Blockchain as a Grand “Technical Fix”—Assessing Existing Pilot Projects

Given the growing consumer demand for transparency from corporations,^[272] as well as the need for efficient supply chain management on a business-to- business level,^[273] agri-food producers, processors, distributors, and retailers are driven to seek innovative solutions.

This section examines three prominent examples that shed light on the incremental regulatory shift to “blockchainizing” food law, driven largely by private actors in the agri-food and tech industries. Furthermore, the practical strengths and weaknesses of using blockchain to ensure food safety, traceability, and sustainability will be reviewed. Last but not least, the government’s role (or the absence thereof ) will be assessed, given the promises and perils of block­chain as it relates to food law in the context of resorting to technology as a regulatory tool.^[276]

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A. Blockchain as a Potential “Technical Fix”

Blockchain has been called for in various contexts to serve as a “technical fix” of regulatory problems.^[277] Regulatory technologies as such may be used to “define and incorporate legal or contractual provisions into code, and to enforce them irrespectively of whether or not there subsists an underlying legal rule.”^[278] Yet one should be familiar with the technical elements and nature of blockchain as well as the technology’s advantages in addressing governance challenges in the global agri-food supply chain.

As a distributed and decentralized system, “[b]lockchain is not controlled by a central authority, person, company, or government” but rather by all network nodes (minders, or participants) based on a predefined algorithm, which keeps “complete information about transactions (and ownership) from the genesis block to the most recently completed block.”^[285] All of the participants in the network have their own digital signature, which is attached to each of the

transactions added to the blockchain with specific timestamps and details.^[286] The history of all of the transactions is, therefore, recorded in the blockchain with great security and accuracy, creating a secure ledger for those who have cryptographic keys (public or private) and can access and manage the shared ledger.^[287]

There are many typologies of blockchains based on different benchmarks.

All together, a distributed and shared platform, data security and immutabil­ity, and transparency and traceability give blockchain technologies the potential to generally ensure accurate and secure records of transactions in the database, generating “trust” for participants in a given market (e.g. supply chain, stock exchange, real estate, or insurance). In this sense, blockchain has the power to “radically disrupt existing political and economic orders by dispensing with the need for conventional third party intermediaries... enabling peer-to- peer transactions via the blockchain without the operational inefficiencies.”^[292] The potential of blockchain is not limited to Bitcoin or the financial sector, although it is regarded as one of the most disrupted issue areas. Rather, the

Blockchainizing Food Law 89 technology can be applied in a general manner as a regulatory tool in a myriad of contexts,^[293] especially those that value information accuracy, data security, record-keeping, and traceability.

In the area of food law and policy, the previously mentioned governance challenges largely touch upon “information.” Specifically, information asym­metry in the supply chain is key to many safety and fraud issues; verifying and sharing information is key to traceability and outbreak response; and sus­tainability and food security partly depend on accurate information regarding the demand for, and supply of, food. Blockchain technologies can ensure the validity and reliability of the information on the network without relying on a central intermediary and can keep such information cryptographically “tam­perproof,” as inconsistent or adulterated data are automatically discarded by the network.^[294] As such, blockchains can be applied to strengthen digital record­keeping and traceability in the food business, verify transactions and certifica­tions, and increase inventory and management efficiency.^[295] A report jointly published by the Food and Agriculture Organization of the United Nations (FAO) and the International Centre for Trade and Sustainable Development (ICTSD) further stresses that

the potential for DLTs to increase efficiency, transparency [,] and trust throughout agricultural supply chains and empower all market players is real. The technology has the potential to simplify and integrate agricul­tural supply chains, enhance food safety, reduce risk in trade finance and promote inclusive trade.^[296]

Although several governance approaches have been adopted by governments worldwide, blockchain holds great potential and has emerged as a promising regulatory tool (more ambitiously, a “technical fix”) for the agri-food industry to strengthen various aspects of supply chain management and deliver strong governance performance.

B. Examples of Blockchainizing Food Supply Chain Management

1. Provenance Seafood Traceability Blockchain

The first example of blockchainizing food supply chain governance is Provenance, a UK start-up company that incorporates blockchain into its

methodology to monitor processes, track products, digitize certifications, and ensure compliance with social and sustainable standards.^[297] More specifically, Provenance constructs “a shared and secure platform” based on blockchain technology, which allows for secure transaction audits, supply chain manage­ment, and information certainty.^[298] As for traceability, Provenance uses block­chain to “enable[] every physical product to come with a digital ‘passport’ that proves authenticity...

However, as argued by one commentator, Provenance offers only a partial solution,^[304] since the majority of agri-food sustainability issues (e.g. insufficient governance, weak institutions, inferior working conditions, market opacity, and lack of information sharing) happen “at the level of production and first intermediaries/processors,” according to the United Nations Environmental Program (UNEP).^[305] That is, while blockchain technology can ensure a high level of transparency, traceability, and immutability (security/unchangeable nature), the data initially input by local producers (the first players along the supply chain) remains vulnerable to human mistakes and economic adultera- tion.^[306] Provenance aims to address illegal fishing and fraudulent certification

Blockchainizing Food Law 91 problems by registering each catch and each sale of fish on the blockchain. Yet the action of registering itself cannot be readily verified by technology without human auditors.

2. IBM Food Trust Platform

Another example that demonstrates an infrastructure model for blockchainiz­ing agri-food supply chain management is the cloud- and blockchain-based IBM Food Trust platform service.^[307] Following a pilot project between Wal­Mart and IBM that uses blockchain technology to track produce in the United States and pork in China,^[308] IBM forged a collaboration with a few other major food producers and retailers, including, inter alia, Dole, Nestle, Tyson Foods, Kroger, and Unilever in 2017, to leverage blockchain technology to address transparency and traceability challenges along the cross-border food supply chain.^[309] Wal-Mart has further required its upstream suppliers of leafy greens to use the IBM Food Trust platform by September 2019.^[310] Under this IBM- Wal-Mart cross-sector collaboration, each food item is digitally connected to the data (which can be either merely about the path of movement or detailed records of specific conditions of that item, as discussed in Section II.B) entered into the blockchain system at every step of the process, which makes possible the tracing of a package of mangos in just two seconds, whereas tradition­ally “it took six days, 18 hours and 26 minutes” from shop to farm.^[311] In this case, when an outbreak happens, both the consumer and the retailer can easily retrieve crucial information (such as inspection records) about relevant sup­pliers, processers, and distributors and swiftly identify what went wrong and where.^[312] The government may also incorporate such supply chain manage­ment information into a public-private partnership “food cloud” to facilitate evidence-based facility inspection, border control, and outbreak responses.^[313] A prominent scholar of food law and policy, therefore, cites the Wal-Mart- IBM collaboration and points out the value of using blockchain technology to

deliver a more evidence-based food safety governance system with the support of private oversight.^[314]

In response to this successful implementation, IBM has expanded its scope of collaboration to work with other players along the agri-food supply chain, such as JD.com, China’s second-largest e-commerce company.

Nevertheless, it should be noted that while the IBM Food Trust Platform is open to agri-food companies, they usually maintain the implementation of blockchain systems in a centralized manner among industry stakeholders (i.e. Wal-Mart itself and its suppliers). Wal-Mart, for instance, while not in a posi­tion to easily alter the data stored in the blockchain without being noticed (the system is modifiable or eliminable, yet blockchain makes it more diffi­cult), could “simply, shut down the entire system.”^[318] As observed by another commentator, “Walmart’s system does not solve the information asymmetry between the trades and the consumers; it only solves the information asym­metry between Walmart and its suppliers.”^[319]

3. WFP Food Security Initiative

Similarly, the UN WFP launched the “Building Block” pilot program in 2017.^[320] Relying on iris-scanning technologies and blockchains, this program helped refugees verify their identities and directly deduct what they spend from the amount of aid they receive from the WFP.^[321] In Jordan’s Azraq camp, more than 100,000 refugees can pay for their food by utilizing a private

Blockchainizing Food Law 93 (permissioned) Ethereum-based blockchain platform “to make cash-based transfers faster, cheaper and more secure”^[322] Using biometric registration data from the UN High Commissioner for Refugees (UNHCR) and authentica­tion technologies, refugees can enjoy peer-to-peer financial assistance to pur­chase food from local supermarkets in the camp instead of cash, vouchers, or e-cards intermediated by local authorities.^[323] Refugees can have more control over their identities and money under such an emergency circumstance. At the same time, the WFP can establish a full record of every transaction that occurs on the retailer’s end and reduce transaction costs due to market inefficiency, corruption, and logistics. The 2018 annual report of the Regional Refugee and Resilience Plan (3RP, a collaboration between the UNHCR, Member States, and non-governmental organizations in response to the impact of the Syria crisis in Turkey, Lebanon, Jordan, Egypt, and Iraq) cites the success of the Building Blocks pilot project and how blockchain technology has enabled the WFP to assist in a more efficient and economical manner.^[324]

Such initiatives have the potential to be generalized to help retailers and consumers pinpoint sources of contamination at times of outbreaks or pro­vide production details and quality certifications (e.g. product origin, farm his­tory, processing and shipping information, and fair trade or safety/sustainability standards). Blockchains can also be combined with smart contract systems or other AI techniques to increase efficiency, simplify transactions, ensure compli­ance and security, and promote trade facilitation across borders.

IV.