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Table of Contents
1 Brief Background about the business..................................................................................................... 3
2 Background about the topic .................................................................................................................... 4
3 Application of the topic in the chosen sector ......................................................................................... 6
4 Impact on various stakeholders .............................................................................................................. 9
5 Challenges that may be faced by the stakeholders.............................................................................. 10
7 Recommendations to different stakeholders ....................................................................................... 11
7 References ............................................................................................................................................... 12
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ABSTRACT
Around twenty years ago, Kuwait's food sector began to expand, and as the 20th century
ended, the country's immigrant population proliferated. The nation's annual production increased
by more than 570,000 metric tons, or 7.7 percent, on average from 2009 to 2014. Kuwait currently
imports more than 96% of its food, despite having a high score on the global food security index.
The underdeveloped agricultural industry in Kuwait is one of the critical causes of its reliance on
imported food. The food industry is anticipated to create $925.80 million in sales in 2023 and
expand at a rate of 12.00% per year (CAGR 2023–2027), with a market size of $1,457.00 million
anticipated by that year. The use of blockchain technology to digitalize food systems gives a
tremendous opportunity to improve efficiency, transparency, and traceability in Kuwait, which
suffers from food insecurity. Blockchain technology generally refers to a state-of-the-art database
system that permits open information sharing inside a business network. Businesses can utilize
blockchain technology to build an unchangeable ledger for monitoring orders, accounts, payments,
and other transactions because the data saved in blockchain databases are sequentially consistent,
and the chain cannot be wiped or updated without the network's agreement. Blockchain combines
three popular technologies to keep network transactions and records: cryptographic keys, a peerto-peer network with a shared ledger, and a computing method. Each transaction made by a
business is recorded as a block of data, and these transactions show how mobile an asset is.
The validity of each new block, and ultimately the blockchain as a whole, increases as
transactions are tied together in an immutable chain. As a result, the blockchain gains its essential
quality of robustness and becomes tamper-evident. Blockchain can be classified as public, private,
consortium, or permissioned. Some of the components of blockchain include distributed ledger
technology, smart contracts, and immutable data. The use of blockchain minimizes instances of
deception and fraud. The use of blockchain technology could result in several data issues for the
supplier and the food manufacturing organization, such as distributed denial-of-service attacks,
double spending, geographical and legal issues, the risk associated with cryptographic assets,
privacy and data protection, and more. I advise suppliers to utilize blockchain technology to reduce
bureaucracy and increase supply chain transparency. Additionally, consumers—the most
vulnerable stakeholders—must urge the adoption of blockchain technology to enhance food
production and distribution traceability.
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BLOCKCHAIN TECHNOLOGY AND ITS APPLICATION IN THE FOOD INDUSTRY
1 Brief Background about the business
The food industry in Kuwait started to grow some twenty years ago, and as the 20th century
ended, the country's immigrant population rapidly increased. From 2009 to 2014, the country's
annual production averaged 7.7 percent, or more than 570,000 metric tons (Oxford Business
Group, 2014). Kuwait ranked 27th out of 113 countries for food security in the 2019 Economist
Global Food Security Index with a 74.8 out of 100. The United Arab Emirates (UAE) and Qatar
(ranked 13), which are both ranked higher, are the only countries Kuwait trails (The Borgen
Project, n.d.).
Despite Kuwait's high ranking on the global food security index, it still imports more than
96% of its food. One of the main reasons Kuwait is dependent on imported food is the weak
agricultural sector, which earlier yielded fruits and vegetables. Significant agricultural expansion
is unlikely, given the 8.6% agricultural land and an annual average rainfall of about four inches.
The food industry is expected to generate $925.80 million in revenue in 2023 and grow at a rate
of 12.00% per year (CAGR 2023–2027), with a predicted market size of $1,457.00 million by
2027 (Statista, 2022).
The issues posed by food supply chains, though, are faced by the Kuwaiti food industry.
As an illustration, during the Covid19 pandemic, disruptions brought on by various virus
containment measures, such as the cessation of movements, greatly impacted the quality, safety,
and freshness of food and resulted in shortages in the markets. This is because the effectiveness of
logistics is crucial for the agricultural-food sector. Kuwait would profit from regional
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transportation and logistics networks, which offer solutions like norms, directives, measurements,
and techniques.
The application of blockchain technology to digitalize food systems presents a significant
opportunity to increase efficiency, transparency, and traceability (FAO, 2020). Data verification,
which would be accomplished with the help of blockchain technology, serves as the foundation
for the creation and quality of products. This will overcome the difficulty of trade efficiency, the
need for tracking and openness for food safety, and funding.
2 Background about the topic
Blockchain technology is described by Amazon (n.d.) as a cutting-edge database system
that allows for open information sharing inside a commercial network. The data inside a block
depends on the type of blockchain; for example, a Bitcoin Block contains information on the
sender, receiver, and the number of bitcoins sent. Because the data is sequentially consistent and
the chain cannot be erased or modified without the network's agreement, businesses can use
blockchain technology to create an unalterable ledger for tracking orders, accounts, payments, and
other transactions (Amazon, n.d.).
Blockchain operates as follows, according to IBM (n.d.); as each transaction takes place,
it is documented as a "block" of data; these transactions demonstrate the mobility of an asset,
which can be intangible or tangible. A company's pick of info, including what, who, what, when
and how much, and even the condition, can be recorded in the data block. Each block is linked to
the ones preceding it and those after it, forming a chain of data as a set is moved from one location
to another or a change of ownership. The blocks connect safely to prevent any blocks from being
changed or being introduced inside two present blocks, and the blocks certify the precise timing
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and order of transactions. To sum up, transactions are locked together in an unchangeable chain,
with each new block strengthening the validity of the preceding one and, ultimately, the
blockchain. This gives the blockchain its crucial feature of robustness and makes it tamper-evident.
Gandhi (2021) claims that multiple kinds of blockchains exist, including private blockchain
networks, which are unstructured peer-to-peer networks. A single organization, nevertheless,
controls the network's governance, executing a consensual procedure and managing the copy of
the ledger. Running a private blockchain behind a company's protected network and hosting it onsite are options. A public blockchain, like the one used by Bitcoin, allows anybody to register and
interact. A consortium blockchain is a permissioned blockchain, meaning that many organizations
can access and maintain records, making it more difficult for unlawful activities to occur. The final
point regarding permissioned blockchain networks is that companies who create a private or public
blockchain typically create a permissioned blockchain network. The requirement for an invitation
or permission to join establishes limitations on who is permitted to engage in the network and what
transactions.
One of the main components of blockchain technology, according to IBM (n.d.), is
unchangeable records, which prevent participants from altering or tampering with transactions
once they have been added to the shared ledger. A new transaction must be entered to undo an
erroneous record of transactions before both transactions are displayed. The second is distributed
ledger technology, which gives all network users access to an unchangeable account of all entries
in a distributed ledger. Transactions are only recorded once with this shared ledger, preventing the
doubling of endeavors in conventional corporate networks. Thirdly, smart contracts, which are
preconfigured and consist of guidelines that assist in expediting transactions, are kept on the
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blockchain. A smart contract can specify parameters for corporate bond transfers, stipulate how
much must be spent on travel insurance, and much more.
For storing financial transactions, traditional database methods provide several difficulties.
Take the sale of a property, for instance. The property belongs to the purchaser following the
exchange of money. The buyer and the seller can independently keep track of the financial
transactions, but neither source can be relied upon. It is simple for the buyer to say that they have
paid the money even though they have not, and the seller to claim they have not received the money
even though they have. A responsible third party must monitor and verify transactions to prevent
potential legal problems. The existence of this centralized authority not only makes the transaction
more challenging but also establishes a weak spot. Both parties may be harmed if the central
database is breached. By developing a decentralized, tamper-proof way to record transactions,
blockchain reduces these problems (IBM, n.d.).
3 Application of the topic in the chosen sector
Anwar (2020) claims that when blockchain technology began to take off, experts primarily
believed it applied to the financial sector. The food business is one of the more open-minded
applications of blockchain technology right now. It is important to note that, according to United
Nations-Kuwait (2020), the adoption of blockchain technologies in the food industry would
address several issues the Kuwaiti sector currently faces, including a lack of traceability in food
processing and distribution, difficulties with inventory management caused by long food supply
chains that affect the shelf life of high-value food products, an absence of accountability in
labeling, and poor food safety caused by the long food supply chains.
First, as was mentioned, Kuwait's food business needs to be more traceable in the delivery
and processing of food (United Nations-Kuwait, 2020). Customers are left in the dark because they
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have not learned how or how the food was produced. After all, tracking food goods is a significant
problem, and most businesses seem reluctant in this scenario owing to the additional investments
they will be forced to make. Therefore, the sector needs assistance now, which is made feasible by
implementing blockchain technology. Notably, blockchain has all the necessary tools to manage
food tracking from suppliers to the person who purchases it. Therefore, businesses can use this
capability to improve their transparency on the assembly line and provide a higher standard of
food to the market. By doing this, the Kuwait food industry will be able to comply with the GS1
requirements, which demand enabling transparency solutions to offer the best route to
harmonization, safeguard business investments, and scale up (GS1 Kuwait, n.d.).
Second, Kuwait's food industry must contend with subpar food safety, one of the most
urgent problems in the global food market (United Nations-Kuwait, 2020). The necessity to
guarantee an adequate supply of nutritious and safe foods is one of the primary difficulties facing
the GCC countries, according to Al-Zenki & Al-Kandari (2010). Since these nations heavily rely
on imported food due to the region's limited agricultural production and rapidly increasing food
demand, widespread concerns about food safety and quality have been raised, particularly in the
wake of a range of food risks in the outsourcing nations like avian influenza, BSE, and dioxin in
poultry and meat. Thus, food safety is guaranteed through blockchain technology, and customers
are at peace and able to purchase all of their items without worrying about the risks of contaminants
or other issues. Through a networked blockchain system with the exporting companies, importing
companies, and the government, it is easy to keep an eye on how they handle raw materials and
completed goods. These requirements force domestic and foreign food businesses to treat their
byproducts more cautiously to protect their goods' level and quality without any problems.
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Thirdly, according to United Nations-Kuwait (2020), Kuwait faces a problem with food
waste and suggests digitizing the food chain as a solution. Othman (2022) estimates that each year
in Kuwait, one person wastes 95 kg of food. According to the food waste index report for 2021
released by UNEP and WRAP, Kuwaiti families waste 397,700 tons of food annually. According
to the survey, households account for most of this waste, disposing of 11% of all the food
accessible at the consuming stage of the food chain, compared to 5% and 2%, respectively, for
food service facilities and retail outlets. Anwar (2020) claims that there are various reasons why
food is wasted, ranging from poor inventory control to delayed product shipments. In each case,
the industry is forced to deal with significant losses, which subsequently exerts additional pressure
on it to produce more goods quickly to meet demand. Blockchain technology, on the other hand,
enables businesses to begin tracking foodstuffs to uphold health codes, adhere to all regulations,
and enhance their management systems. It is simple to increase productivity and minimize food
waste because they can keep track of everything online, even in real time.
Last but not least, fake food products provide a problem for Kuwait's food business. The
Ministry of Commerce and Industry, according to Times Kuwait (2020), was able to prevent the
counterfeiting of 52,000 cooking cans imitating a worldwide brand. They were seized when the
products were sold to food outlets without invoices. Blockchain technology makes it simple to cut
down on or completely eradicate the rising quantity of fake goods in Kuwait's food industry.
Improved food traceability throughout processing and delivery makes this possible. Because a
blockchain can follow every product from the factory to the customer, it can verify whether the
product is genuine. Locating the issue's root cause might also lessen the likelihood that counterfeit
goods will enter the market.
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4 Impact on various stakeholders
Stakeholders might be impacted by the use of blockchain technology in Kuwait's food
industry in various ways. First of all, Question Pro (n.d.) believes that adopting blockchain
technology in the food business will allow customers to monitor, manage, transmit, and submit
contends for their warranties. In other words, customers can independently check a product's
complete life cycle, and businesses cannot influence it. Second, a manufacturing company can
monitor raw materials from their inception in a supply chain until the finished product is distributed
to the final consumer. Blockchain technology enables traceability by giving a snapshot of the supply
chain network at a glance. A food manufacturing company would also have a competitive edge
with the deployment of blockchain technology because current consumers often rely their faith in
a company on its environmental and social responsibility.
Thirdly, according to Technology Innovation Management Review (2021), numerous food
controversies in the past few years have eroded consumer confidence in the global food industry.
For example, in 2013, several European meat exporters substituted horsemeat for lamb and beef,
affecting 1,000 tons of food. Similarly, Astill et al. (2019) estimate that locally caused foodborne
diseases caused by contaminated food impact 4 million Canadians annually. Customers and food
manufacturing companies will benefit from fast turnaround timeframes to recent incidents of food
scandals and foodborne outbreaks due to the adoption of blockchain technology. This is based on
the idea that food accidents are difficult to track down in the supply chain because of a lack of
transparency and ineffective batch sorting.
Lastly, suppliers will profit from using this technology in Kuwait's food business because
both sides can track blockchain payments. As a result, suppliers who wait for processing are at a
disadvantage during the purchasing process (Ashcroft, 2022). Blockchain expedites the procedure,
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increases party control, and strengthens the supply chain. Similar to this, the zoned architecture of
blockchain enables suppliers to quickly respond to and abide by Kuwait's food restrictions and
trace materials along the food supply chain until they reach the manufacturing food company,
promoting security by nullifying identity theft.
5 Challenges that the stakeholders
may face
Although blockchain technology has many advantages, some obstacles prevent its
widespread use. First off, according to Shirley (n.d.), using blockchain technology could lead to
various data issues for both the supplier and the food manufacturing organization. These
difficulties include distributed denial-of-service attacks, double expenditure, geographical-legal
issues, the risk associated with cryptographic assets, and privacy and data protection. Notably, no
one entity is in charge of the accessibility or security of a ledger in a permissionless public
blockchain system. This increases the chance of deception, deceit, and mistakes spreading through
the distributed ledger.
Second, special tax issues related to blockchain and cryptocurrency rules may result in
higher costs. Additionally, because these restrictions are constantly changing, producing ROI early
on is always more complicated. This primarily affects suppliers and enterprises that manufacture
food (Shirley, n.d.). The existence of several standards and regulations for product safety, as well
as the need to balance innovative products with regulatory compliance, would present additional
difficulties for suppliers in the Kuwaiti food industry. This calls for efficient corporate
management to maintain technological alignment with those changes. The implementation of
blockchain technology is also expensive, so producers and suppliers of food will incur higher costs.
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7 Recommendations to different stakeholders
First, I advise suppliers to adopt blockchain technology in order to cut down on paperwork
and improve supply chain transparency. This advice is supported by the fact that a blockchain
supply chain enables parties to record information such as price, date, location, quality,
certification, and other pertinent details to manage the supply chain more efficiently. Additionally,
according to Deloitte (n.d.), the presence of this info within the blockchain can enhance
transparency and adherence over external foodstuff contract manufacturing. Besides, it reduces
losses fueled mainly by product counterfeiting, boosts monitoring of the material supply chain,
and strengthens a company's position as a pioneer in ethical production.
Because consumers are more environmentally sensitive and health-conscious and only buy
items they can fully understand the origin of, food manufacturing enterprises should be at the
forefront of integrating blockchain technology. Sales volume will rise thanks to blockchain, which
will also help the business's reputation and brand recognition. Thirdly, in order to improve food
production and distribution traceability, consumers—the most vulnerable stakeholders—must
demand the adoption of blockchain technology. Additionally, Kuwait's government must be
tenacious and implement strict measures to control items from local and foreign food
manufacturers that are counterfeit in order to support customers' demands for safe and healthy food
products.
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7 References
Amazon. (n.d.). What is blockchain technology? https://aws.amazon.com/what-is/blockchain/
Astill, J., Dara, R. A., Campbell, M., Farber, J. M., Fraser, E. D., Sharif, S., & Yada, R. Y. (2019).
Transparency in food supply chains: A review of enabling technology solutions. Trends in
Food Science & Technology, pp. 91, 240–247.
Deloitte.
(n.d.).
Using
blockchain
to
drive
supply
chain
transparency.
https://www2.deloitte.com/us/en/pages/operations/articles/blockchain-supply-chaininnovation.html
Evan Shirley. (n.d.). Blockchain challenges in the food and beverage industry. Clarkston
Consulting. https://clarkstonconsulting.com/insights/blockchain-challenges/
FAO. (2020). From impact to transformation – improving the food supply chains in Kuwait in the
context
of
COVID-19
pandemic
–
Kuwait
policy
note.
https://www.fao.org/3/cb2553en/cb2553en.pdf
GS1 Kuwait. (n.d.). Traceability. https://www.gs1kuwait.org/traceability
Hasib Anwar. (2020). Blockchain in Food Industry: Food Traceability And Safety. 101
Blockchains. https://101blockchains.com/blockchain-in-food/
IBM. (n.d.). What is blockchain technology? https://www.ibm.com/topics/what-is-blockchain
IvyPanda.
(2020).
Kuwaiti
Food
Industry
and
Its
Development
Report.
https://ivypanda.com/essays/kuwaiti-food-industry-and-its-development/
Kuwait Times. (2022). Food waste increased significantly in Kuwait in recent years: Food Bank.
https://www.kuwaittimes.com/food-waste-increased-significantly-in-kuwait-in-recentyears-food-bank/
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Oxford Business Group. (n.d.). Kuwait: Appetite for growth in food and beverage sector.
https://oxfordbusinessgroup.com/articles-interviews/kuwait-appetite-for-growth-in-foodand-beverage-sector
Question
Pro.
(n.d.).
Blockchain:
4
Ways
it
Benefits
Consumers.
https://www.questionpro.com/blog/blockchain-4-ways-benefits-consumers/
Sameer Al-Zenki & Dina Al-Kandari. (2010). Assessment of the food control system in the State
of
Kuwait.
https://www.academia.edu/28180794/Assessment_of_the_food_control_system_in_the_S
tate_of_Kuwait
Sean Ashcroft. (2022). Ten benefits blockchain brings to supply chains. Supply Chain.
https://supplychaindigital.com/digital-supply-chain/ten-benefits-blockchain-brings-tosupply-chains
Statista. (2022). Food – Kuwait. https://www.statista.com/outlook/dmo/ecommerce/food/kuwait
Technology Innovation Management Review. (2021). An Exploration of Blockchain-based
Traceability in Food Supply Chains: On the Benefits of Distributed Digital Records from
Farm to Fork. https://timreview.ca/article/1446
The Borgen Project. (n.d.). 5 F A C T S A B O U T F O O D S E C U R I T Y I N K U W A I T .
HTTPS://BORGENPROJEC T.ORG/FOOD -SECURITY-IN -KUWAIT/
Times Kuwait. (2020). Ministry thwarts largest commercial fraud on counterfeit food products
in Kuwait. https://timeskuwait.com/news/ministry-thwarts-largest-commercial-fraudon-counterfeit-food-products-in-kuwait/
United Nations-Kuwait. (2020). Supply chain during Covid19 crisis in Kuwait webinar series #3:
Controlled environment agriculture, food cold chain logistics and digital technologies.
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https://kuwait.un.org/en/126663-supply-chain-during-covid-19-crisis-kuwait-webinarseries-3-controlled-environment
Yashoda Gandhi. (2021). What is a Blockchain and How does it work? Analytics Steps.
https://www.analyticssteps.com/blogs/what-blockchain-and-how-does-it-work