Omnichain CEO Pratik Soni shares how organic food companies can integrate distributed ledger technology into their supply chain management systems to ensure product integrity and protect against food fraud.
As they browse the aisles of their local grocery stores, today’s conscious shoppers aim to make healthier and more eco-friendly purchases. Many now favor the organic variety of their favorite food and beverages, and they are more than willing to pay a premium price. In fact, the U.S. organic food market has seen impressive growth over the last several years, with sales reaching a record high of $52.5 billion in 2018, according to the Organic Trade Association.
Organic labels can now be found in nearly every aisle—from fresh produce, eggs, milk, and poultry to juice, coffee beans, breakfast cereals, and snack foods. And a “USDA-certified 100-percent organic” label guarantees with 100-percent certainty that those fruits were grown without pesticides, those chickens were raised without antibiotics or growth hormones, and those snacks were made without artificial preservatives…right?
Unfortunately, it’s not that simple.
An Easy Target for Food Fraud
The organic food market is prime target for fraud, particularly since these goods tend to fetch much higher prices than those that are “conventional.” In the United States, USDA enforces stringent standards for growing, processing, and handling organic foods; however, many goods labeled “100-percent organic” are imported—or contain imported ingredients—from countries around the world.
As of 2016, organic agricultural imports came into the United States from 87 different countries—with these shipments handled by countless farmers, production sites, distribution centers, logistics providers, and other middlemen along the way. Herein lies the problem: While every link in this global network of trade partners is required to provide organic certifications and keep related invoices, they each use their own software systems, spreadsheets, or paper records to track their supply chain data. This disconnect creates a convoluted chain of custody in which product origins are hazy. It’s then nearly impossible to verify product provenance with absolute certainty.
In 2016, for example, 26 million pounds of soybeans treated with pesticides were transported via cargo ship from Ukraine to Turkey and, finally, to California. Certification documents were forged at some point in transit, and the conventional soybeans arrived at port falsely labeled as organic. Twenty-one million pounds were already distributed by the time the deception was caught. Many were sold to farmers of organic livestock—which must be fed organic feed—ultimately compromising the integrity of the organic food label.
To protect their products and processes, organic farmers, manufacturers, and retailers need a system that provides complete farm-to-fork traceability. This is exactly where distributed ledger technology (commonly known as blockchain) can help.
Connecting the Global Supply Chain
Businesses can integrate distributed ledger technology into their supply chain management systems to create a permanent, digital ledger of all product movement. Essentially, blockchain is a connected, peer-to-peer ledger that supply chain stakeholders can use to record and track all data on transactions and exchanges in real time.
Blockchain digitizes each interaction by saving it in a series of cryptographic blocks (from which the technology gets its name). No single party can alter any records, and any change is visible to everyone in the network. The resulting ledger is tamperproof and immutable, providing complete product lifecycle history and minimizing opportunities for fraud.
Stakeholders no longer have to waste time and resources piecing together a complicated paper trail of documentation. Rather, they can instantly trace organic goods throughout every level of the supply chain—all the way back to the farm. This eliminates any doubt as to how products and ingredients labeled “100-Percent USDA-Certified Organic” were grown, processed, or handled. Farmers can rest assured they are truly sowing organic seeds or feeding their livestock organic grains, food manufacturers can irrefutably prove the ingredients and processes they use meet organic standards, and retailers can feel confident they are offering quality organic products to shoppers.