By Jason Clay, SVP, Markets, World Wildlife Fund
In the food sector, the unknown is inherently risky. Companies without traceable and transparent supply chains are vulnerable to operational, financial, legal, and reputational risks. And while technological advances can help solve the problem, disparate and incompatible solutions will slow progress.
A few years ago, Associated Press, the Guardian, and other influential media documented slave labor in seafood supply chains in Thailand, linking them to some of America’s most prominent brands and retailers. Similarly, leading palm oil processors that supply global brands have been caught sourcing palm oil from plantations created and operating illegally in some of Indonesia’s most precious national parks. Banks and investors that finance illegal farming and fishing—knowingly or unknowingly— have been caught in the dragnet, too.
Even when practices are not illegal, they can still present risks, as some major American and European brands learned last spring when the New York Times linked legal beef and soy sourcing practices to the loss of some of Latin America’s most vital ecosystems.
Reputational and legal risks aside, many production practices drive habitat loss, soil erosion, water pollution, and climate change, which conspire to diminish productivity and destabilize supply, both now as well as in the future.
Lack of traceability and transparency also leads to food loss/waste, which claims a third of all the food that’s produced around the world. When companies don’t know how much food loss/waste is in their supply chain, they can’t save food or the natural resources and money used to produce it.
Companies with transparent supply chains can give consumers what they increasingly demand: to know where their food comes from and how it was produced. And, conversely, companies that don’t know also send a clear message: they don’t care.
Until recently, traceability systems relied on paper, which is inherently vulnerable to error and fraud. Fortunately, the proliferation of networked technology is making traceability easier. In Thailand, for example, World Wildlife Fund and the Seafood Task Force are working across the farmed shrimp supply chain—from feed producers to shrimp farmers to processors—to digitize paper records so that large brands and retailers sourcing shrimp from Thailand can ensure that suppliers are more sustainable and responsible. We are also studying the feasibility of blockchain to enable traceability in tuna, beef, soy, and farmed shrimp supply chains in other markets.
The breadth of the traceability movement may also be its weakness, however. As companies build their own solutions, they risk confusing suppliers and buyers.
For example, if three retailers that buy from a single processor each develop their own, unique traceability system, it will triple the processor’s investment to comply. Precompetitive collaboration and interoperability are keys in the development of traceable supply chains at scale.
The Global Dialogue on Seafood Traceability is one model that other food sectors can emulate. Created in 2015, it provides a platform for seafood industry players—many of them competitors—to develop a “unified framework for interoperable seafood traceability practices.” The Blockchain Interoperability Alliance is another example of companies working together to keep siloed solutions from stifling progress.
Tools now exist to enable fully traceable and more transparent supply chains. More are coming. The question is not “if” but “when” and “how.” Ideally, companies will answer those questions together, pre-competitively. By collaborating, they can ensure solutions are scalable, compatible, and effective. There’s too much at stake to do otherwise.