset in the blockchain. The catch was then marked for identification. Suppliers transferred the catch to the factories along with the recorded application data. The final phase of the pilot was to work with retailers to label tuna products with smart, communicable near-field labels to inform consumers of where they came from.
The United Nations report notes that several valuable lessons have been learned from the first pilot. Some steps in this process are still unclear, including whether the tuna has been individually labeled or whether an entire catch has been identified and recorded as a single entity on the blockchain. The pilot’s report on origin also highlighted many issues related to Connect physical assets to digital assets using QR codes, radio frequency identification labels, and near-field communication technology.
Jessi Baker, CEO and founder of Provenance, told Cointelegraph that the project also highlighted the challenges of using blockchain to enable traceability in a truly reliable, open, and comprehensive way:
“We have learned that there are enormous trade-offs between private and public supply chains. Private chains offer some interesting gains in efficiency and some gains in trust in a closed system, but they do not and do not significantly contribute to consumer confidence with existing centralized tracking solutions.”
Baker further noted that Provenance has won several large groups of food and beverage brands as customers since this particular pilot project to enable transparency in the supply chain, including Unilever, Pernod Ricard and Princes: “These companies are now focusing their efforts on testing the impact of the product, ie ensuring the verified social and environmental information behind a product, which is often linked to traceability.“”
Fishcoin is another cited use case that encourages fishermen to earn cryptocurrency by collecting and sharing seafood data on a blockchain network. Alastair Smart, Director of Operations at Fishcoin, told Cointelegraph that the Fischer Project rewards start-up supply chains for data and middle-of-the-chain supply that works as a mechanism based on the user payments market to meet regulatory and buyer requirements .
Fishcoin uses a stable coin called Fishcoin (FISH), which is individually linked to the US dollar. Smart also explained that Fishcoin is currently working on the Steller network and on the Ethereum blockchain. He pointed to the role of Internet of Things technologies and said:
“The underlying tracking protocol platform integrates IoT technology and we are working with multinational food companies, ingredient suppliers, United Nations organizations, software developers and fish farmers to use this technology to ensure accurate aquaculture as part of an intelligent farming initiative . “
While the United Nations report summarized Fishcoin’s performance, Fishcoin’s chief technology officer, Vignesh Iyer, said so The project was created to support small, marine-based food producers in developing countries as they cannot afford basic electronic documentation of catches and tracking technologies..
Given that more than 90% of the world’s seafood comes from developing countries that don’t have data collection mechanisms from sources, sustainability becomes a problem, Iyer added:
“To meet the needs of the many actors involved in these agricultural supply chains, the industry needs an interoperable chain-wide system that can reliably and securely provide important data elements. We need a mechanism to reward producers and supply chain intermediaries who share their data and to create an incentive (carrot) for responsible and sustainable practices that go beyond government mandates (stick) for traceability“”
The challenges remain
The United Nations report states that “While there is potential for using blockchain technology to improve seafood trade, there are a number of challenges that need to be addressedAbove all, there needs to be greater awareness of how blockchain-based systems can be used in seafood value chains. It is also pointed out Scalability is an important issue for allowable blockchains, which, as observed, have the greatest potential to improve seafood traceability.
Security is also a challenge as advances in quantum computing could jeopardize the cryptographic algorithms on which blockchain networks are built. From an operational point of view, human input and physical marking methods could also be inaccurate, which raises concerns about the authenticity of data in blockchain networks.
Interoperability should also be considered, as there is still no standardization of traceability in supply chains for ship products and there are concerns about data protection and the legality of offshore transactions. Blockchain.
Finally, the report points to an important point, namely that it is necessary to create a regulatory framework so that blockchains can be used and adopted comprehensively. In fact, the report makes it very clear that any data validation and verification structure as part of a traceability framework must be based on regulatory oversight by the authorities in each region concerned.
The waves break
To address these challenges, various recommendations are made, mainly regarding the Compliance with legal and official standards. It is also recommended to understand what data should be collected through the use of the blockchain and to determine the sources and jurisdictions in the regions involved in the supply chain process.
Up to this point it is pointed out that Blockchain-based tracking solutions may work best in fisheries that want to voluntarily demonstrate compliance or in those that want to create self-monitoring mechanisms to build trust among competitors. Although the potential and limitations of blockchain are obvious, the study’s authors can ultimately agree with one thought:
“Blockchain, data mining and AI will not stop illegal, unreported and unregulated fishing, they will not prevent overfishing and discards. But they can contribute to the global fish and seafood markets in a more visible and transparent way with the associated cash flow.”