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Date Posted: June 19, 2018

Could Blockchain Technology Put a Stop to Food Fraud?

Written By: Quality Associate
The Quality Associate team has vast experience in FMCG, food production, horticulture, food technology, supply chain management and foodservice.

Food Fraud is one of the biggest threats to the food industry and consumers alike. Online marketplace, Alibaba, estimates that food fraud now costs the food industry $40 billion a year. A scandal can cripple an entire industry, such as in 2008 when melamine was introduced into baby formula in China. The outcome of which, was 300,000 victims and 6 deaths of babies. Consumers were left fearful and with no trust in local manufacturers. The Chinese baby formula industry collapsed as consumers looked internationally to purchase products they considered safe.

Buying a fake dress will cause damage to the ripped-off brand’s bottom line. It might, if detected, cause embarrassment to the wearer’s pride. But purchasing fake food or medicine online is a different matter entirely” (Richard Cook – Asia Times, 2018).

Retailers and manufacturers alike are looking to combat this issue and build trust with consumers by implementing innovative technologies.

Nowhere is this more of a concern to retailers than in China. Authenticity of goods sold and consumer trust are key to the growth of retailers in this market, such as Alibaba. Reliably achieving a high standard of authenticity for goods sold on their platform could lead to the removal of their trade blacklist in the USA. This was implemented due to the selling of counterfeit goods.

To ensure a supply of consistently authentic goods, the business is implementing the Food Trust Framework, a supply chain traceability system that aims to provide consumers and manufacturers confidence in the authenticity of the goods and ingredients used. The framework uses a blockchain ledger system that tracks and records the shipment, storage and producer data of every raw ingredient used in the manufacturing process, all the way to the delivery to the end consumer. The blockchain ledger system is transparent to any stakeholder in the supply chain, including the end consumer, and cannot be altered once the information is entered. The ledger clearly accounts for all ingredients used in the supply chain and clearly pin points inconsistencies that could be the result of food fraud. This allows for traceability and supply chain accountability and will deter fraudulent acts. The Food Trust Framework is currently being trialled with exports from Australian and New Zealand with manufacturers Blackmores and Fonterra. If the trial is successful, the Food Trust Framework could form the key component in Alibaba’s global supply chain.

Other retailers are looking to blockchain technology to secure their supply chains and instil consumer confidence. Fellow retailer JD.com have been working with Walmart and IBM to create the Blockchain Food Safety Alliance. This is a positive step forward in traceability and transparency, however both Alibaba and JD.com’s systems rely solely on QR codes to be scanned and input the data into the blockchain. This leaves the system open to fraud if goods are swapped out for a like for like, cheaper imitation. Therefor the blockchain system cannot work solely on its own to combat fraud.

To combat this risk in the blockchain system, IBM are developing the IBM Crypto Anchor Verifier (https://www.ibm.com/blogs/research/2018/05/ai-authentication-verifier/). This device is small enough so that it can work with smart phone cameras. The system works by analysing the optical characteristics and patterns unique to every food substance.  To achieve this, a combination of artificial intelligence and machine learning is used to determine if the item is authentic and uncontaminated. This process will assess the authenticity of many goods including fine wine, oils and medicine. The Verifier is claimed to also be able to detect the presence of bacteria in the item. This information is then entered into the blockchain system along with the tracking, storage and production details of the food. This system would ensure the authenticity of ingredients and foods at each stage of the supply chain as well as verifying where the goods have come from.

If your business needs assistance with Threats and Vulnerability systems or training, contact Quality Associates today for a free phone consultation on 1300 73 71 93 or info@qualityassociates.com.au

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