Blockchain Implementation in the Food Fortification Value Chain
By Xinyan Zhang, Project Manager, BASF Food Fortification and Partnerships
Food fortification has been proven to be one of the most effective ways to combat micronutrient malnutrition. However, the social impact of the fortification programs has yet to reach its full potential due to factors such as insufficient technology infrastructures and undefined roles and responsibilities within the value chain. At the same time, blockchain technology has become popular and widely implemented in the insurance, retail, healthcare and supply chain sectors because of its potential to increase transparency and traceability of products.
A blockchain is a growing list of records that are linked together using cryptography. Each block in this chain contains information about the previous block, a timestamp and transaction data. These blocks form a chain with each additional block reinforcing the ones before it. A blockchain network is decentralized and all the history in the blockchain is immutable.
This article examines the potential to implement blockchain technology in food fortification and to enhance food fortification market compliance and transparency in the supply chain based on the results of my master’s thesis. Four lessons can be summarized as the key takeaways from the research conducted.
1. Tracking for compliance with blockchain framework
To enhance transparency and compliance, the first step is to identify what factors are directly associated with compliance and quality. In the implementation stage, blockchain has the design needed to track the identified factors which enhance transparency and to ensure that the system can automatically collect and store the desired data in an immutable form. Identifying the right tools and the appropriate incentives for key stakeholders joining this effort is important in streamlining the data transaction stage.
2. Bridging technology and knowledge gaps among stakeholders along the value chain
The existing technology gap between stakeholders needs to be addressed when implementing blockchain technology in food fortification. The technology gap needs to be investigated and the question of whether or not the organizations involved have the capability to adopt the system has to be considered. Large corporations can face interoperability challenges since they have established mature technology infrastructures which requires significant efforts to adapt. Small and medium sized enterprises need to address the challenge of a lack of resources and the capacity to adopt new technologies.
3. Designing for data privacy and future scalability
Scalability, security and decentralization are competing forces in the “blockchain trilemma”. Some of the main impediments for enterprises taking part in a blockchain consortium are concerns about data privacy. From a technology perspective, one of the main constraints when implementing a blockchain consortium is the ability to cope with the increased number of transactions (e.g. required storage capacities and resources). This is especially the case when a blockchain system is deployed together with other data-intensive infrastructure such as the “Internet of Things” which collects data automatically. Managing scalability is the key to ensuring a successfully running system.
4. Governance and ecosystem enablers
The blockchain governance model determines the operational and business rules, thus guiding the activities of the network. Blockchain governance can be determined by an individual, a group of people or all the users within the network based on how decentralized the technology architecture is. In a country's food fortification ecosystem, the enablers are the government, NGOs, technology suppliers, private sectors and small and medium sized enterprises. Designing a blockchain governance system that motivates the enablers to integrate it in running systems and that is beneficial to all the enablers is key and is a challenge.
In summary: Blockchain technology can improve transparency of the supply chain process and enhances trust among partners. When a blockchain network is well integrated within the internal processes of an organization serving food fortification, the technology can improve efficiency by saving administrative costs, streamlining the operational process and improving the transparency of product logistics.
At the same time, the data collected and stored by blockchain systems can be used for long-term research and tailored food fortification programs, ultimately enlarging social impact. However, because blockchain technology is still maturing, it is a challenge to gain stakeholders’ buy-in and commitment. The sustainability aspects regarding resource demands for blockchain implementation and the physical energy needed to run and maintain it requires further research. A pilot approach could help assess the challenges and potentials of blockchain implementation for food fortification.