A traceability system in a food supply chain is simply a system that allows for a product to be traced forwards and backwards. Traceability systems have been used in food supply chains for several years now, from versions that are paper-based to those that are completely electronic. Bosona & Gebresenbet (2013), identified: regulatory requirements, food safety and quality, as well as social, economic and technological concerns as the major drivers of food traceability.
Regulatory concerns are those that are triggered by enforced traceability, such as the EU General Food Law Regulation (EC) No. 178/2002, which sets provisions for traceability in Article 18.
In the seafood industry, Food Traceability Systems (FTS) have been implemented by regulatory bodies as a tool to combat Illegal, Unreported and Unregulated (IUU) fishing. IUU is a serious concern globally with FAO statistics estimating IUU to affect one in every five fish and cost up to US$23 billion dollars annually. The EU and USA both have regulations/programs with traceability aspects to combat IUU. For instance, the EU regulation to combat IUU fishing is Regulation (EC) No. 1005/2008 (EU, 2008), with provisions allowing for electronic submissions of EU catch certificates or replacing EU catch certificates with electronic traceability systems that have the same level of control by authorities. USA has the US Seafood Import Monitoring Program, requiring mandatory compliance as of 1 January 2018 where importers now have to report key data from point of harvest to the point of entry into the US of certain imported fish and fish products vulnerable to IUU fishing and/or seafood fraud.
These regulatory concerns have prompted many food companies that export to the EU and USA in setting up FTS to fulfill these regulatory programmes and standards that will ensure them market access.
Food safety, food quality, and social concerns
Food safety and quality concerns are triggered by high-profile occurrences of contaminants found in food products or when product mislabeling/fraud have been uncovered. These raise serious health concerns to consumers, ultimately lowering consumer confidence and raising social concerns that drive consumer’s choice towards buying products they trust and believe to be safe.
One company which has developed a FTS to address food safety and quality concerns, which will simultaneously address social concerns is Walmart, in the USA. Walmart initiated and launched their blockchain-enabled Walmart Food Traceability Initiative in September 2018, for their fresh leafy greens product range. This was their response to a number of high-profile recalls that had occurred over the decade and were associated with fresh leafy greens in the US.
Economic concern and consumers willingness to pay a price premium
Contrary to popular belief, Bosona & Gebresenbet (2013), pointed out that the economic benefits of a FTS is not a major driving point, as initial investment in an efficient full chain traceability system is relatively high and is capital and resource intensive. Another concern raised by Souza-Monteiro & Caswell (2004), is that exporting countries with strict (mandated) traceability requirements may be disadvantaged with markets that do not require traceability because of the higher prices associated with FTS.
However, there are strong economic concerns that drive the food industry into setting up a good FTS such as huge losses to the food industry’s profitability as a direct result of major product recalls. USA alone had over 300 recalls announced by the U.S. Food and Drug Administration (FDA) in 2018, The EU has the Rapid Alert System for Food and Feed (RASFF) that efficiently shares information between its members and have led to product recalls from the market. This year’s first quarter, RASFF had over 900 food threat notifications of which 74 were recalled from consumers. A good FTS is able to reduce associated recall costs, by quickly identifying the source and where contaminated products are in the supply chain, thus preventing the loss of unaffected products inaccurately linked to contaminated products.
In addition, these high-profile food contamination outbreaks, product mislabeling and fraud, that have resulted in consumer confidence loss have influenced consumers willingness to pay a price premium for traceable products. One such example is the 2008 Sanlu milk powder scandal in China that resulted in 62% of the respondents who were willing to pay a price premium for traceable food, a proportion much higher when compared to the USA, Canada and Spain at the time.
Calvo Dopico, et al. (2016), conducted research on consumer willingness to pay a price premium, they found that 58% of Germany’s respondents, 51.32% of United Kingdom respondents, 52.2% France’s respondents, 36.1% of Spain’s respondents and 24.04% of Portugal’s were willing to pay a price premium. Their research also found that most consumers didn’t know what traceability means and there is a need to educate consumers. They concluded that if consumers clearly understood the benefits of a traceability system and if the traceability system could communicate those relevant benefits, then the agents along the food chain could evaluate if the costs of implementing the traceability programme could be allocated to the consumer’s final price.
It used to be that an effective FTS required devices and software that were complex and expensive, this had dissuaded food companies from implementing a FTS. However, emerging technology have presented cheaper alternatives that have driven companies to develop full chain traceability systems that will enhance efficiency in their supply chain.
As a traceability services provider, we have developed our solution to enhance both traceability and transparency in the supply chain and it will ensure Pacific fisheries and agriculture market access to importing countries with various levels of traceability standards. Our innovative solution digitally records and tracks products from bait-to-plate and soon from farm-to-table.
We use innovative technology, locally source as much of our materials as possible and work directly with stakeholders from across the supply chain. We have moulded our solution to best fit the entire supply chain, making it not only easy to use and adaptable but also affordable.
If our clients want, we can connect consumers to product provenance and authenticity, we do this by providing our clients with a platform to tell or continue their product story and it ensures consumer confidence in our clients’ products.
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