From farm to plate: food will be transformed by traceability

New technologies such as blockchain can be used to give consumers the information they need about food provenance to make sustainable choices.

Do you know where your Friday night steak came from? If you’re one of the few people who shop in a traditional butcher that has direct relationships with slaughterhouses and farmers, you may have some idea. Alternatively, if you bought your meat from the supermarket, its packaging may list the country of origin, though not anything more specific. But in the not too distant future, if you’re not squeamish, you might be able to trace that steak all the way back to the cow it came from.

New technologies such as blockchain, radio-frequency identification (RFID) tags and even DNA testing are set to revolutionise food traceability. “Food is essential to life and – most obviously – something we put in our mouths,” says Thijs Geijer, food and agriculture economist at ING. “Consumers need to be confident that food is safe and knowing where it comes from gives them that.” An ING survey of Dutch consumers shows that more than 50% want to know more about the origins of their food.

Food producers have long been subject to stringent regulations. However, contamination scandals, concerns about hormones in meat, and increasing interest in provenance mean consumers want to know more than is currently on labels. “Getting approval from government bodies like the European Food Safety Authority to sell products for human consumption is a long and detailed process,” says Geijer. “But many people feel that inappropriate things are happening in the food chain and want greater certainty.”

Some of those concerns may be justified. A report by Italian farmers association Coldiretti, Italy’s Institute for Political, Social and Economic Studies and the Observatory on Crime in the Agro-Food Industry showed that in 2018 organised crime generated €24.5 billion across the Italian agriculture sector – partly through mislabeling – a rise of 12.4%. The reputation of prized Italian exports like extra virgin olive oil, prosciutto and buffalo mozzarella has been tarnished in recent years by mislabelling and tainted products.

In the seafood sector, substitution and mislabelling are also common with protected species often sold as legal fish, or low-value products like farmed salmon substituted for the more expensive wild-caught variety. In 2016, campaign group Oceana reviewed more than 200 published studies from 55 countries. It found that, on average, one in five of more than 25,000 samples of seafood tested worldwide was mislabelled. Other studies suggest as much as a third of seafood is mislabelled.

While safety usually tops consumer surveys of food concerns, consumers are also deeply interested in sustainability. “More than four in 10 Dutch consumers see a link between meat consumption and environmental issues and that number is rising,” says Geijer. “Improved information about meat provenance – its quality, safety and animal welfare standards – is therefore appealing, especially given the significant price difference between normal and premium or organic meat.”

How technology can help

Companies across a wide variety of food sectors are currently investigating how technology can be deployed to improve the traceability of food. Already, all eggs produced in Europe are coded to identify their farm of origin. Perhaps the best known project in this area is IBM’s Food Trust, which uses blockchain, best known for underpinning cryptocurrencies, to track food and prevent contaminated food from reaching consumers. Walmart, Nestle, Unilever, Carrefour and a number of other global firms have signed up to the technology; Walmart has told its leafy-greens suppliers that they must integrate with the network by September 2019.

Separately, companies such as Barry Callebaut, a supplier of high-quality chocolate and cocoa products, are investigating the potential use of blockchain for food traceability. Louis Dreyfus, a merchant and processor of agricultural goods, has already deployed blockchain technology – both for agricultural commodity transactions (involving ING, see box) and to improve traceability.

For products such as orange juice and soft drinks, Louis Dreyfus has partnered with Albert Heijn, the Dutch supermarket chain, and soft drinks and juices bottler Refresco, to make the supply chain of Albert Heijn’s own brand of orange juice fully transparent using blockchain technology. “Via a QR code on the packaging, the consumer can follow the entire journey of their orange juice before it ended up in their shopping basket – from farms managed by Louis Dreyfus in Brazil to the supermarket shelf – and be certain it was sourced and produced in accordance with the highest ethical standards,” explains Murilo Parada, head of Louis Dreyfus’s Juice Platform.

Radio-frequency identification (RFID) technology also has possible use cases in the agri-business sector. For example, farms can add RFID chips to pigs which allows them to be identified when they are taken to the slaughterhouse; that identity remains with the meat and is used on packaging for consumers. And DNA testing can significantly improve standards: less than 1% of more than 1,400 seafood products certified as sustainable by the Marine Stewardship Council and subject to so-called DNA barcoding were mislabelled, significantly less than the seafood industry average.

To put such technology into action, it is necessary to digitise information across the supply chain, from farmers, to processors or slaughterhouses, to wholesalers and then to retailers. “Digitising the supply chain will be challenging and could prove costly for some complex supply chains and, as importantly, it requires a wide variety of market participants to share information,” says ING’s Geijer. “It’s important that it delivers benefits for everyone in the supply chain, otherwise they won’t put in the effort or share the data.”

For us as consumers, the benefits of digitisation are clear: increased information about what we put in our mouths. For retailers, traceability offers a way to enhance the prestige of premium products by guaranteeing provenance. Crucially, traceability also offers a way to lower the costs associated with product recalls. “Budget food producers and retailers want to know more about the supply chain [as well],” says Geijer. “Recalls are extremely expensive, and all producers and retailers value their reputation. So, investing in traceability could make sense.”

Producers can also benefit from benchmarking information that enables them to understand the performance of their product compared to peer companies, according to Geijer. “And technology also opens up the possibility of a direct link between producers and consumers, which could help bridge the existing gap in global food supply chains. While it’s a gimmick, producers can add a code on their orange juice cartons which allows consumers to give a tip to the farmer if they really enjoy the product.”

A more detailed shopping basket

Geijer believes that it is already cost effective for many product categories to include traceability, though other challenges remain to its widespread introduction. “If information is to be provided to consumers, a guarantee is being provided. It’s one thing to make the data flow from farmers to slaughterhouses and to retailers. But to give a consumer guarantee is a huge commitment and will require significant investment,” he says. “But if food companies get the technology right it will provide them with a competitive edge.”

Traceability is unlikely to become mandatory for all products in the near future. “Discussions in the regulatory community are currently focused on food labelling for health,” says Geijer. “Instead, raising standards on food provenance and tracking is expected to remain the preserve of companies for the foreseeable future.”

Nevertheless, in just a few years, a fairly high proportion of people’s shopping baskets could be traceable in some way. “Different levels of traceability will apply to different products,” says Geijer. “For example, meat may be traceable to an individual animal and vegetables to a specific farm. Many people will no doubt ignore this information. But consumers who want to know more about what they put in their mouths will soon have more resources at their disposal.”

Putting trade settlement on blockchain could improve traceability

In January 2018, ING joined forces with global merchant Louis Dreyfus, ABN AMRO and Société Générale to complete the agricultural sector’s first blockchain commodity transaction. Featuring no paper contracts, certificates or manual checks, the soybean shipment transaction from seller Louis Dreyfus to Chinese buyer Shandong Bohi used ING’s blockchain prototype Easy Trading Connect. It was completed five times more efficiently than a paper-based trade and the transaction time was reduced from weeks to days.

Peter van Bemmelen, who works in ING’s innovation group, believes that improved product traceability (including for food) is likely to be an outcome of post-trading platforms that process transactions using blockchain, like that of Louis Dreyfus. “If sales, trading and logistics are together on one platform you already have the critical building blocks to provide traceability and prove product provenance,” he says. “It’s not clear the traceability is enough to sustain a business model alone; it may make more sense to add it to an existing post-trading platform.”

Van Bemmelen notes that there have been previous attempts to digitise commodity trading but they had limited success. “Despite drawbacks, blockchain has the potential to succeed because it removes the question of whom to trust: it is a valuable governance tool that allows the industry to create a collaborative environment owned by all, but also owned by none,” he says.

Louis Dreyfus is already moving onto the next stage in its blockchain journey. It has formed a consortium with Archer Daniels Midland Company, Bunge and Cargill to investigate using the technology to improve efficiency and transparency for customers in the grain industry.


The View is the online magazine of ING Wholesale Banking