This interview is part of our new Blockchain In Agriculture series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and agriculture.
In this interview we speak with Erik Arokszallasi, CEO of TE-FOOD, to understand how his company is using blockchain to transform the agriculture business, and what the future of the industry holds.
1. What’s the story behind TE-FOOD? Why and how did you begin?
EA: We have been active in the corporate IT industry since 1996. In 2015, we had the opportunity to develop an end-to-end traceability system for South-Vietnam, with the support of the government of Ho Chi Minh City.
We developed the software and hardware components, assisted the government to put the related regulations in form and communicate it with the shareholders and the consumers, trained over 10 000 supply chain workers, and supplied them with physical identification tools as well.
At that time we believed that farm-to-table food traceability is a challenge for emerging countries, but it's something already a solved problem in developed countries. To our surprise, we realized that such traceability systems which cover the whole supply chain are very rare even in the most developed markets. We also realized that there is no other such widely used, publicly accessible farm-to-table food traceability system around the world like we implemented in Vietnam.
Until 2018, we were concentrating on the iteration and roll out of our system in Vietnam, onboarding over 6000 business customers. Most of them are household farmers, or market traders, but there are multinational players amongst them as well, like Auchan, Lotte Mart, Big C, AEON, CP Group, Japfa, or CJ. Then, in 2018, we saw that the time was right to start offering our services to international customers.
2. Please describe your use case and how TE-FOOD uses blockchain:
EA: It's important to note that blockchain is only one part of food traceability. There are several challenges, and while blockchain provides a good solution to some of them, most of the challenges are not depend on blockchain. Distributed ledger technologies have a lot of hype nowadays, which obviously helps with their adoption, but they are not a magic pill which immediately solves the trust problem in the food industry.
We help food companies to establish transparency within their supply chain by working in collaboration with their suppliers and customers to identify batches and retail items, and collect relevant data about them. Whether that data will be shared with the consumers, or be used internally is the decision of our customer, and depends on the goal they want to achieve with traceability.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
EA: Migros, the largest retail company in Switzerland wanted deeper insight of their fresh fruits and vegetables supply chains. When they see the activities, they can identify potential bottlenecks to optimize the distribution. This can lead to reduced food waste.
Cofidec, a large Vietnamese food producer sources their raw ingredients from over 150 farms. They implemented TE-FOOD to standardize the cultivation and pre-processing activities on all farms. Now the farmers follow a unified protocol in their farming activities which ensures that Cofidec buys proper quality ingredients.
When Vinamilk, one of the largest dairy companies in Southeast Asia launched a new infant formula product, Vinamilk Organic Gold, they wanted to show transparent information about the dietary values, processing activities, and production certifications to ensure their consumers that the product provides premium quality ingredients and food safety procedures.
Supermarket giant Auchan wanted to show the premium quality of their Filiére product line to their consumers. Most of these products are local, organic, and promote sustainable food production. Blockchain based traceability can provide proofs for these statements.
4. What other blockchain use cases in the agriculture industry are you excited about?
EA: One of the most interesting use cases we see is transparent agricultural credit scoring and lending. There are hundreds of thousands of small farmers in developing and emerging countries which can't access loans because they can not provide traditional collateral. They don't own the land, don't have valuable equipment, and the banks don't have data to set a proper credit scoring for them. Using blockchain based traceability, the banks could have access to data about their operations, which could be the basis of credit scoring, and could lead to a loan, which would enable them to buy supplies, or invest in technology.
Another use case is to support food safety audits. Usually there are yearly audits which assess the compliance of food companies to certain food safety standards. In many cases, this is not enough. If food safety auditors could access continuous, real time data about the activities of the food companies, they could provide more value.
5. Where will TE-FOOD be in 5 years?
EA: We believe that in the future, end-to-end traceability will be the norm in the food industry. Studies show that consumers – especially in the Millennial segment – demand transparency and proofs regarding the food they buy. But traceability is also beneficial for quicker and targeted product recalls, which cost billions for the food companies, but often the food processing companies have to change their processes to keep the data integrity. All these changes need years to evolve, but the global trends support this direction. Nowadays, mostly the larger brands are embracing blockchain based traceability. They will be followed by their competitors, then smaller companies, and we expect that governments will also join at one point and set having end-to-end traceability as a basic requirement.
We have to evolve with this rapidly changing industry, and provide solutions which the market needs. We are working on to keep TE-FOOD amongst the most popular brands of food traceability solutions.