From radical transparency and food security to real-time management of the global supply chain, the Blockchain offers the food industry far more than peer-to-peer financing.
Photo via Wikimedia Commons user Davidstankiewicz
What if you could be assured that the piece of mahi mahi or the organic chicken breast you were tucking into tonight is exactly what you think it is, sourced as promised, and guaranteed fresh? What if every transaction in the opaque world that is the agriculture supply chain could suddenly become transparent, traceable, and verifiable without any need for third-party oversight?
An overwhelming majority of food today goes through a ridiculously large number of touchpoints as it wends its way from producer to purchaser; the process can be inefficient, costly, and a breeding ground for contamination and fraud. Angel Versetti, the CEO of a Swiss startup called Ambrosus, which launched last month, claims his company will put an end to all that in a novel way: Ambrosus is introducing the use of blockchain technology and smart contracts into the global food marketplace. As Versetti put it to MUNCHIES, "In a nutshell, Ambrosus is a platform that assures quality, safety, and origins of food in a verifiable matter."
According to its website, Ambrosus uses a "customized combination of robust sensors, biosensors and food tracers [to] assess and monitor in real-time the food's physical attributes and its surroundings." But what is really revolutionary about the company's approach is this: "We are tackling the issue of how do we trace real world assets alongside the blockchain. This has not been done before," Versetti told us.
Blockchain technology is perhaps best known because of its association with Bitcoin, but the underlying technology behind the cryptocurrency holds far more potential for global disruption than simple peer-to-peer financing. To put it simply, blockchain is a collective and public ledger system that is maintained by a collective commons of computers, with no centralized authority required to approve transactions. Each ledger can only be changed when there is a consensus among participants, who agree and validate transactions. In essence, the collective monitors and polices each transaction.
Ambrosus uses Ethereum, a decentralized blockchain-based platform run by a Swiss non-profit; when a blockchain transaction is validated, a "smart contract" automatically executes. According to Nick Szabo, the computer scientist and cryptographer who coined the phrase in 1996, a smart contract is "a set of promises, specified in digital form, including protocols within which the parties perform on these promises." To validate transactions within Ambrosus, no authoritative institutions like banks are needed—trust is built into the distributed, transparent nature of the platform. Ethereum co-founder Gavin Wood said in a video explaining the system that it eliminates the need for third-party intervention and solves points of contention immediately.
Ambrosus is not the only—or even the first—startup to promote the use of so-called "distributed ledger" or blockchain technology in the agriculture sector. A company called Filament offers smart farm technology, and SkuChain allows for tracking through supply chains. But, Versetti said, Ambrosus will be "the first marketplace powered by smart contracts for food products." He explained, "One of the key values we're bringing to the supply chain is automatization of the whole process. So we've got the payment and settlements mechanism as well as the escrow solutions that completely reduce the risk in supply chains."
The big players in food and agriculture are also exploring the use of blockchain technology. Walmart has begun to test blockchain technology in its food tracking systems and announced recently that it was seeing "very encouraging results." According to Sarah Nolet, an ag-tech consultant, the venture capital arms of both Monsanto and Syngenta are actively exploring the ag-tech field. But Versetti is critical of proprietary blockchain systems that aren't open to all, calling them "nonsense." He told MUNCHIES, "Instead, we want to make a public, community-driven blockchain where the information can be trusted. We're not giving any single company a say in how it's implemented, we'll let the community manage that."
The first smart-contract based farmer-buyer transaction settled through blockchain has been attributed to David Whillock, an Australian wheat grower back in December 2016; a commodity management platform called AgriDigital processed the smart contracts involved in that deal. Sarah Nolet, who is a consultant to AgriDigital, told MUNCHIES that despite the early breakthroughs, "The agriculture industry is the least digitized industry," so change may be slow. "Before blockchain can realize its full potential, like many other technologies, the infrastructure (e.g., digitization, connectivity…and then eventually digital currency) has to be in place. Further, the value proposition has to be clear to users." Nolet sees the greatest potential for using blockchain technology to be in the field of establishing provenance of foods like fish, which are so often the subject of fraud. Versetti told us he sees seafood, baby food, and high-end food products as key markets for Ambrosus.
Versetti said Ambrosus will begin testing soon. "Within the next two weeks, maybe even one week, we are releasing on the testnet of Ethereum the first marketplace powered by smart contracts for food products." But he sees community participation as key to the growth of Ambrosus: "What we're building is essentially a protocol, but around it there is a system of dapps—decentralized apps. The initial ones we are deploying ourselves, but we're also releasing the code—it's already partially on Github—so the community can develop additional elements where the farmers or other participants of the supply chain can enjoy that. It's all open source."
A marketplace of tracked and trusted food products could have an impact beyond assuring consumers that the fish they're eating is indeed wild salmon, Versetti said. "You also want to have development of food systems that do not create environmental degradation and are sustainable so we are able to meaningfully produce a sufficient amount of food without damaging the planet. An even more serious question is the lobbying of powerful actors who use different chemicals to produce food."
Ambrosus is banking on the notion that a blockchain-powered marketplace can provide these assurances: "These are some of the challenges in the food industry and these are the challenges we hope to tackle."