Food shortages in Western countries caused by supply chain disruptions are not a question of if, but when. Remember the pasta crisis in March, right after Russia invaded the Ukraine? On the other hand, we experience a considerable amount of produce, harvests, processed food, and resources being lost or wasted every single day. McKinsey estimates that 33 to 40 percent of the world’s food is lost or wasted every year.
A part of that food waste is caused by the infamous bullwhip effect in our supply chains. However, it’s an effect that we can overcome if every stakeholder in the entire chain would share their data, so each involved can get accurate insight in what amount is truly needed for production and prevent overproduction. Instead of each player just ordering or producing a little extra – just to be sure, not knowing how many small fluctuations occurred before.
Why Blockchain Is the Go-to Technology to Prevent Waste
If each link in the global supply chain was connected through technology and would share their data on their part of the chain, companies would be better equipped to anticipate on disruptions like the ongoing energy crisis. Because they would act upon holistic insight from the end-to-end chain. Not just on insights from within their own operation, but on data from the entire ecosystem they are a part of and that may affect them in the end.
Since a global supply chain consists of so many players, blockchain would be the go-to technology to connect the dots. Since this is one of the few technologies powerful enough to securely support the information that is exchanged in such a vast international network of stakeholders. If we set up a blockchain network and create a connected global supply chain, this ecosystem would be more flexible than ever. And we could actively contribute to the reduction of food waste by producing what is truly in demand and not based on what separate stakeholders think they need.
Complicating Factors in the Agricultural Chain
In reality, and certainly in agriculture, using blockchain as a part of the solution for a resilient and yet flexible connected supply chain – and as a tool to reduce food waste – is more complicated than the outlined I’ve sketched. Because food loss or waste is not restricted to production environments, supermarkets, or restaurants, and the loss that happens in agriculture is not always a result of the bullwhip effect.
McKinsey estimates that half of food loss happens during and after harvest and during processing. Although farms do overproduce and some produce doesn’t meet customer expectations, factors like climate change and draught are also responsible for this. In my opinion however, there’s another big complication that lies at the foundation of all this. The state of our agricultural soil is a big contributor to poor harvest quality and yields. And that is where the second trend I would like to discuss, comes into play.