This piece is an extract from Ambrosus Vision Paper, which is available to download in English. Translations of the Vision Paper in Arabic, Chinese, Japanese, Korean and Russian will be added within the next 10 days. The purpose of this piece is to introduce the problems within the global food supply chain and explain how this led to the birth of Ambrosus and the subsequent development phases and pilot projects.

Food is something everyone, everywhere needs at all times. Food provides the necessary nutrition for growth, health and the intellectual abilities of all humans. The quality, safety and origins of food directly influence our physiological and mental well-being. And yet despite the vital importance of food, the global system of food production and distribution does not adequately serve the needs of our society. Consumers are in the dark about what they actually eat; farmers are forced to adopt the cheapest agricultural techniques, ones that often pose health risks, and are then squeezed out of profits; large manufacturers are primarily concerned with maintaining market share and are concerned with food safety only to the extent that it protects them from legal liabilities; food scandals with mislabeling, fraud, contamination or unclear origins are increasing every year; supply chain networks are prone to risks of non-payment and malpractice, and are dominated by a small, collusive group of intermediaries who pay minimal prices to suppliers and charge a significant premium to end clients; various ingredients are widely used in food processing that have been linked to increased incidence of cancer, heart disease, diabetes and other potentially terminal diseases, yet due to strong lobbying by the industry and paid research groups these ingredients continue to be used while people remain unaware of their serious risks.

The food we give to our children directly influences their health, growth and intellectual development

The good news is that the state of technology today allows for a bold rethinking of how global food supply chains and markets could operate. A system of interconnected quality assurance sensors can reliably record the entire history of food from farm to fork; blockchain can protect the integrity and verifiability of sensor data; while smart contracts can enable automatic governance of food supply chains and manage commercial relationships between the different actors within them. Coupled with the dynamic ecosystem of complementing technologies and protocols developed within and around the Ethereum ecosystem, we can envision — and build — a thriving food vertical that will create value for all stakeholders participating in the food sector.

The combination of the maturity of the technology, the brainpower and creativity of participating actors and the clear opportunity to build a bridge between Ethereum and the food sector led to the development of the Food Supply Chain 2.0 vision by Team Ambrosus. We introduce Amber, the world’s first bonded token that follows the food products alongside supply chains, recording and handling the sensor data through the combination of Ethereum blockchain, sidechains and decentralised storage solutions. The information about the product’s quality, safety and origins is uniquely assigned to the accompanying token; hence the name bonded token. Amber also serves as fuel to run the Ambrosus ecosystem, which creates the world’s first publicly verifiable and community-driven system to assure the quality, safety and origins of food, and to create a range of valuable services around this core proposition, such as peer-to-peer marketplaces, smart contract-powered supply chain management tools, a quality-assured commodities exchange platform, consumer-oriented mobile apps to check quality of food, commission-free food delivery platforms, predictive data analytics for food supply chains as well as other solutions whose diversity and scope is limited only by the creativity of the participating actors and the wider community.

Precious seafood is often subject to poor handling, unclear origins, unsustainable practices and counterfeiting

The key problems with food supply chains and markets are briefly outlined above. Below, we will attempt to identify the main characteristics whose combination created the many perverse incentives, inefficiencies and malpractices that have been persistently reducing the total value that the global economy could derive from the food sector:

1. No insights into individual items: labels and certificates pertain to the whole line of a product developed by a manufacturer; individual items still run the risk of being below standard, for example due to problems during the distribution or sourcing stages.

2. Reliance on the honesty and competence of a central party: governments and companies are the only parties enforcing standards today, meaning consumers must trust them to carry out the proper enforcement of these standards. There is no independent verification tool for consumers to assure them of the internal parameters, processing methods or external storage conditions of their food.

3. Misleading or incomplete labels: many labels do not provide full information about the product to the consumer (e.g. consumers who buy products marked BIO / Organic may not realise that these labels do not guarantee that food is pesticide-free, chemical-free or GMO-free). Labels are also regularly abused, for example through ingredients that are added to the final product that do not conform to norms.

4. Squeezing out of small and quality producers: many smaller producers and farmers actually do produce better quality products and follow environmentally-friendly and health-benefiting agricultural practices to a far higher degree than large food processing conglomerates. However, they have no way to demonstrate this fact to consumers, and they struggle with finding prospective customers and selling to them. In the absence of a peer-to-peer marketplace with a reputation system, payment mechanisms and enforceable contracts, market forces will continue working against these producers and their practices.

5. Fragmentation and opacity of supply chains: supply chains have become complex, opaque and fragmented, making ingredient tracing, origin authentication and identification of chemical contamination, infestation or poor transportation conditions an impossible task. Lack of tokenisation and effective tracing techniques for food products result in chaotic and murky markets, dominated by a small group of large buyers over whom nobody has control or oversight.

6. Unsustainable resource use: socio-environmental factors are largely excluded from pricing considerations today and, despite the push from consumers and civil society groups, there is often lack of insight into the sustainability of food supply chains, including such factors as emission of CO2, use of resources in production and processing, lack of environmental degradation and fair working practices. Due to lack of insight, performance in sustainability indicators does not currently translate into impact on companies’ profits, leading them to use sustainability as a marketing tool, rather than adopting it as a true corporate strategy.

All these characteristics together create a low level of trust in the food system amongst consumers, poor living standards for farmers, low satisfaction amongst intermediaries and caterers and market distortion opportunities for the large intermediaries that benefit from complexity, opaqueness and lack of data. This state of affairs led to creation of Ambrosus. We will be releasing regular updates about our technology over the next few weeks. You can see how we are solving these problems by reading our Vision Paper.