The Blockchain Technology’s Potential Influence on Food Supply Chains and Food Traceability : Implementation Framework in the Hungarian Cattle Supply Chains

Gartai, Ádám (2020) The Blockchain Technology’s Potential Influence on Food Supply Chains and Food Traceability : Implementation Framework in the Hungarian Cattle Supply Chains. BA/BSc thesis, BCE, International Study Programs. Szabadon elérhető változat / Unrestricted version:

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Contemporary food supply chains are incorporating significant insufficiencies due to their disconnected, largely autonomous stakeholders, conducting their business in the world’s least digitized industry. The absence of a sophisticated traceability system is the root cause of continuous food frauds and outbreaks, which are responsible for inestimable social and economic damages as well. A distributed ledger technology, called “blockchain”, is a potential solution for the aforementioned global issues by serving as a trust protocol. Based on the author’s definition, a blockchain is a distributed ledger in a peer-to-peer network, in which transactions are organized into a chronological chain of data blocks in an immutable and authentic way, by validating them according to a pre-agreed consensus mechanism by the peers of the network. Consequently, the aim of the study is to investigate and reveal the potential influence of this meta technology on the status quo of food supply chains and their traceability shortcomings. In order to deliver practical results, the analysis of the research focus is conducted through the example of the Hungarian Hortobágy Angus cattle supply chains, intending to explore the main and sub-research question as follows: (i) How can blockchain technology be implemented in the Hungarian food supply chains to enhance traceability and transparency? (ii) What is the potential impact of blockchain technology on the domestic food supply chains and the food retail industry? The study was built on three main pillars with the intention to provide a holistic approach to the focus of the study. The first pillar investigated the relevant theoretical background of the research by overviewing the applicable scholarly literature. The chapter comprised of two main parts, namely (i) food traceability and (ii) the blockchain technology itself. In the first part, the status quo of food traceability issues was presented besides introducing the major concepts and characteristics. The second part elaborated on the six major enabling technologies of blockchain, as follows: peer-to-peer networks, distributed ledgers, distributed consensus mechanisms, hash functions, hash chains and lastly digital signatures. Afterwards, a brief synopsis is conducted of the technology, introducing the definitions and types of blockchain besides comparing the associated attributes of each variety. The second pillar established the applicable methodology of the analysis, which is based on an exploratory, empirical research utilising a qualitative hybrid approach. Consequently, the paper is built on (i) eleven in-depth interviews with experts from the USA, Australia and Hungary, experienced in the field of food supply chains or the blockchain technology and (ii) the knowledge presented in the theoretical background. The selection criterion of the contributors was based on a purposive sampling technique, according to the relevance of the interlocutor’s background. Additionally, a quantitative sub-research was conducted as well in the form of questionnaires with a total of 210 responders, focusing particularly on the domestic consumer preferences in terms of food traceability and price sensitivity. The third pillar was responsible for analysing the research questions of the study, carried out based on the first two pillars. The findings of the paper can be divided into two sections, according to the main and sub-research question. The first section includes the analysis carried out through the investigation of the cattle supply chains, in which a bidirectional, farm-to-fork traceability system was proposed, on the basis of a hybrid blockchain architecture along with a number of incorporated technological devices. Based on the findings, the presented framework can ultimately replace the current traceability systems, enabling a novel way of cooperation between the stakeholders besides instantaneous data capturing and sharing along the life cycle of the products, thus taking food traceability and transparency to a new level. The second section claims that the established blockchain-based solution can positively influence the analysed attributes of food supply chains, namely: traceability, efficiency, trust, quality, safety and last but not least financing, ensuring a highly sophisticated supply chain. The proposed traceability system was built in a way to eliminate most of the implementation limitations, that are well-known from the contemporary literature, such as scalability issues, vast energy consumption and data storage capacity. Despite this, there are still a number of technical, regulatory, institutional and infrastructure-related challenges that have to be addressed before the widespread adoption of the solution, namely: (i) standardization of data structures, sharing and accessibility, (ii) interoperability of data between the private and public blockchain platform and last but not least (iii) the associated development and implementation costs. Thus, further research is needed towards the aforementioned limitations of the system. The presented findings of the study offer valuable managerial implications as well. Based on my research, I recommend the establishment of a blockchain consortium particularly for the food traceability use case to achieve a standardized framework with the collaboration of supply chain stakeholders and the authorities. Additionally, the research outcomes provide significant value for the successful execution of the Digital Agricultural Strategy of Hungary.

Item Type:BA/BSc thesis
ID Code:13987
Specialisation:Economist in International Business
Deposited On:05 Oct 2021 11:57
Last Modified:02 Dec 2021 11:52

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