This time I had the pleasure of interviewing TE-FOOD: an skilled team providing a top-to-bottom solution for all participants of the food supply chain.
How would you describe the main pillars of the project?
TE-FOOD is a blockchain ecosystem for farm-to-table fresh food traceability. As an ecosystem, it is aimed to bring together food companies and solution providers for the contracting, management, and clearing of various services around food quality and supply.
As a centralized platform, it started live operations in Vietnam during 2016, and currently serves over 6000 business customers doing 400 000 transactions each day. While most of the customers are small businesses, there are some leading food companies amongst them like Lotte Mart, Big C, AEON, Auchan, CP Group, and CG.
TE-FOOD is a top-to-bottom system, as it provides solution for companies with any kind of traceability infrastructure. If they have nothing, we provide physical identification materials, client applications, and blockchain ledger. If they already have a traceability system, we provide various interfaces to integrate. Whatever technological readiness they have, we have an implementation methodology for them.
Another strength is the farm-to-table approach. If a food company just wants to comply with the traceability requirements of a country where they export to, TE-FOOD can be implemented from farm-to-export. If they want to mitigate tampering of their product in their target markets, we can implement it farm-to-table, so the consumers can scan the QR codes on their products in the grocery stores, and watch the food quality information of that specific food product.
As the supply chain of pigs or eggs works differently, we provide tailored processes for each food type. Currently we track and trace 12,000 pigs, 200,000 chickens, and 2.5 million eggs each day. Cattle traceability started recently, and we are working on the processes for various fruits and vegetables.
Another important selling point is that TE-FOOD is a very affordable solution. It’s important, as the companies in food supply chains have usually low margins.
And finally, what we always emphasize, a good technology is nothing without without a proper implementation methodology. Last year we trained more than 10,000 people in the food industry to use TE-FOOD, so we gained huge experience in implementations.
Thinking about the future, do you have any roadmap with relevant upgrades or partnerships?
Yes, we have a roadmap on our web site. But a roadmap is a plan, and plans can change according to the market conditions.
We inserted new elements into the roadmap, like the deep data analysis based productivity suggestions module, which automatically gives small and medium sized farmers pragmatic suggestions how to improve profitability to compete with the larger companies.
We also had to de-prioritize some roadmap elements, as we don’t develop them just for the sake of innovation, we need real life implementations immediately to achieve product-market fit solutions.
Regarding partnerships, we are seeking for partners for the sales and implementation of TE-FOOD, and for creating added value through joint projects. Recently we announced a cooperation with FAO, the Food and Agriculture Organization of the United Nations, which enables us to research the possibility of using blockchain technology in official livestock statistics.
What’s the added value of TeFood in comparison with other competitors?
Recently we wrote a blog post about the competition of blockchain based supply chain solution providers. Vechain, Waltonchain, Ambrosus, OriginTrail, Wabi, Devery or TE-FOOD are extremely small crypto startups compared to traditional IT services giants. The market share all the mentioned crypto startups represent is not noticeable on the global scale.
It makes no sense to compare ourselves to them, as the real competitors will be IBM, SAP, T-Systems, Accenture, Microsoft, Atos, Capgemini, Cognizant, TCS, NTT Data, and a lot of other established providers. They have the customers, an unimaginable sales power, and the implementation resources. We have to partner with as many of them as possible, and enable them to create successful implementations on our ecosystem easier and cheaper than developing their own.
We partnered with Deloitte, Laurel, Nongshim Data System, Telenorma, to name a few, and more to come. With the flexibility of our software, the integration possibilities, and the compliance to GS1 standards we can provide them a solution which can be sold to their customers.
What are the use cases you are looking to cover?
There are several use cases for fresh food traceability:
- Governments need real time insight of the food demand and supply of regions. It might seem strange, but in a lot of country they don’t have any such insight.
- On the emerging markets, the growing middle class puts bigger pressure on governments to decrease food frauds.
- Outbreaks happen very often in the developed countries as well. Farm-to-table fresh food traceability could literally save lives by reducing the path to find the source of contamination to seconds, instead of weeks.
- Products of certain geographical indications and traditional specialties (e.g. Prosciutto from Tuscany region, Feta cheese from Greece, Wyoming premium beef) are often tampered on foreign markets. Farm-to-table traceability can provide a proof of origin.
- Traceability can also help to prove that special products are really what they state: bio, halal, kosher, non-GM, local, etc.
- As more countries implement stricter food import regulations (like the FDA Food Safety Modernization Act), traceability data is often required. This forces farms and food producers to implement such systems, otherwise they lose their export markets.
How are you aiming to provide scalability to your service?
As of now, we are a 37 person solution provider, which is quite small number to run projects globally. This is why implementation partners are very important. We already have partners who can sell and implement TE-FOOD in Italy, Germany, South Korea, South Africa, and Hungary. We train them, we provide them resources, we hope that soon the first results can be announced.
Regarding scaling of the network, we don’t think it will be an instant issue. Unlike several other projects, we don’t plan to build a technology aiming worldwide adoption right now, and won’t fight with transactions per second data. Current blockchain technology is immature, but the development is extremely fast, so we think the best strategy is now to build a solution for the next 12–18 months. 1,5 year later, we will have a completely different technical landscape as well as growing demand for blockchain services. No one will conquer the world quickly, mass adoption of blockchain based food traceability will take 5–10 years of hard work.
But certainly we will implement the use of masternodes right from the start. There will be three masternode tiers and one special tier. Each tier will give different kind of service to the network.
- Iridium — a virtual node, where node operators can rent out their TFD token licences.
- Steel — masternode to run interfaces (between TE-FOOD client and its own blockchain or a third-party blockchain (e.g. Vechain, WaltonChain).
- Platinum — masternode to provide interfaces and validate transactions on TE-FOOD’s own blockchain.
- Titanium — masternode to run all services of TE-FOOD.
Lately there is an strong debate around the risks of some tokens being a security. Are you worried about that?
This is maybe the toughest barrier in the advancement of the crypto economy. The people who followed our project know that we always focused on regulatory compliance. But people don’t know that we went further than trying to interpret the announcements of authorities in the news.
We contacted the SEC equivalent authority of Germany through our partner company, Telenorma AG, and collaborated with them to create a token economics, which can lift us from the gray area where crypto companies exist all around the world. Luckily, the financial supervisory authority was helpful, and after several months of work, the token economics of TFD was born.
As a result, for the first time in the history of crypto, a major securities commission released an opinion, which referred to, that based on its economics, the TFD token is not a security, it doesn’t need a licence under the German Banking Act, or the Payment Services Supervision Act.
What does this result exactly mean? Many companies said that their token is a utility, but many times the securities commission of their country thinks otherwise. The tokenized licence model we worked out is finally one which is compliant with the regulations. The importance of this achievement goes beyond TE-FOOD, it opens new horizons for this whole industry as well.
Many people say Venture Capital is on the sidelines of crypto, waiting for the end of the operation in a regulatory gray area, and we got over this obstacle.
Evaluation of the current scenario for TE-FOOD and the blockchain industry.
We have been enterpreneurs in the corporate IT industry since 1996. To tell the truth we are a bit disappointed for what we experienced in the last 6 months in crypto. In 22 years we haven’t met as many unreliable, unprofessional suppliers as in this short period of time. Shady business conditions, price offers without describing the exact service, large media companies which don’t know what data should be written on an invoice, many things we haven’t got used to. And there are the extreme amount of scammers, which results in paranoid distrust that makes businesses even more difficult to operate.
I think this space desperately needs regulation, because the current environment will discourage traditional companies to enter. If we want governments and businesses to take crypto serously, then it has to mature, and adapt to how business is traditionally done. An industry with over 250 billion USD market capitalization can not appreciate pure hype or pyramid schemes, because neither of them is sustainable (besides pyramid schemes being illegal). On the long term, blockchain projects need fundamentals and legal structures to be successful, there is simply no other way. I really, really hope these things will improve soon.
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