PwC and Arc-Net use blockchain to combat food fraud
Global consultancy PwC and the Northern Irish Arc-Net will gather their knowledge to help the food industry fight fraud. At the heart of their joint efforts is the use of blockchain, an innovative technology that has emerged from financial services.
The blockchain concept was originally developed as an efficient and secure way to manage and register transactions made with cryptocurrencies (for example, Bitcoin). Until now, it has mostly been of interest to individuals and financial institutions. However, with its distributed-ledger technology (DLT) and smart contracts, blockchain has great potential to benefit all companies across the supply chain – not just banks.
One area where the innovative financial technology was perhaps thought of as an unlikely fit at best is the food industry. Worldwide food poverty has hit society in a number of ways, with PwC research suggesting food fraud, as some look to capitalise on people’s desperation, appears to cost the food industry $40 billion a year. According to the World Health Organization (WHO), one in ten people worldwide are ill from eating contaminated foods every year, and 2.2 million people die every year.
Food fraud is currently a widely discussed topic in the media following a number of high profile scandals, from the infamous horse meat fraud (where horse meat was sold as beef by major supermarkets including Tesco and Asda), and the recent major egg scandal which hit Europe, as millions of eggs wrongly received a safety standard certification, to name but a few examples. The food industry is therefore under increasingly sharp scrutiny when it comes to ensuring the quality of produce.
Blockchain technology has emerged from the financial sector, particularly in the area of secure payment processing, where the technology offers enormous potential. Originally, blockchain was designed by the bitcoin developers – its ledger technology acts as the backbone of the virtual currency by tracking on a network of hundreds of computers from each bitcoin where and when they were transferred and to whom. Because the computers monitor each other's registers, no intermediary is required to approve a payment.
Big Four consulting firm PwC are presently working in partnership with Arc-Net, a Northern Irish company that has developed a same-name platform for supply chain authentication and security, to turn blockchain deployment toward use in the security of the food chains. The consulting firm and the security specialists have combined their strengths to develop a new model, which enables all ingredients of a product from beginning to end to be followed. In other sectors, attention is also paid to the enormous potential of technology, including in the logistics sector and also in the government.
According to Kieran Kelly, CEO of Arc-Net, the collaboration will provide global food brand owners with the ability to deliver on product and brand security, “while delivering supply chain mapping and compliance.”
Hans Schoolderman, a Partner at PwC responsible for Sustainability & Food Integrity, meanwhile said, "Blockchain is widely spoken and written about, but few parties offer concrete solutions. The Arc-Net blockchain platform is a proven solution to fundamentally ensure transparency in the food chain. Our collaboration with arc-net enables us to bring the breakthrough solution of arc-net to our clients, quickly. Through these technologies, there are demonstrable high-quality, safe and transparent products on the market, which can increase the confidence we have in the food we eat."
Better than certification
According to Schoolderman, a blockchain solution works better to combat food fraud than the "forest of Certification Programmes", which have already been created – and are often linked to consumer branding. "The annual costs for these programmes are huge. For an (international) food producer this may amount to tens of millions of euros a year, while added value is limited," said Schoolderman, who contended that there is a lack of reliable information enabling consumers and suppliers to really know how safe food and drink is. "Companies generally know what their direct suppliers do, but they often have no idea what's happening in the chain,” he concluded.
Unlike certification programs, a blockchain-based system does not depend on trust. The control in the registry does not occur via a central authority, but through a network of users in a blockchain. Only if a transaction, including relevant data about quality, times and owners, is identified as reliable by the network, it will be executed. This gives each player in the chain full access to a copy of the registry, allowing each player to check the journey food has taken, preventing foul play.
