Regulating the Food Supply Chain through Blockchain
JADE LINDLEY & ADAM GRAYCAR
20 January听2021
Blockchain technology could help the international fight against food product fraud.
When a family in the United States eats a piece of fish for dinner, they could be eating seafood caught near Fiji by a Chinese vessel, shipped to a packing plant in Thailand, and sold to a distributor in Mexico before it ever reached a U.S. wholesaler and finally a supermarket chain in Chicago. And to complicate matters further, the selling name of a fish that travels through a global supply chain can vary across different countries or regions.
How, then, can any single country provide the regulatory oversight needed to protect consumers?
Food fraud regulations vary by country: Some are more tightly controlled, such as in the European Union and pan-European countries, while others are less so, such as in the United States and 最新糖心Vlog. Monitoring and enforcement across borders is clouded by differing common food names, definitions of food-related illegal activity, and regulatory processes.
Transnational and often ocean-based food transportation supply chains are long and have many vulnerable points听听to contamination and criminal infiltration.
Food regulations tend to focus on food safety to preserve human health. Yet human health can be compromised by profit-driven criminal infiltration in which the risk of detection is low and likelihood of penalty is even lower. Emerging, decentralized technologies, such as blockchain,听听cost-effective, non-manipulable, and transparent methods to trace each point in the journey from farm to fork鈥攐r, as it were, from sea to supper. Although consumer trust may increase in certain products and brands that adopt traceability technology, the cost will no doubt be passed on to the consumer.
Is it worth it?
Food fraud reportedly听听the global food industry $49 billion each year. It听听intentional deception for profit, including food mislabeling, adulterating, misrepresenting country of origin, misrepresenting weight, misrepresenting nutrition information, and repackaging. It is a borderless crime that has infiltrated supply chains to yield profits.
In the past, food fraud has听听as lucrative as cocaine trafficking, with a much lower risk of interception. Like cocaine trafficking, food fraud usually听听alongside enabling crimes, such as corruption, document fraud, and other processes to facilitate border crossings and dodge food safety tests.
Few foods appear to be exempt from fraud. Frauds not only听听highly prized, rare, and expensive foods鈥攕uch as Beluga caviar, Densuke black watermelon and Yubari King cantaloupes鈥攂ut also high-demand, low-to-medium cost everyday staple听鈥攕uch as alcohol, mineral water, seasoning cubes, seafood, and olive oil. The net result is that no foods or locations are safe from food fraud, yet regulation to control food fraud is far from perfect.
Existing legal remedies cannot prevent all criminal activity in this area, but there may exist a beneficial technology-based approach to regulation of food fraud.
Blockchain is one of the most promising technological advancements in food fraud suppression. It听听secure transactions or 鈥渂locks鈥 at every point along the supply chain, viewable directly by those with access to that blockchain ledger, which eliminates the need for intermediaries. Each block is听听with a unique, non-manipulable identifier such that blockchain provides a completely decentralized, transparent, and traceable chain of custody, starting with the source (assuming the producer is not engaging in fraud). Blockchain has been successfully听听outside the food industry and increasingly it is being tested within it.
叠濒辞肠办肠丑补颈苍听听the ability to track in real time, removing the need for time-consuming and potentially fraudulent document processing. Although supply chain vulnerabilities are听听in transnational transportation, blockchain could close the loop on potential criminal infiltration along the supply chain and therefore reduce food fraud.
Ocean freight is one of the most relied-on forms of food transport, and the effectiveness of blockchain听听on adoption by all points along the supply chain. Blockchain鈥檚 usefulness is limited unless all points in the supply chain听听into the system鈥攊ncluding producers, freight-forwarders, ports and shipping firms, distributors, wholesalers, and merchants.
Options exist that may suit a particular product or industry, but there is no silver bullet to control food fraud. As with all technology, however, there are potential barriers and challenges. Some of these include the听听of implementation, maintenance, and upgrades;听听in all locations, such as on-the-high-seas and remote farms; user-friendliness, and听听to, availability of, and support for user training; and听, reliability, and fit for purpose of the technology.
Despite these barriers and challenges, the potential protections that blockchain solutions offer could outweigh their cost.
By removing anonymity in food supply chains, blockchain technology can听听a safer, smarter, and more sustainable food supply. The cost of adopting blockchain technology will no doubt be听听along to the consumer, and therefore awareness of blockchain鈥檚 benefits must be made available to ensure consumer buy-in. Fortunately, such buy-in might be easier to obtain than might be thought. Scholars such as听听补苍诲听听丑补惫别听听辞惫别谤飞丑别濒尘颈苍驳听听at least by other scholars for introducing blockchain technology in food supply chains.
Yet it is unlikely that governments will have the capacity to mandate the use of blockchain because even the minimum economic impacts of such a mandate on small- to medium-sized business would be damaging.
Many available technological solutions appear to be producer or industry-led, rather than government-led. Some industry advocates advance a strong corporate social responsibility argument that, without implementing decentralized traceability solutions, a company鈥檚 product or brand could听.
Policing the implementation and use of any mandated technologies could also be challenging, and thus any government鈥檚 incentive to mandate blockchain鈥檚 use could be fraught.
Still, trading nations should look to harmonize common food names and food-related illegal activities to support better food fraud enforcement. Communication about effective, decentralized traceability technologies can promote consumer trust in brands.
Blockchain has the potential to transcend borders and regulations by empowering producers and consumers to legitimize supply chains鈥攔emoving the need for countless intermediaries who may facilitate food fraud or other crimes such as corruption and document fraud.
When it comes to stimulating the use of blockchain, government action may prove less effective than industry self-regulation, although prosecution of food fraud offenders should still continue. International organizations should foster a dialogue and consultation process with key stakeholders to combat food fraud through collaborative, joint efforts鈥攁nd through appropriate use of blockchain technology.
About the Authors:听[1]听Dr Jade Lindley听is a crimologist and senior lecturer at the UWA Law School.听[2] Adam Graycar听is Professor of Public Policy at the 最新糖心Vlog of Adelaide and Director, Stretton Institute.听
This article is republished from The Regulatory Review.听.
鈥The views expressed here are the authors', and may not necessarily represent the views of the Stretton Institute.
Image credits:听听from听 and听听on听