Alibaba trials Blockchain in Aus and NZ to tackle food fraud

By Joseph James Whitworth

- Last updated on GMT

Steve Ciobo MP, Minister for Trade, Tourism and Investment witnesses signing of the agreement
Steve Ciobo MP, Minister for Trade, Tourism and Investment witnesses signing of the agreement

Related tags New zealand Supply chain

Alibaba Australia is to trial Blockchain to mitigate the risk of counterfeit and fraudulent food products.

The firm will work with PricewaterhouseCoopers (PwC) firms in Australia, New Zealand and China.

Blackmores and Australia Post will provide market testing across their supply chains.

All four firms signed a Memorandum of Understanding (MoU) witnessed by Steven Ciobo MP, Minister for Trade, Tourism and Investment during Chinese Premier Li Keqiang’s visit to Australia.

Alibaba said the framework will be piloted in Australia and form the basis of a global supply chain model that can be applied across all of Alibaba Group’s e-commerce markets.

Building up the Blockchain

The project will include development of a pilot blockchain technologies model for vendors to get details from suppliers about where and how food was grown and map its journey across the supply chain.

The technology has the potential to enable up-to-date audits, increasing transparency between producers and consumers and mitigating the risk of counterfeit and fraudulent food products.

World Food Programme tests blockchain

Blockchains provide a way for two parties to do business without the need for a trusted third party.

An identical record of all messages on a blockchain is available to every participant (or ‘node’), which can be thousands. Because there are so many copies of data on the blockchain network, it is difficult for a would-be attacker to alter records and falsify transactions.

The first test at field level of WFP’s blockchain innovation - called ‘Building Blocks’ - was in January in the Sindh province, Pakistan.

As vulnerable families received WFP food and cash assistance, transactions were authenticated and recorded on a public blockchain through a smartphone interface. Transaction reports generated were then used to match the disbursements with entitlements.

Blockchain could help humanitarian actors roll out cash assistance in days when disasters strike.

Blockchain technologies were originally developed to track the transfer of Bitcoin and other cryptocurrencies. 

They are designed to authenticate, verify, permanently record and provide ongoing reporting in relation to the transfer of ownership and providence of goods.

Maggie Zhou, managing director of Alibaba Group Australia and New Zealand, said food fraud is a global issue that costs industry billions every year and puts consumers’ health at risk.

She added the agreement was the first step in creating a framework that protects the reputation of food merchants and gives consumers confidence to purchase food online.

“Given Australia and New Zealand’s exemplary regulatory environments, along with being home to some of the world’s most successful food and beverage exporters, it was a natural decision to pilot the program here,” ​she said.

“We see the Australian and New Zealand markets setting the tone for the rest of the world when it comes to integrity, safety and quality of food supply chains.”

PwC research shows 39% of companies said it was easy to fake their food products and 42% believe there is no method for detecting fraud, beyond standard food checks.

Luke Sayers, PwC Australia CEO, said: “Building trust in our food supply chain is important at a time when public confidence in food producers, processes, vendors and even government regulators has been rocked by a number of scandals.

"Global consumers expect instant gratification and when it comes to food, that means any time, any place. As a result, food supply chains have gone global which creates added complexity and opacity.”

Combat counterfeit products in China

Australia Post said the initiative with eCommerce company Alibaba and natural health firm Blackmores will combat the rise of counterfeit food being sold across China.

Bob Black, CEO of StarTrack (a business of Australia Post), said the project would help guarantee genuine products arrive safely to Chinese consumers.

Black said the platform will track food from paddock to plate, strengthening the supply chain.

"The initiative will leverage our secure, reliable and fast service to support the authentication of Australian products bound for the Chinese market,” ​he said.

“We play an important role facilitating and growing trade between Australian and Chinese businesses and consumers.”

Australia Post said food fraud is one of the biggest issues facing industry, with the potential health risks associated with adulteration and loss of trust from consumers and governments.

In recent years counterfeiters have targeted health supplements, beer and wine, honey and cherries.

Christine Holgate, Blackmores CEO, said all of its products pass more than 30 quality checks and tests before being released for sale.

“This initiative with Alibaba Group, PwC and Australia Post will provide even greater confidence for consumers purchasing our products through e-commerce channels,” ​she said.

“We look forward to making this process and our supply chain more visible and transparent to our consumers in China as part of this project.”

Fonterra has also signed a memorandum of understanding (MOU) with Alibaba, NZ Post and PwC.

Jacqueline Chow, COO global consumer and foodservice at Fonterra, said it would give consumers more confidence in products they are buying.

“Connecting our co-operative with consumers and being able to reassure them about the quality and safety of our products is fundamental to being the most trusted source of dairy nutrition,” ​she said.

“It is all about providing consumers with the opportunity to have a personal connection with their food and let them know more about the source of their food, how it is produced and how it moves through the supply chain.”

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