It’s not your imagination. The seafood industry is talking a lot more than usual about Bitcoin these days.
But don’t worry. There’s no effort afoot to launch a new form of seafood-themed cryptocurrency — though “Fishscales” would have a nice ring to it.
Rather, the National Oceanic and Atmospheric Administration’s implementation of its new Seafood Import Monitoring Program (SIMP) requirements is helping to drive a great deal of interest in blockchain, the digital technology that underlies Bitcoin, Sean O’Scannlain, the president and CEO of Fortune Fish & Gourmet, told Undercurrent News in a telephone interview this week.
Besides running one of the US’ largest seafood wholesalers, O’Scannlain is also chairman of the Seafood Industry Research Fund (SIRF), a 55-year-old group that has provided almost $4 million in grants to help create about 400 research papers, all publicly available. Roughly a week ago, the National Fisheries Institute (NFI) announced that SIRF would be launching a pilot aimed at enabling the industry to better use blockchain, increasing transparency, optimizing supply chain processes and combating fraud.
NFI, a trade association that represents processors, wholesalers, importers and others, houses SIRF at its headquarters in McLean, Virginia.
SIRF has budgeted $120,000 to work with IBM’s Food Trust IBM’s blockchain-enabled Food Trust system and at least five companies, including a harvester, importer, processor, cold storage company and either a retailer or foodservice company.
O’Scannlain said the study is in the very early stages. Participants have yet to be chosen and it’s not yet clear if Fortune will itself be one of them, but he hopes for the project to be complete in six months and for the seafood industry to emerge with ideas on how the technology can help its businesses “generate revenue and reduce costs, from harvest to distribution to our customers”.
Trace Register to rollout release on July 1
Pressure was already building on seafood companies to provide products that are more sustainably sourced, properly labeled, avoid illegal fishing and human rights abuses, and all of that’s driving efforts to improve traceability in the supply chain. But traceability software by itself doesn’t prevent individuals from modifying records, making a type of fish appear to be a more valuable species or hiding that it was taken from an undesirable source fishery, including one that might be known for relying on slave labor, for example.
That’s where blockchain comes in, explained Phil Werdal, CEO, and Dag Heggelund, chief technology officer, of Trace Register, a seafood traceability solutions provider started in Seattle, Washington, in 2006. They count Whole Foods Market, the world’s largest organic retailer, and Albertsons Companies, the US’ second-largest food and drug retailer, among their many customers.
As noted earlier, blockchain is a term most commonly associated with cryptocurrencies, where it is used to keep track of who has owned each unit of value and when. it helps to prevent instances where, for example, a crypto dollar might be claimed by multiple individuals.
As Werdal and Heggeland explained, blockchain gives each item or group of items a unique identifier, like a fingerprint, that enables users in a full chain traceability system the ability to track every item or group of products through every part of the supply chain. In instances where individuals in the supply chain are using different traceability software, blockchain enables trusted “interoperability” across systems, they said.
The two men gave the example of a harvester who catches or raises tilapia and sells it to a processor who changes the product description to red snapper fillets before selling the fish to a wholesaler. Assuming the harvester’s initial entry was accurate in this scenario, Blockchain would detect the inconsistency and alert the end user.
“Blockchain doesn’t make sure the data is valid necessarily,” Heggelund clarified. “It just makes sure it is not tampered with.”
Blockchain allows for an unlimited amount of information to be maintained, but also can be used to limit what some can see. Consider sales price information between a processor and a wholesaler, for example.
Trace Register has been studying blockchain more closely over the past three years and, on July 1, plans to provide a new release that includes an application of the technology to all of its customers for free, Werdal and Heggelund told Undercurrent.
It may seem late, but the seafood industry is really on the front end of the wave when it comes to developing practical applications for blockchain.
The first time the concept of blockchain is believed to have been talked about in a public fashion was in 2008 when an individual or group describing itself as Satoshi Nakamoto published a paper discussing improvements on the technology made by using a “hashcash”-like methodology to add blocks to a chain without requiring them to be signed by a trusted party.
Though much has been written about blockchain since, the research firm Gartner, in May 2018, reported finding that only 1% of chief information officers indicated any kind of blockchain adoption within their organizations and just 8% were in short-term ‘planning or [looking at] active experimentation with blockchain’.
Seafood industry ‘searching for solution’ to SIMP
Being able to better trust your network is a compelling enough reason to use blockchain, but then came SIMP.
By now there’s no one who buys or sells seafood in the US who hasn’t dealt with the challenges associated with the National Oceanic and Atmospheric Administration’s new documentation requirements, implemented in April 2018 for 15 species and then expanded in 2019 to include shrimp and abalone. It requires the capture of 17 new data elements, including where the seafood was caught or farmed, the species, the quantity and weight of the harvest, the kind of gear used, the name and flag of the harvesting vessel and the first point of landing as well as other details.
Importers of record are held accountable for maintaining compliance.
O’Scannlain said the seafood industry was “searching for solutions to the cost burden that SIMP has added on to the industry [and hoping to] come up with the most cost-effective economic approach to become compliant”.
But there’s another motivation for implementing blockchain in the business gains that can be made, said Monica Jain, founder and CEO of Fish 2.0, who recently published a paper identifying some of those advantages.
Started seven years ago, Fish 2.0 holds a contest every two years in which enterprising companies showcase their latest seafood-related innovations while simultaneously networking and trying to win additional investors. For the group’s latest biannual contest, which has its final championship round in November, 13 of the 200 competing companies are entered in the category of “traceability and transparency”, Jain told Undercurrent. At least half of those rely on some level of blockchain technology in their business, she said.
One of the hottest types of innovation in her latest contest, rather than blockchain, is actually data capture, including several new camera-, sensor- and internet of things-related applications. But coming behind the data capture technology wave will be an effort to employ the newly captured information in useful ways, and that includes blockchain, she said.
Chief among the prospective advantages to blockchain identified by Jain is the added sense of comfort it could provide when it comes to financing trade, she said.
“Broad blockchain adoption will open up new and cheaper financing avenues for seafood businesses,” she wrote in her paper. “With better information and increased transparency, financial institutions can build more-accurate predictive models and develop more-suitable financing and insurance products for the seafood industry.”
Another prospective advantage is the enhanced ability to de-commoditize products, which is also a hot trend in the seafood industry, she told Undercurrent.
“Producers take a lot of pride in the way they produce seafood, or aquaculture, or wild fisheries, the way they handled the seafood, the quality and freshness of their products, and so they don’t want their products mixed in with everyone else’s seafood. We need blockchain to be able to do that,” Jain said.
Though SIRF is a heavily US-oriented group, interest by the seafood industry in blockchain technology is global.
Like a credit card machine
No doubt IBM will come out of the SIRF project with an advantage in the traceability solutions space. IBM’s system already ensures companies can set rules about who can see the data they upload and for how long and that they maintain control of their data even after it has been uploaded to Food Trust.
The company is already working to provide traceability for Ecuador’s Sustainable Shrimp Partnership initiative.
O’Scannlain said IBM was thought to be a good match for the project because of its experience working with other food types, but he stressed that it’s the project’s goal to create seafood-related uniformity that all traceability software vendors can take advantage of.
“We hope at the end of the day, we have something like a credit card machine at a retail store,” O’Scannlain said. “There’s one machine for all of the different credit cards, not a separate machine for AMEX, Visa or MasterCard. We want to have one solution that will work together with all of the vendors who are providing this technology.”
But the project also has many questions to answer and challenges to overcome.
“For blockchain to work, every point along the chain has to be using it,” Jain said. “And getting everyone to agree to use it is a hard thing, and imagine the training program behind that.”
Some suppliers are required by their regulatory agencies to continue to maintain paper records and some harvesters don’t have the latest technology, she noted. In some instances, harvesters are still using old cellular flip-phones because they maintain better battery life.
“There is certainly a vast range of sophistication on our supply chain,” O’Scannlain agreed. “You might have one guy with one boat somewhere or a multi-billion international salmon farming company. That’s a pretty wide range. We need to make sure this works all of the way across the supply range.”