The Enabling Environment for Food Traceability System Success
Food market systems have become increasingly complex and multinational. Simultaneously, consumer demand for safe, high-quality, sustainable foods of known origin is growing rapidly. As a result, both regulators and retailers respond by strengthening the rules and requirements related to traceability along the supply chain.
For food operators — both small and large — to participate in these markets, they must adhere to a web of regulations in both origin and destination countries, while abiding by the private voluntary standards driven by buyers. This context reinforces the need for widespread adoption of food traceability systems (FTS) that will enable food operators to comply with these public and private rules.
FTS allow inputs and/or finished products to be tracked throughout their entire lifecycle, providing the data necessary to identify and remove products from the supply chain as necessary. These systems can then deliver the transparency needed in developing and emerging country market systems to improve food safety, increase market access, expand trade and provide greater efficiency.
By delivering these systemic benefits, FTS can help advance several U.S. Government development priorities, including:
- The U.S. Government Global Food Security Strategy (GFSS), which calls for “investing to link producers and other agribusinesses in the food system to end markets” (IR2) and “building capacity to improve food safety policies, guidelines, and enforcement” (IR5).
- USAID’s Multi-sectoral Nutrition Strategy, which highlights the need to “strengthen food supply chain…capacity to ensure high-quality, safe food,” “promote…transparency within the national food systems and enforcement of global standards,” and support “a functional national food safety system...by allowing the application and implementation of standards along the production supply chain.”
- USAID’s Digital Strategy, which calls to “strengthen the critical components of digital ecosystems…a sound enabling environment and policy commitment; robust and resilient digital infrastructure; capable digital service providers and workforce; and, ultimately, empowered end-users of digitally enabled services.”
Despite the promise and potential that FTS hold, their adoption by food operators in developing country contexts — particularly Feed the Future countries — remains quite limited. In 2019, the Feed the Future Enabling Environment for Food Security (EEFS) project wrote an article on the role of traceability for food safety and trade, in which we suggest that “well-designed and administered traceability systems, regardless of the platform used, can advance producer access to markets and improve food safety for consumers.” To this end, USAID, its implementing partners (IPs) and food operators must first understand the enabling environment factors that will influence a “well-designed and administered” FTS in a given operating context.
The EEFS project has identified the following enabling environment factors that will affect the successful adoption and implementation of FTS. For each factor, we discuss areas of inquiry to guide USAID, IPs and food operators in their FTS investment decisions.
Incentives. What, if any, traceability requirements are stipulated in national food safety regulations? Additionally, do buyers in a particular market segment (domestic and/or export) require suppliers to meet private voluntary standards with specific traceability requirements? The absence of regulatory and/or market-driven requirements for traceability will dampen food operator incentives to invest in FTS, while rules that are clear and enforced will strengthen these incentives. Further, the details within the prevailing regulations and/or standards will indicate the specific functionality required of FTS (see Four FTS Design Dimensions below).
Capacity. Do food operators have the technical, operational and financial capacity for the initial investment, integration and ongoing implementation of the traceability system? Where operator capacity and resource availability is low, the likelihood of initial investment in FTS, or continued investment beyond the life of USAID support, will also be low. USAID and IPs must first determine if an operator is capable of integrating a FTS into their business model, and what areas of capacity building may be required to ensure its successful implementation beyond the life of any project funding.
Access to Digital Technology. Are local traceability technology service providers active in the country? Do food operators have the connectivity they need to implement a digitally enabled system? Where rural connectivity is limited, the ability to provide real time data accessibility will be weak. Additionally, where operator access to locally available FTS platforms and ongoing technical support is weak, then the likelihood of their adopting systems appropriately customized to their needs will also be weak, thereby influencing the likelihood of success.
Supply Chain Coordination. Are buyers and suppliers along the supply chain willing to share information among one another to meet regulatory and/or standards requirements? Regulations and standards typically require operators to be able to track product, at minimum, one-step forward and one-step back from their operation (from where they sourced, and to where they sold). Where actors along the chain are unwilling to share this critical information, then any actor will not be able to meet their traceability requirements individually — and therefore the success of their traceability efforts will be compromised. Lead firms, industry associations or private sector networks can play a key role in promoting greater coordination and data-sharing to strengthen traceability along the supply chain.
In addition to these enabling environment factors, there are at least Four FTS Design Dimensions that must be considered in selecting and designing an appropriate FTS technology/platform in a given context.
- Data Entry Method: The two general types of data entry are manual or automated. Automated entry is faster and less error-prone and enables more detailed data and more rapid responses when issues are observed; however, the required financial resources and access to digital technology are far greater.
- Distance Data Travels: The three main types, from simplest to most complicated, are one-step back and one-step forward; many-steps back and one-step forward; or many-steps back and many-steps forward. In the simplest function, basic regulatory requirements typically can be met, but it is harder to trace back from the consumer to the origin. More complicated functionalities will improve farm-to-table knowledge, but it requires greater coordination along the supply chain, including data standards and interoperability.
- Data Granularity: The two main degrees of data granularity for FTS are per lot (batch) or per unit. Per unit is a higher degree of granularity and can reduce costs/waste when recalls are necessary; however, greater control of the production process and more advanced technology (e.g., individual ID codes for each product) becomes necessary. Per unit traceability becomes more difficult where smallholder supply is significant due to “mixage” at aggregation points.
- Data Storage: Finally, it is necessary to consider how data is stored and retrieved. While paper-based systems are the least expensive, they are inefficient and most prone to manipulation. Centralized storage allows larger amounts of data to be collected and backed up, but cybersecurity and manipulation remain a concern. Data stored in distributed ledger technologies (for example, blockchain) are immutable and cannot be changed once entered; however, they are considered a higher cost solution with advanced technology capacity required, and the challenge of “garbage in, garbage out” remains.
EEFS has launched a new comprehensive study and a webinar recording to discuss all of these factors driving the adoption and implementation of FTS for food safety, transparency, and integrity. The EEFS study will provide:
- Detailed traceability requirements according to regulatory frameworks in developed markets (e.g., United States, European Union, and Japan);
- Detailed traceability requirements according to several leading international voluntary standards (e.g., GlobalGAP, ISO, GFSI, GS1, and several others);
- Guidance for selecting/designing an appropriate FTS in a particular context; and
- Rapid case studies of FTS adoption/implementation across developing and emerging markets.
We hope that the findings of this work will demonstrate the value to USAID, IPs and food operators of assessing the enabling environment for FTS to guide evidence-based investment decisions.
The Feed the Future Enabling Environment for Food Security (EEFS) project is a pre-competed Blanket Purchase Agreement (BPA) for USAID Missions and Operating Units to access evidence-based analysis of how the enabling environment influences agricultural market system performance, food security, and nutritional outcomes. For further information on how USAID can access EEFS expertise, please contact the Chief of Party, Adam Keatts, at [email protected].