World Economic Forum Blockchain ‘Tool-Kit’ Could Fix Broken Food Supply Chains

While the internet has enabled a world where supermassive digital files can be sent globally in seconds, the world’s shipping orders have largely been trapped in 1950s accounting technology, relying more on paper bills of lading and phone calls to document the shipment of goods, than the benefits of online commerce. The modernization of this process has largely been ham-strung by two factors: competitors (and even partners) don’t trust each other with valuable accounting records and therefore keep largely redundant records that need to be constantly audited, and there’s certain legal responsibilities that come with accepting one of those paper bills of lading and the accompanying goods.

In theory, the solution to both these problems could be blockchain, the accounting technology behind bitcoin that lets strangers do business with each other without sharing their personal information and that can prove a digital object is only in one place at a time. So, in September 2018, the World Economic Forum (WEF) started looking into the world’s aging supply chain infrastructure and how blockchain could fix it. Back then, few people outside the blockchain world cared about food supply chains. While food-borne illnesses were estimated to cost the U.S. $90 billion in revenue annually, that was just a fraction of the $660 billion in revenue generated by the supermarket and grocery store industry.

Then COVID-19 hit, and that aging infrastructure was made painfully evident. While restaurants, hotels, and tourist destinations that account for as much as half of food purchases were shut-down to prevent the spread of the deadly disease, milk, bread, vegetables and a wide range of other perishable products vanished from grocery store shelves. Farmers unable to re-calibrate their supply chain from wholesale to retail were forced to till their crops back into the soil, and milk was dumped down drains.

Now, 18 months after the WEF started its research, its findings released today as both a PDF and an interactive online service, could hardly be more relevant. Called ‘Redesigning Trust: A Blockchain Deployment Toolkit,” the project is the result of interviews with 80 public and private companies and 20 governments to extract what project head Nadia Hewett, describes as “nascent insights and failures” of some of the largest projects ever launched in blockchain. If Hewlett gets her way, the project will result in hundreds of completed proofs-of-concept finally being implemented to fix the world’s increasingly frail supply chains.

“Those proof of concepts are now being taken up, dusted off again,” says Hewett, who also leads the forum’s blockchain work. “And I do think that this time what we’re seeing with this pandemic, there’s going to be a lot more momentum to really make sure that things that should have been taken care of during other supply chain disruptions are really taken seriously this time.

The tool-kit details a step-by-step process for how to assemble an ecosystem of participants that will all benefit from moving some process to a shared, distributed ledger, and how to solve both technical and non-technical problems. Included in the 80 corporate participants, is state-owned Saudi Aramco, which made news last year after going public with a $2 trillion valuation, and Deloitte, the same Big Four accounting firm who had previously published a report finding that 92% of all blockchain projects were dormant or dead. While the tool-kit is designed to help executives and developers using any supply chain, it’s target of the oil and especially the food industry is particularly pertinent. 

After consulting with representatives of past Blockchain 50 list members Bumble Bee Foods, Maersk, the United Nations World Food Programme and others, the tool kit describes what it calls a minimum viable ecosystem (MVE) to launch a food supply chain connected via a blockchain. Specifically, the tool kit describes the MVE as at least a single retailer, a wholesale processing plant, a bank, distribution center, a retail processing plant and a regulator. In addition to providing real-time information about where supplies might be bottle-necking, or to anticipate shortages before they occur, the report cites increased certainty for every member of a supply chain that the food was always at the legally required temperature, even when it was out of the control of any single member’s control.  

While the total impact of COVID-19 on the world’s food supply chains has yet to be calculated, anecdotal evidence is already rolling in. WEF tool-kit contributor, the Port of Los Angeles, experienced a 23% drop in total business in February alone, and multiple reports of meat-packing plant closures augur a future meat shortage, perhaps only weeks away. And yet, in spite of numerous blockchain food supply chains already up and running for everything from olive oil to grain, Hewett says it’s very unlikely that any of the current systems alone will have a significant impact on COVID-19-related supply issues. 

“While there are blockchain solutions out there right now that governments and organizations are using for different ways in short-term COVID mitigation, the tool-kit is more about the long-term because a well-thought out and responsible deployment takes time,” she says.

Among five pilot partners who tested the tool kit before it was rolled out today is Saudi Aramco, the most valuable publicly traded company ever. In the tool-kit itself, Saudi Aramco chief digital officer Nabil Alnuaim said its recommendations were ‘drawn from an unparalleled community of business and technology experts.” But not all of those contributors came from such giant companies. In fact with three other pilot partners from much smaller private institutions in the United Arab Emirates and one from Canada, Hewett says she hopes the lessons learned from the larger companies involved will help others with smaller budgets better capitalize the technology. 

“We need to make sure that we level the playing field for small- and medium-sized enterprises in emerging markets,” she says. “There’s many today that do not have access to best-in-class information, experts that do not have the budgets to hire consultants. And this toolkit is a combination of best practices.”