Can blockchain unblock food ingredients supply chain?

With the increasing popularity of plant-based foods, new supply chain challenges are on the rise with regard to the traceability of ingredients. According to The Good Food Institute, plant-based meat alternatives are projected to account for 6 per cent of worldwide meat consumption by 2030. In such a scenario, the production and ingredients supply should meet the demand on time to optimise the business potential for alternatives to animal products. However, the food ingredients supply chain faces unique traceability problems in India.

Food ingredients, one of the fast-growing billion dollar industries, plays a vital role in the growth of the food processing sectors worldwide. The emerging trends in the food and beverage market push the industry towards exploring innovative applications of these food ingredients making the industry even more fertile. Moreover, the rise of specialty food ingredients, where China, Russia, and Brazil along with India are the key players, is making an impact in the market. However, India holds only 0.2 per cent shares of the $700 million global food ingredients business, as per reports.

The primary reason behind this could be the significantly poor level of local investments in the manufacturing of food ingredients, forcing the need to import most of the ingredients from other countries. Along with other barriers like the inadequate framework for processing and agricultural practices, insufficient marketing capabilities, and inferior storage and infrastructure, the poor connectivity in the food ingredients supply chain is one of the major setbacks crippling the sector in India.  

Virender Grover, Managing Director, Roquette India says, “the food ingredient manufacturer is the primary processor of agricultural commodities. The food ingredient industry has the ability to provide consumers with access to a bigger variety of choices for healthy plant-based diets, which will also reduce our environmental footprint and our current big dependence on animal farming for our protein needs. But unfortunately, still, our stakeholders do not see ingredient manufacturers as an integral part of the food industry.”

Now the growing popularity of plant-based foods in India has put the much needed spotlight on the availability and traceability of ingredients such as pea, chick pea, millets, canola, quinoa, oat, hemp seeds etc. This in turn is calling out for more attention from all the stakeholders on how to build an effective and traceable supply chain system for the food ingredients in the country.

In India, the most commonly used traceability technologies are alphanumeric codes, holograms, barcodes, RFID tags, and GI tags focused more on end product identification and sales management, that do not offer a robust solution.

“The inability of the food businesses in implementing an effective traceability system across the food supply chain in India has been reported due to high cost involved in the infrastructure required for executing a tracking system. Besides, ignorance and general disregard for the food safety culture has been one of the other pertinent reasons. Therefore, it is important to educate all stakeholders of the benefits of a robust traceability system”, says Prof. Eram Rao, Department of Food Technology, Bhaskaracharya College of Applied Sciences, University of Delhi.

Technology to the rescue?

Some food processing companies in India have already started exploring technological interventions to tackle different obstacles in the food ingredients supply chain. 

To be specific, blockchain is one technology that is making a positive impact on the food ecosystem, and has generated considerable hype in the market. Blockchain is a promising intervention that is continuously transforming the food supply chain into a more sustainable business model with utmost resilience. 

According to the reports, it is estimated that blockchain will enable $31 billion in food fraud savings globally by 2024 by immutably tracking food across the supply chain. Substantial savings in food fraud will be realised from 2021 and compliance costs will be reduced by 30 per cent by 2024. 

Srinivas Kuchibhotla, Partner – Advisory, Food, and Agri, KPMG India, says, “Agriculture production and food supply chains have witnessed a significant transformation with technology enablement at the farm gate. Multiple pilots of technology interventions in agri-food supply chains across states by various stakeholders have paved the way for technology-enabled, data-driven agriculture and food supply chains in India.”

Last year, the Spices Board of India, under the Ministry of Commerce and Industry, and UNDP India’s Accelerator Lab signed a Memorandum of Understanding (MoU), with the aim to build a blockchain-based traceability interface for Indian spices to enhance transparency in the supply chain and trade. It will allow farmers just as all other members of the supply chain to access the information which further makes the entire supply chain more efficient and equitable. This UNDP-Spices Board joint initiative to build a blockchain-powered traceability interface for Indian spices, is to make the value chain efficient, transparent, and equitable for all stakeholders. 

Another initiative in this direction comes from a Bengaluru-based startup, which has created a blockchain-powered traceability platform that enhances food and supply chain transparency. It has partnered with an international non-profit TechnoServe, to offer end-to-end digital traceability for coffee produced by 3500 farmers in Araku Valley, Andhra Pradesh.

“TechnoServe uses the pre-harvest module to track the first mile connectivity of the coffee value chain. This is followed by the onboarding of Blue Tokai, Humble Beans and Slay Coffee clients onto the same blockchain network to track the post-harvest processes and generate a QR code product identity for consumer engagement. Traceability offers transparency and differentiation to each stakeholder in the supply chain”, says Srivatsa Sreenivasarao, Co-Founder and Chief Executive Officer, TraceX.

The startup currently works with 30+ food companies that include prominent names such as Olam, MTR Foods, Slay Coffee, Government of Telangana, GoDesi, BlueTokai, Sam Agri, Milk Mantra and many others.

Recently, Mangaluru-based chocolate manufacturer Central Arecanut & Cocoa Marketing and Processing Co-operative (CAMPCO) has chosen Infor CloudSuite Food & Beverage, a US-based Enterprise Resource Planning  cloud company, for optimising an end-to-end supply chain network.

How is the West faring?

Although India has been gradually adopting tech interventions at various stages of supply chain management of food ingredients, there are multiple examples of global players that are far ahead along the curve. 

For instance, Colombia-based Demetria, the first artificial intelligence (AI)-powered taste and quality intelligence software as a service (SaaS) startup for the coffee supply chain has unveiled a working application that identifies the successful reproduction of high-value coffee seedlings. Demetria has entered into a commercial agreement with Nestlé Nespresso to deploy this solution having conducted a pilot, enabling the coffee brand to enhance operational capacity and efficiency by providing high-quality coffee plants to farmers. 

Then there is Belgium-based drink and brewing company AB InBev that has initiated a new programme in Europe that uses blockchain technology to provide its beer consumers with an end-to-end view of its barley supply chain. The brewer has launched a new pilot programme to give full transparency and traceability in its supply chain of barley, from the consumer back to the farm, using a blockchain technology platform deployed by SettleMint.

Moreover, Nestlé has expanded the use of the IBM Food Trust blockchain technology platform to its Zoégas coffee brand. By scanning the QR code on the packaging, consumers can follow the coffee journey from the growing locations to the Zoégas factory in Helsingborg where the beans are roasted, grounded, and packed. Together with OpenSC, Nestlé is also piloting an open blockchain to monitor and openly communicate data related to the sustainability of milk and palm oil. 

Likewise, US-based Cargill, a global food corporation, has also been connecting its consumers with the journey of the cocoa they are eating and drinking. With the launch of CocoaWise, a digital portal, Cargill aims to provide a lens through which food and beverage manufacturers can have increased knowledge and shareability of the origin of the products they source from Cargill’s direct supply chain.

Recently, Toronto-based Above Food Corp. (Above Food), a first-of-its-kind vertically integrated plant-based food company, has launched a new direct-to-consumer e-commerce platform to give consumers across North America the opportunity to enjoy more than forty plant-based food products with unparalleled traceability.

Way forward

The world is undoubtedly moving towards technology-enabled IT services with adoption of Internet of Things (IoT) and blockchain technologies to provide real time information to consumers about different food ingredients. Although these technologies are still at an early stage in India, it is necessary to provide training and to encourage knowledge-transition with skill development through peer education, building partnerships between big food industries, medium and small enterprises, for strengthening the traceability systems in their facilities. Government and industry-driven skill enhancement and continuous training of the workforce could go a long way in fully integrating the tech-based food ingredients supply chain management practices in India.

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Mansi Jamsudkar

(mansi.jamsudkar@mmactiv.com)

Image credit- shutterstock