Food fraud siphon up to $ 50 billion in the global food industry each year and endangers public health. When deployed rigorously and realistically, the blockchain could prevent this dark crime.
The problem? It comes with a high price. Evolution, cost, interoperability and integration pose significant barriers. Not to mention confidentiality problems, regulatory uncertainty and long way to adopting stakeholders.
But food fraud is not going. As David Carvalho observed, CEO of the Noris protocol:
“Most people would be surprised to learn that food fraud is a problem, but it is a major problem, costing the global food industry each year between 30 and 50 billion dollars. It is a small percentage of the total value of the sector – more than 12 billions of dollars – but still equivalent to the GDP of a small country like Malta. ”
So what to do? And how can the implementation of the blockchain really be achieved?
Food fraud bites more deeply than we think
The United Nations food and agricultural organization (FAO) stresses that food fraud involves deliberately deceiving customers from the quality or content of the food they buy.
Essentially, it is intentional substitution, the addition or elimination of materials for economic purposes.
The typologies of fraud are diverse and sophisticated. These include false labeling, theft, counterfeiting and dilution.
Examples of the real world abound. Melamine was added to milk in China to falsify the protein content. Higher was sold as an ox in Europe. Olive oil is often diluted with cheaper vegetable oils.
The economic assessment is amazing. But the real cost is much higher when taking into account reputation damage, regulatory compliance, legal battles and the erosion of consumer loyalty.
In some cases, the human cost can be much more devastating; The 2008 melamine scandal in China has injured more than 300,000 infants.
Temujin Louie, CEO of Wanchain, underlined the vicious circle created by food fraud:
“A fraud incident leads to a fear of health, which erodes consumer confidence. This decreased confidence can result in reduced sales for the brand involved and the wider product category, thus harmful to legitimate companies. ”
Damage is not calculated as the sum of individual losses. It must be calculated as a systemic weakening of the foundations of the food industry.
The cracks in the supply chain make it possible to transmit food fraud
The complexity and opacity of world supply chains create fertile land for fraud. The cold chain is particularly vulnerable.
Failures in the logistics of the cold chain can lead to deterioration. These failures allow fraudsters to deform storage conditions or sell compromise and fresh goods.
Fraud is not limited to high -level cases or luxury products. Dairy products, spices, seafood, organic products, honey and fruit juices are frequent targets.
Carvalho added that fragmented data systems are a major Achilles heel:
“Many companies maintain their own internal monitoring systems, but they often lack interoperability with their suppliers or customers.
Fraudulent products enter and move into the unteaded system without shared reliable data.
Blockchain Bites Back
Blockchain technology can serve as an antidote to this growing crisis. However, Louie warned that the blockchain -based accounting attempts have had their share of challenges.
“During the 10 years and more since the launch of Ethereum, we have not yet attended real interruptions,” warned Louie. “One of the reasons why the promise of blockchains in the supply chains was largely dissatisfied is that the first adopters were guilty of simplifying the problem.”
The basic principles of Blockchain technology can create a more transparent and trustworthy system. Decentralization ensures that no single entity controls data. And the immutability guarantees that once the data recorded, it cannot be modified or deleted.
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The advantages do not stop there. Selective transparency allows you to share relevant information with authorized stakeholders without exposing sensitive commercial data. Meanwhile, intelligent contracts can automate processes and enforce chords.
In the end, cryptography guarantees the integrity and security of the big book. And to go even further, the integration of internet sensors of objects with the blockchain creates an immutable audit track of environmental conditions, crucial for the integrity of the cold chain.
The implementations of the real world are starting to bear fruit. In collaboration with IBM, Walmart uses a hyperledger fabric to draw pork in China and mangos in the United States, reducing trace of days to a few seconds. TE-Food and Provenance offer blockchain-based traceability solutions that improve food security and transparency. Large food companies like Nestlé and Carrefour and platforms like Seafood Souq explored the blockchain to improve the transparency of the supply chain.
Louie underlined the paradigm shift:
“The traditional food supplies channels have worked on a model of confidence of intermediaries, based on paper documents, third -party certifications and the word of various actors along the chain. Blockchain, on the other hand, goes to a system based on verifiable data. ”
Carvalho explained the deterrent effect:
“A well -involved blockchain system can act as a powerful deterrence, as visibility and audit of the increased audit make fraudulent activities more risky and more likely to be exposed.”
Decentralized agreement
Despite its promise, the blockchain is not a panacea. Evolution, cost, interoperability and integration with inherited systems pose important obstacles to adoption.
The problem “bin in, garbage” remains a fundamental limitation. Blockchain can only ensure data integrity once it is on the air – but it can only be held responsible for the precision of the data entering the chain.
Oracles and IoT devices that feed external data on blockchain are vulnerable to falsification and technical failure. Manual data entry is also sensitive to error or manipulation. A recording of perfect traceability does not prevent an oracle compromised from feeding false data or a part of collusion to enter into fraudulent details at the point of origin.
Confidentiality problems, regulatory uncertainty and the adoption of stakeholders are additional obstacles. Food supply chains involve sensitive data that companies hesitate to exhibit.
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Authorized blockchains and selective transparency offer solutions. However, these require careful governance and access to clear data access protocols. Regulatory executives are evolving and a large participation of stakeholders is essential to success.
Louie pleads for a pragmatic approach. “Start with clearly defined use cases where the blockchain can offer a demonstrable value, rather than trying a large non -focused implementation,” suggested Louie. “Robust governance models, especially for consortium blockchains, are essential.”
Carvalho highlighted the need for standards, training and collaboration on a industry scale:
“Technology alone is insufficient. Success depends on the overhaul of underlying commercial processes, investment in training and change management and promotion of a culture of collaboration and data sharing. ”
A synthesized future for food integrity
The convergence of blockchain with IoT, AI and other innovations offers a promising path. The IoT sensors provide real -time data on the course of a product, creating a recording to the allowance test.
AI algorithms analyze large data sets to detect anomalies and optimize logistics. Quick testing methods, intelligent packaging, robotics and digital certificates still improve food integrity.
The infrastructure built to combat fraud offers wider advantages. These include improving operational efficiency, reduced food waste and supported durability allegations.
Blockchain and its complementary technologies have become attractive even for companies less directly affected by fraud. Pilot projects give precious lessons. Industry consortia are formed and standards are starting to emerge.
The potential awards extend beyond the reduction of fraud to encompass the improvement of food security, reduced waste, increased confidence of consumers and a more durable, fair and resilient global food system.
The invisible bite of food fraud can be omnipresent, but it is not invincible. If it is deployed and integrated in a thoughtful way, the blockchain could be the trust layer which finally solves the food fraud problem of $ 50 billion.
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