Marton Ven is CMO at TE-FOOD International, which provides traceability solutions for livestock and fresh food companies. He’s also the co-founder of Flumen, a company that provides electric car fleet charging. I asked Marton some questions on topics such as blockchain technology solutions, collecting data, and market research.
Traceability in the Food Industry
Alex Ross: TE-FOOD focuses on traceability solutions for the food industry. Why is this such an important issue? Is it because consumers are getting more demanding about knowing where their food comes from?
Marton Ven: Yes, consumer demand is one of the most important motivators. According to statistics, during the recent years, consumers became increasingly interested in knowing what they eat. 75% of them are even ready to change brands if those provide more information on provenance, processing methods, and ingredients.
Several consumer segments from LOHAS to Naturalites and Drifters are the primary targets for traceability projects, the same segments which are the most suspectible to the concept of sustainability.
Interestingly, Lumina Intelligence reported that consumer engagement is lower than average in case of products with sustainability claims. The report came to a conclusion, that sustainability needs to be explained on human level, to be communicated as a story to engage consumers.
I think traceability fits to this approach very well. It can be presented as a story, which gives a real background to the sustainability claims. If you look at the traceability landing page we created for a Canadian beer supply chain, you can see photos, videos, descriptions about the cultivation and harvest of the barley from which the beer in your hand originated, how it was malted, roasted, brewed. You see a story which started several months ago on a distant field, and became the beer you drink. But traceability from the farm to the retail creates value on more levels.
Retailers or food producers can gain deeper insight and control over their supply chain, and identify bottlenecks, where the distribution slows down. By optimizing their supply chain processes, they can achieve quicker distribution processes, thus decreasing food waste.
Another value is quicker, and targeted product recalls. Recalls cost billions in USD annually for the food industry, partly because tracing back a retail product to the farms takes weeks. With a traceability system it takes seconds.
The Challenge of Collecting Data
AR: On the challenge of tracing supply chains in the food industry, you are quoted in an article, Blockchain for the Food Industry, “The hardest obstacle comes from collecting data from a large number of different companies. In recent decades, supply chains have become global, sometimes incorporating hundreds of companies from different countries…” Does blockchain technology make it easier to track such complex supply chains and collect better data?
MV: No, blockchain technology itself doesn’t make data collection easier. But it makes the whole process more trustworthy. When all supply chain participants send their events (e.g. harvest, transport, processing, etc.) to a decentralized, immutable ledger (like blockchain), it means that they are solely responsible for the information they entered. Certainly blockchain can’t verify if the information entered is valid or not, but it verifies that a specific supply chain participant stated something about a product batch, and makes this information accessible to other companies in the downstream supply chain.
This is a big step forward, as currently downstream supply chain companies often don’t see beyond their first tier suppliers. This is a significant source of risk.
How Traceability Benefits Health & the Environment
AR: TE-Food is involved in a traceability project in Trinidad that is designed to limit the use of pesticides in the making of a popular dish, Callaloo. This points to how traceability is an important issue for health and environmental reasons. Do you see the potential for other ways to help make food safer by using this type of technology?
MV: In case of contaminations, a traceability system can show you in seconds from where a contaminated product originates, and you can also get a list where similar products from that farm are currently in the supply chain. This enables targeted product recalls to be done significantly quicker than the current process. Such feature can save lives, and companies can mitigate product recall costs.
Traceability can also be used against food frauds. Some common food frauds are pumping animals with water, or injecting them with sedatives before slaughtering (for better meat quality). We managed to implement business logics into our implementation in Vietnam to identify such cases.
A third example: a retail chain turned to TE-FOOD to have better insight of their fresh fruits suppliers. If the shelf life of a package of strawberries is 20 days, it’s a significant difference if the grocery store receives it after 12 days or 18 days. They source fresh fruits from over 150 suppliers, and they want to see where distribution slows, so they can intervene, and prioritize quicker routes. This leads to decreased food waste.
AR: TE-FOOD works with a variety of businesses and provides several distinct services. Could you talk a little about your market research process and how you identify and reach out to the most promising potential clients?
MV: Farm-to-table food traceability is still a new field. Contrary to the common consumer belief, retailers usually don’t exactly know from where their food products originate. Supply chains are global with a lot of participants, while food producers and retailers often don’t have the capacity to monitor anything beyond their first-tier suppliers.
So food traceability market is still forming, and after three years we are still learning how to target our prospects. What we recognized, that the two segments which can successfully implement such system are food producers and retailers. They have the power to onboard their suppliers.
The most common purposes to implement such solutions are marketing (through transparency), compliance to food import regulations of target markets, and deeper supply chain control.
Currently the company types which are receptive to traceability are large food companies, and organic product producers. We believe that large companies implementing such solutions will motivate their competitors to follow them, which will motivate medium size companies to follow the big ones. We hope that on the long term, transparency will be the new norm, a general demand.
Solving Problems in Different Industries
AR: Blockchain solutions are now being applied in quite a few industries. Aside from the technology you implement in your own companies, what do you see as some of the most promising blockchain applications in the coming years? A related question: do you see any particular problems or challenges that come with this technology?
MV: Blockchain is a decentralized, unmodifiable, secure ledger technology for any kind of data and business logic. This makes it ideal for any kind of activity where different participants exchange assets or information, and they don’t necessarily trust each other.
These industries in history tend to utilize middle men, or trusted third parties. Banks, attorneys, land registries, brokers, fund managers are some of these roles, which might be disrupted by blockchain technology.
Although you have to differentiate blockchain technology and cryptocurrencies/crypto tokens, I think that the future possibility of using crypto assets makes blockchain a perfect solution for several industries. There are already several projects to tokenize real estate ownership, bonds, or stocks. This area is developing with an extreme pace.
As blockchain technology is quite new, there are a lot of technical challenges from scalability, speed or energy impact, as well as legal issues with anonymity or GDPR compliance (Right to forget is not compatible with unalterable ledgers).
The technology and its legal framework need to mature a lot, which means there will be a lot of failures. And public opinion is often hostile when technology makes errors. A crash made by an autonomous car makes headlines all around the world, while there are tens of thousands of accidents each day. Obviously, failures will hinder adoption, but I think the advantages of blockchain are strong, and companies will overcome these challenges.
Potential Solutions and Challenges With Blockchain
AR: Who are some of the people -such as authors, business leaders, or influential leaders in any field, who have had a strong impact on your outlook?
MV: I would like to mention Michael Porter, a professor at Harvard Business School, who had a famous TED Talk about “The case for letting business solve social problems”.
Lack of food safety, food frauds, overuse of antibiotics, economic inequality are common social problems where food traceability can have a positive impact. Companies like TE-FOOD are capable to provide a solution for these problems, and do it by making profit, which is necessary to keep solutions scalable.