This is the fourth installment in the Feed the Future Enabling Environment for Food Security project’s series on improving trade in safe, nutritious foods. The first post introduces steps toward enabling safe food trade in Africa. The second installment unpacks the complementary roles of regulations and standards in the marketplace to address food safety concerns, while the third looks at different forms of regulatory cooperation to facilitate increased trade in safe foods with lessons from Southeast Asia. This final installment introduces the importance of traceability to effectively administer standards and enforce regulations within agrifood supply chains to mitigate food safety threats.

Traceability — a system to track a product from production to consumption — is a critical tool for operationalizing standards and regulations through increasing transparency across food supply chains. Well-functioning traceability systems improve food safety control by allowing both public and private sector actors to verify that products meet market and/or regulatory requirements and to respond swiftly in the event of food safety breaches.

Developing country food systems in particular would benefit from the expansion of traceability, as they face a significant share of the global burden of foodborne illnesses. Expanded traceability may also help build the cross-border transparency necessary to facilitate access to regional and global markets. In order to thrive, however, end-to-end traceability systems rely on a multitude of enabling factors, from physical infrastructure and digital capacity to market incentives and data-use regulations — many of which are nascent or absent in developing markets.

What is a Traceability System?

A traceability system is the “the totality of data and operations that is capable of maintaining the desired information about a product and its components through all or part of its production and utilization chain.” [1] As a product passes from one market actor to another, a traceability system collects and records data points to perform real-time and ex-post tracking of a product’s movement through the value chain from origin to final destination. Traceability systems vary widely in their scope and sophistication. They can range from individual firm-level systems capturing transactions within their own supply chain to multistakeholder platforms capable of tracking a product across the entire food system.

Why Does Traceability Matter to Safe Food Trade?

Traceability reduces contamination, disease, and spoilage in the food supply by identifying hazards before affected products make it to end consumer markets. When unsafe foods slip through the cracks and enter the system, these systems allow market actors and/or regulators to identify and isolate the source quickly in order to mitigate the consequences. In the event of a product recall, traceability enables a targeted withdrawal of the foods most likely to have been affected, thereby minimizing waste and market distortions.

Traceability for food safety objectives can be particularly beneficial for fresh, perishable food value chains, such as fruits, vegetables, meat, and dairy — all of which are especially susceptible to spoilage and contamination.

Importantly, traceability systems can simultaneously protect consumer health at both the domestic and international levels. When systems are compatible across borders, they can facilitate food trade by providing market actors with the capacity to verify that a product meets requisite regulations and/or standards.

The Challenges and Promises of Traceability in Developing Countries

End-to-end traceability systems are challenging and expensive to implement. The private sector is the main driver of traceability, and investments are typically motivated by consumer demands, risk mitigation, standards compliance, efficiency gains, or some combination of these incentives.

In developing countries, the inherent challenges of establishing traceability are further exacerbated by deficient physical and technological infrastructure, spotty access to electricity and internet, poor digital literacy, and fragmented informal value chains. In these contexts, the private sector’s cost-benefit analysis does not always add up to a strong enough business case for investment. Consequently, traceability systems in developing countries are concentrated in export markets for products where consumer demand for accountability and proof-of-origin are loudest (e.g., sustainably harvested seafood, zero-deforestation palm production, single-origin coffee, etc.).

While increased access to mobile devices will continue to transform agricultural supply chains in developing countries, penetration of mobile internet connectivity — a critical input for many traceability systems — still lags behind: 44 percent of the population of sub-Saharan Africa has a mobile device, while only 23 percent has access to mobile internet. [2]

Additionally, traceability systems often require advanced technological and record-keeping capacities that small-scale market actors often lack. To complicate matters further, raw products produced by smallholder farmers are frequently combined at the collector/intermediary level, presenting the challenge traceability systems face when mixage occurs.

Despite these challenges, traceability systems can prove supplier compliance with standards and regulations and/or to verify geographic origin. This verification benefits small-scale actors by helping to integrate them into regional and global supply chains, as a number of successful pilots demonstrate.

For example, Farmforce is a web-based traceability system developed by the Syngenta Foundation that incorporates outgrowers and smallholder farmers to facilitate access to export markets. The software was first piloted in Kenya and later commercialized in Guatemala with the support of the Feed the Future Partnering for Innovation Project.

Partnering for Innovation has also supported the Haitian information technology company Solutions to develop a tracking software that provides full traceability to smallholder mango growers, enabling exports by ensuring compliance with the U.S. Food Safety Modernization Act. [3]

In another example, the European Union imposed mandatory inspections of 10 percent of Kenyan French beans and peas at ports in 2013 due to the presence of pests and pesticide residue, resulting in the exports of horticultural goods from Kenya falling dramatically. In response, the Feed the Future Kenya Agricultural Value Chain Enterprises project supported the development and launch of a National Horticulture Traceability System in 2016. The cloud-based system is tailored to smallholder horticultural exporters and facilitates compliance with export market standards. [4]

Blockchain and the Promise of Transparency

Blockchain and other distributed ledger technologies (DLTs) are attracting interest across sectors for their capacity to transform how transactions are made and recorded. Blockchain is a decentralized digital ledger in which data are inputted, verified by consensus, and updated in real-time across a network of actors. Once a piece of information is added, it is permanently and unalterably stored in the blockchain.

A range of agrifood actors are already integrating blockchain into their operations. IBM’s blockchain-based traceability platform Food Trust incorporates over 80 retailers and suppliers to date, including food giants like Carrefour, Walmart, and Nestle. Food traceability technology startups such as Ripe.IO, Provenance, and FoodLogiQ are also crowding into the space with their own proprietary platforms.

Despite the buzz surrounding blockchain, a number of barriers to adoption exist in both developing and developed countries alike. Transitioning to a blockchain-enabled platform entails high upfront and operating costs and requires well-established digital and physical infrastructure. Uncertainty surrounding the regulation of blockchain as well as data protection, privacy, and usage issues are additional disincentives to adoption.

In practice, blockchain-based systems are also generally slower than traditional digital databases. Integral functions, such as error checking, consensus verification, and built-in redundancy, slow down the system and require high energy usage and processing capacity. Finally, while blockchain may prevent data manipulation, it does not eliminate the need for the collection and input of accurate, reliable data.

Blockchain undoubtedly offers some advantages over other digital traceability systems. The relative homogeneity across blockchain systems facilitates better interoperability, and decentralized ledgers may be preferable when addressing traceability issues in longer value chains where a centralized system is not feasible. [5]

However, blockchain should not be viewed as a silver bullet to solve traceability challenges. The operating environment and market context will often determine whether a blockchain-enabled platform or an alternative electronic traceability system is appropriate. Basic prerequisites for successfully introducing a DLT platform include regulatory certainty, sufficient technological infrastructure and internet connectivity, high digital literacy, and incentives to cover upfront costs.

Additionally, there should be a solid justification for not using an alternative centralized traceability database operated and intermediated by a central authority, which is often simpler, cheaper, and faster to build and use. The case for introducing a DLT/blockchain platform for traceability is generally built on: (1) the need for multiple actors to be able to access and interact with the database directly and simultaneously and (2) some level of distrust between actors [6] due to data reliability concerns.

The Way Forward

As consumers become more aware of food safety issues in developing countries, actors all along food value chains must be equipped with the ability to meet consumer demands and comply with standards and regulations. Concurrently, officials in both the public and private sector will need to effectively administer these systems to ensure compliance. A critical component of administering food safety standards and regulations is the ability to trace products from their origin through the supply chain, isolate threats, and recall contaminated products when needed.

Well-designed and administered traceability systems, regardless of the platform used, can advance producer access to markets and improve food safety for consumers. While blockchain and other DLTs are exciting innovations that present some unique advantages for food supply chain management, they will not solve all of the challenges that developing countries face in implementing traceability systems. In some cases, centralized technologies may be preferable.

National governments and development agencies must expand investments in developing the foundation upon which effective traceability systems can be implemented. These efforts should include enabling private sector investment in agrifood value chains, expanding consumer awareness of food safety issues, establishing an appropriate regulatory framework for food safety, strengthening market actor capacity to comply with standards and regulations, building institutional capacity to administer standards and regulations, and strengthening rural information and communications technology infrastructure.

References

[1] International Trade Centre. Traceability in Food and Agricultural Products. Bulletin No. 91/2015. http://www.intracen.org/uploadedFiles/intracenorg/Content/Exporters/Exporting_Better/Quality_Management/Redesign/EQM%20Bulletin%2091-2015_Traceability_FINAL%2014Oct15_web.pdf.

[2] GSMA Intelligence. The Mobile Economy Sub-Saharan Africa 2019. https://www.gsmaintelligence.com/research/?file=36b5ca079193fa82332d09063d3595b5&download.

[3] Feed the Future Partnering for Innovation. Annual Report 2018. https://pdf.usaid.gov/pdf_docs/PA00TFC2.pdf.

[4] Bob Koigi. “National Traceability System Breathes New Life to Kenya’s Horticulture Industry.” HortiNews, January 20, 2017. https://www.hortinews.co.ke/2017/01/20/national-traceability-system-breathes-new-life-to-kenyas-horticulture-industry/.

[5] P. Olsen, M. Borit, S. Syed. “Applications, Limitations, Costs, and Benefits Related to the Use of Blockchain Technology in the Food Industry.” Nofima AS, February 2019. https://nofima.brage.unit.no/nofima-xmlui/handle/11250/2586121.

[6] Paul Nelson. Primer on Blockchain: How to Assess the Relevance of Distributed Ledger Technology to International Development. USAID. https://www.usaid.gov/sites/default/files/documents/15396/USAID-Primer-Blockchain.pdf.