Blockchain technology could increase transparency around food and beverage products, but experts are divided on how it could affect the prices customers pay.
Blockchain, the technology behind cryptocurrencies like bitcoin, is a public ledger of every transaction that has taken place. Proponents claim the global online database improves food safety – and quality – by making it easier to trace the path of food from farm to supermarket.
With blockchain, food suppliers and middlemen can submit data about the breeding, manufacturing, and transport of products into a ledger, which customers can then access. Information stored in this ledger cannot be edited retroactively. This acts as an assurance of the quality and reliability of information.
How blockchain could affect food prices
That means suppliers can segment their products by quality and freshness, and charge premiums for higher quality segments, consulting firm Deloitte wrote in a June report about the use of blockchain in food.
But professional services firm Accenture said customers may not see that impact on prices at the register.
“Price data, for example, could allow upstream supply chain actors to better negotiate price and receive a greater portion of the final price from the consumer,” Accenture wrote in a 2018 report.
“Due to high margins, the opportunity exists for producers to increase their prices without much impact to the final retail price,” the report noted.
One company that’s using blockchain to track tuna fish caught in Indonesia is Bumble Bee Foods. The firm, known for its canned seafood products, partnered with cloud company SAP to provide more detailed information about its fish. SAP’s blockchain lets consumers “easily access the complete origin and history” of Bumble Bee yellow fin tuna. By scanning a QR code on a package, customers can check a product’s authenticity, freshness and sustainability.
Deloitte highlighted that blockchain may lead buyers to focus on things like taste, shelf life, and grade information, rather than quantity, when buying food.
Getting ahead of food borne illnesses
Meanwhile, other analysts argue blockchain could lower prices by preempting certain problems.
Better record keeping through blockchain ledgers would make it easier to pinpoint locations of outbreaks of food borne illnesses or prevent mislabeling of allergens, Garrick Hileman, head of research at Blockchain.com and researcher at the London School of Economics told CNBC in a note.
“Anything that reduces those issues will reduce the cost of manufacturing and distributing food,” said Hileman. “There is certainly the possibility that prices come down due to these cost savings associated with the introduction of blockchain.”
PwC’s global blockchain leader, Steve Davies, agreed, explaining that greater transparency about food supply will provide clearer information about quality, origin and accuracy of ingredients and materials.
“Eliminating fraud and fake goods in the food and beverage industry is going to be worth billions of dollars and has broader health and welfare benefits too,” he told CNBC in an email.
Beef and pork supply chains could be among the first to benefit from the use of blockchain, LSE’s Hileman said, because of the cost of disease outbreaks in those types of meat.
For example, China has seen pork prices skyrocket as it struggles to handle an outbreak of African swine fever, which has killed millions of hogs. The country is the world’s top producer and consumer of pork, a staple in the Chinese diet.
“They’re two areas in the food supply chain where there is the greatest risk and the greatest potential cost if something goes wrong,” Hileman said.
Blockchain, the technology behind cryptocurrencies like […]