Beef blockchain buzz: Technology adds teeth to traceability
October 3, 2018
Since humans first started accounting for trades in value, be it with hammered metal, cowrie shells or squirrel pelts, the concept of money has continued to evolve.
Today a group of Wyoming ranchers and businesspersons are taking cutting edge trade technology – blockchain management – and envisioning it applied to one of the world's most traditional industries, that of raising cattle.
What is a blockchain?
Blockchain is a generic term for a connected, unalterable system of data that notarizes when, where and between whom a transaction or action has occurred. Blockchains utilize cryptography (code) that once entered, is unable to be altered. So far, the technology is "unhackable."
The first blockchain was developed in 2008 by an anonymous coder to launch the global digital currency Bitcoin, a virtual monetary system that bypassed banks (and pardoned the lives of many squirrels). The vernacular is "the blockchain," however, anyone can apply the technology, and a variety of companies today peddle their versions of blockchain platforms. Theoretically, kids trading marbles could enter transactions into a designated blockchain. Real-world examples of potential uses, though, include digital voting, land and title transfers, tax regulation, medical recordkeeping, or more controversial notions of weapons tracking or workforce regulation.
Branding crews and RFID
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In the small town of Devil's Tower, Wyo., where his cattle graze eighth-generation land in the shadows of the national monument, rancher, businessman and state senator Ogden Driskill envisions the blockchain as a missing link in adding value to Wyoming cattle.
Development of blockchain legislation in the Wyoming Senate, along with a separate, but eye-opening, trade mission to Taiwan, spurred Driskill to partner in the startup company BeefChain earlier this year. With the tagline "Wyoming Craft Beef," the alliance includes the owners from six Wyoming ranches, University of Wyoming faculty, traceability solution specialists, and reps from big-hitters like IBM and Microsoft. Their vision is to gain USDA process verification approval and track calves from gate to plate. Ideally, to plates in the Pacific Rim.
"We in the U.S. have no idea how much people over there want beef from Wyoming and about a 5-state region around here," said Driskill. "If we can verify where our cattle came from and the processes they have undergone in their lives, there is a huge premium to be made. Our goal is to bring home probably $150-$200 per head to enrolled producers."
This spring 1,600 calves of Driskill's and partnering ranches were tagged at branding with RFID tags procured from YTex, scanned using Tru-Test technology and entered into the BeefChain system built through Ethereum, a blockchain app platform.
The future timeline includes owners scanning these calves again at weaning and transport, where their time, location and ownership data stamps will enter the blockchain. From there, Driskill said a lot of legwork still needs to be done. He and BeefChain CEO Rob Jennings agree success of traceability hinges on participation of all sectors, including the feedlot, packer, and retailer or restaurant.
They envision as their the end goal diners scanning a QR code while perusing a menu to determine if a particular food story is agreeable to their ethics and desires.
In the meantime, BeefChain is working to develop key relationships with feedlots and say they feel the best long-term solution is for Wyoming to have its own mid-sized packing plant as part of the system.
Something new under the sun
Traceability programs, value-added chains, and branded beef have been on the agenda of any cattlemen's meeting for decades. For years, discussions have droned on about how to make more money selling a premium beef story.
Tracking that story becomes the problem. Many companies are effective at source, age and other verification, and a handful of branded programs are wildly successful (think Certified Angus Beef®).
BeefChain is hitching its cart to technology.
Compared to verification systems based on affidavit and auditing protocol, Jennings said the blockchain is superior as it provides immutable location data bound by technology, not reporting. Jennings said claims such as health treatments and feeding practices, at this point, will be testament based. "But if you're talking about getting granular with data on antibiotics and hormones, we're really not that far away from having tags that are reading vital signs and health signs on animals. The dairy industry is there, and the technology pipeline is booming."
By developing a system around the technology, Driskill and Jennings say they are confident demand from consumers will drive adoption among the middle-sectors.
Yes, but … why
Be it the proverbial motorized car ending the harness maker's career, disruption brings progress at the cost of change.
But from his vantage point, Jennings notes that disruption is really about bringing the glory – and the dollar – back to the rancher, and ultimately eliminating the middleman by connecting the cattleman to the consumer.
"The two most important people in the chain are the people producing the food and the people eating the food," Jennings says. "For so long the rancher has been forgotten about – or even persecuted – and not celebrated, but the rancher should be the hero. What's more important than where that steak came from, and what it's comprised of?"
He views the blockchain as creating a collective bargaining tool for independent ranchers, and an improved instrument for price differentiation and discovery. Ultimately, Jennings said, it could create new avenues of financing and cash flow for a very capital intensive, delayed ROI business.
"Even though it may seem a little 'Star Trek-y,' once you've turned your animal into a digital asset with an RFID number with location and date stamps, there is potential to create fractional ownership of the herd – basically 'tokenize' your cows.
"This could create a new model of financing the ranch. A rancher could presell the animals, democratize the commodity market, and people could buy tokens into herds they feel parallel their belief systems." That token could ultimately be traded in the form of a box of beef delivered to your house, or a share of profits.
Jennings said the basis of the program is election. "We're not asking ranchers to change their methodology or open it to evaluation. We're simply offering new technology – not as a top-down mandate, but as a grassroots bottom-up movement."
Driskill said he finds it ironic that the community of ranchers most opposed to the ideology are those who support mandatory COOL. "I've never seen a government program that I like as a whole. They have good intentions, but they all end up being expensive and complicated when they're done. This offers people a chance to do COOL on their own merits."
Ultimately, it's the early adopter, the risk takers, the man in the ring, who lead change.
Naysayers will say it's unnecessary. Conspiracists will cry "Big Brother." And traditionalists will simply refuse to participate.
Nonetheless, at some point the car will likely come, and the buggy disappear. And is that a good thing or a bad thing?
It simply depends on the driver.