Traceability and transparency
China has seen its fair share of food safety scandals: In 2013, thousands of pig carcasses were found floating in the Huangpu River, a tributary that supplies 23 million residents with drinking water in Shanghai. In 2014, a nationwide crackdown on frozen meat smuggled into mainland China revealed that some meat traders had been selling tons of beef, pork and chicken wings that in some cases had been frozen for 40 years. And in February 2016, Shanghai Jiading People’s Court fined Aurora, Illinois-based OSI Group LLC 2.4 million yuan (US$365,000) and sentenced 10 individuals to prison for producing and selling inferior food products. A general manager was sentenced to three years in prison and nine other individuals received prison sentences ranging from 19 months to 32 months.
Following these scandals and others, China adopted more stringent food safety regulations, implemented tougher punishments for food safety violations and resolved to improve the safety of the country’s food supply. The Walmart Food Safety Collaboration Center and the blockchain pilot program are part of the food safety piece of the puzzle, and IBM is a key partner.
“What they’re doing is tracking from the breeder or the farm, through the processing plant, through the distribution center, into the retail store and ultimately to the consumer,” explains Paul Chang, Cognitive Supply Chain SME (subject matter expert) at IBM. “We’re providing the fundamental blockchain technology to all of the members of that supply chain in China. We’re also providing cloud services that are actually hosting the solutions that, whether you’re a small farmer or a large retailer or transportation company, you have easy access to technology without a significant investment in infrastructure.
“And, IBM is bringing our expertise around supply chain management and our traceability technology so that the solutions that we are deploying can be easily scaled beyond what we’re doing in China,” Chang says, “and our research team, which has a large presence in China, is doing the bulk of the work in terms of applying the technology to solve this specific problem.”
In December 2016, the IBM team was in the design and development phase of the pilot project, which is expected to last four to six months. Chang says some of the expected outcomes include authenticating all of the transactions; securing information retrieval by all parties in the supply chain; providing auditable transaction records; and developing trust among trading partners.
“Tracking pork in China is about as important as it gets in terms of food safety,” Chang says. “The ability to deploy this technology in China to track pork really speaks to the scale of the technology and its ability to quickly on-board small farmers as well as large wholesalers and retailers. It’s a big problem in China – they’ve had some issues with contaminated pork. And again, because it’s the most important protein for China, it made sense for Wal-Mart and the Chinese suppliers to try to tackle this problem.”
The benefits of blockchain include enhanced security, reduced costs and transparency. Chang says that blockchain is a highly secure database that is auditable; and once transactions have been locked down, the record is immutable.
But the consensus-driven nature of blockchain presents some challenges, such as getting participants to agree on protocols and how much information is needed to verify a transaction. Yiannis points out that achieving consensus has required plenty of discussions with all stakeholders in the pork segment of the food system – farmers, processors, distributors and retailers.
“We have to figure out what are those critical data attributes that are absolutely needed to be able to do traceability,” Yiannis says. “Our aspiration is to go beyond traceability, so we have to say ‘even on a paper form, these are the minimum data attributes that you need: Where was the product produced? What was the lot number? What was the production day?’
“We then have to have conversations around what are additional data attributes that we think are value-added attributes that we could tackle with blockchain traceability,” Yiannis continues. “In true traceability, you don’t know if a facility had a food safety certification or a regulatory inspection; or any time they’re making any claims – is it organic, is it sustainably produced – so we’ve agreed to some minimum value-added attributes that we think will be beneficial in a traceability solution like blockchain.”
Conversations also have addressed how to capture relevant data: Will it be digital systems, manual inputs or a combination of the two?
“If you think about it, the concept is a digitized food system,” Yiannis says. “So, a digitized food system can’t be all captured on paper. As more and more of the food system moves to digital solutions, the information would then be able to be captured from an existing database somewhere.”