The Price of a Story
Blockchain is another way cattle producers can connect with consumers.
For anyone trying to understand what blockchain is and what it could mean for the U.S. beef industry, Wyoming state senator and beef producer Ogden Driskill describes it as "source verification on steroids."
A fifth-generation rancher, Driskill still owns and helps manage his family's Campstool Ranch, located at the foot of Devils Tower, in Crook County. The operation is described as commercial, cow/calf and raising "all-natural Angus beef on grass and sunshine."
Joining with other area cattle producers, Driskill says they've found blockchain is a legitimate way to look for premiums in a tight market. At press time, the program had tagged nearly 1,600 calves, and interest was continuing to grow in the concept among Wyoming's 11,400 ranchers. Those ranchers, Driskill points out, generate more than $1 billion in cattle sales annually.
FOOD SOURCE VERIFICATION
The operations Driskill markets with implement blockchain verification at birth when calves receive an RFID (radio-frequency identification) tag (Y-Tex brand), which is scanned using Tru-Test technology. The information is entered into the tracking system built through Ethereum, a blockchain app platform.
Driskill notes food-source verification is growing in importance as current shipment-tracking systems used by companies such as UPS are highly susceptible to fraud. The FBI reported that in 2010, the last year for which data has been made available, $30 billion in goods was stolen through shipment fraud.
"Beef operations producing high-quality meat can use blockchain to get a premium price every time they sell cattle, probably $150 to $200 per head," Driskill explains. "This technology also has potential to greatly expand foreign beef markets."
THE BLOCKCHAIN PROCESS
Following the birth-applied RFID tags, Driskill explains calves are scanned again at weaning and at transport. Information about time, location and ownership data stamps are loaded into the blockchain system. Calves are then tracked and scanned from feedlot to packer to retailer or restaurant. Bar codes on the meat package allow consumers to check the source of beef before they purchase it.
"If the beef goes to a restaurant, there may eventually be a QR code on the menu that a customer could scan to find out where the beef was raised," Driskill says. "Many people have a great interest in knowing if their food story agrees with their personal ethics."
One advantage ranchers such as Driskill can experience when using a blockchain system is receiving a larger percentage of the sale. This benefit, in addition to recognizing a premium on the sale of each animal, can at times significantly impact the rancher's bottom line.
"There's growing interest in blockchain, and, as with any new technology, there are few regulations for it," Driskill says. "Our Wyoming legislature is working to get ahead of issues that could arise and doing all we can to keep blockchain a grassroots effort that provides direct benefits to beef producers."
He admits the use of blockchain adds "layers for reporting," but he believes the extra effort is well worth the time it requires.
Many U.S. beef producers are unaware of the strong desire that exists in foreign countries for Northern Plains beef products, Driskill notes.
"If we can verify where our cattle come from in our five-state region and the processes they've undergone during their lives, there's a huge premium to be made," he believes.
One of the attractive things about blockchain data is that it cannot be modified once it's in the system. That significantly raises confidence levels in both buyers and sellers, regardless of the product type. Blockchain is a two-way street, letting sellers also verify that buyers are who they say they are and that they have the funds to cover purchases.
Current members of the marketing group Driskill works with include Steve Lupien, Philip Treick, Philip Schlump, Tyler Lindholm and Jerry Holthouse. The group has a minimal enrollment fee to be part of the program plus the cost of the RFID tag.
"There's immense interest in blockchain," Driskill says. "It's giving beef producers the opportunity to establish a niche market for just about any location in the world. Wyoming ranchers plan to use the technology to build a market in the Pacific Rim and deliver ag products there.
"We're really interested in putting more money in the pocket of the beef producer. At the same time, we're selling the story behind our beef. One Idaho ranch is selling beef directly to a high-end restaurant in Taiwan. They're realizing a much greater profit than they could in our domestic market. Taiwanese demand for their beef is growing, and we believe there's a very strong demand in the Pacific Rim for beef from this region. It's a market that's just waiting to be developed."
BEGINNINGS OF BLOCKCHAIN
Blockchain was invented in 2008 by an entity using the name Satoshi Nakamoto. The technology was intended to serve as a public transaction ledger for bitcoin, a cryptocurrency (digital currency).
The bitcoin system employs "cryptography," a computer term for code, which, once entered, cannot be altered. Since its inception, blockchain has proven to be "unhackable."
In the beef industry, 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." That data trail, which cannot be modified by anyone, gives confidence to buyers that the beef product they purchase is exactly what the beef producer says it is.
Beef producers uncomfortable with making personal production data available to the public can use blockchain and simply select specific data for public view. Additional data can be held in the system without making it visible to everyone.
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