United States: Blockchain Technology Ensuring Safe Transport In The Global Seafood Industry

John Richard Chapman III is a Partner in our Fort Lauderdale Office.

By now you have heard of Bitcoin and likely even blockchain. You have probably read or heard the stories of how blockchain will revolutionize the world in a manner unseen since the internet debuted. But can blockchain really prevent slavery and protect the world's most precious resources? Many believe the answer is yes. And those that believe in the technology are investing heavily to implement blockchain in our everyday lives, including in the food we eat.

Seafood, a $151 billion dollar industry, is the most widely traded animal protein in the world and the world's largest traded food commodity. In the United States, 90% of the seafood consumed is imported from Southeast Asia. The Asian seafood industry has come under significant criticism from human rights and environmental groups. Recent documentaries and investigative reports illustrate the darker side of the industry, identifying problems ranging from overfishing to outright slavery on fishing vessels that are away from port for years at a time. In response to the documented overfishing, fraud, illegal, unreported, and unregulated fish (referred to as "IUU fish"), the public has become much more mindful of the source and sustainability of the seafood they consume. Many consumers are demanding sustainability in their seafood, and they are willing to pay a premium for it.

Governments have also implemented regulations to limit fish fraud. For example, at the behest of President Obama, the National Oceanic and Atmospheric Administration created the Seafood Import Monitoring Program, which requires U.S. seafood importers to track key data along the seafood supply chain. The program took effect on Jan. 1, 2018, and must be adhered to by U.S. seafood importers.

But how can a seafood consumer ensure that his or her tuna filet, caught on one of thousands of boats on the other side of the world, was harvested using ethical and sustainable means? And how can a seafood importer ensure the accuracy of the supply chain data that it is now required to track by the U.S. government? According to many, blockchain can solve these problems.

Currently the seafood supply chain is largely stuck in the paper age, relying on paper records and tags to trace a fish from the time it is caught to the time it reaches the consumer's plate. This tracking method is unreliable and results in about 20% of the fish consumed being mislabeled, either intentionally or inadvertently. Blockchain could change this by making the global supply chain completely transparent, allowing seafood importers and consumers to use their smart phone to ensure their seafood was caught sustainably using safe labor conditions. Blockchain is nothing more than a secure, transparent, way to record transactions. Its supporters tout blockchain's security and how it uses a decentralized environment that is not reliant on any single entity to ensure its accuracy.

Encouraging participation amongst the many levels in the supply chain is a challenge to integrating blockchain-based tracking. But aside from being federally mandated for U.S. seafood importers, compliance can be incentivized if supply chain players see a premium for offering seafood products with traceable information on their harvest and sustainability. Incentives could even come in the form of "Fishcoins," which could be provided to local fisherman in exchange for information on their catches. The fisherman could then deposit the Fishcoins in their crypto wallets, and later exchange the Fishcoins for something of value.

Blockchain has already made inroads in the seafood industry. For instance, Provenance, a European-based company, piloted a program in Indonesia (which produces more tuna than any country in the world) to track locally-caught tuna through the global supply chain. The pilot program enabled fisherman to register their catch, and then allowed consumers to track their tuna through the supply chain. Then in May 2017, OwlTing, a Taiwanese software service for blockchain integration, launched the world's first app for tracing food products. And in August 2017, Earth Twine in collaboration with Stratis, announced its development of the world's first seafood industry blockchain for tracking the origin and supply chain of seafood products. Earth Twine advertises that its technology aids seafood importers in complying with government regulations for tracking seafood, such as the U.S. Seafood Import Monitoring Program.

Admittedly, these companies are not household names - yet. And implementation of blockchain in the seafood supply chain still has a long road ahead. But the technology is becoming more mainstream, and will likely play a role in our everyday lives in the near future. Without doubt, large players in the world's food supply chain are paying attention to, and investing in, the technology. In fact, a major chain store has reportedly partnered with a technology icon to use blockchain technology to track Chinese pork and Mexican mangos. Soon, you may know the origin and entire supply chain for the seafood you purchase at your local fish market or favorite restaurant. Those in the seafood industry that ignore the technology could be left on the sidelines.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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