Where does our food come from? Here's why we need to know

Despite the central role that food plays for humanity, we as consumers tend to know very little about it: where did it come from? Who produced it? How was it made? What were the environmental and social costs of supplying it? These are questions that few of us can answer.

Due to the highly complex nature of global supply chains, this sort of disconnect is not surprising. In fact, very few agribusiness companies or grocers can seamlessly track and trace food products throughout the supply chain.

What does this sort of disconnect mean for food systems? First, it creates gaps in our understanding of the environmental impact of our food systems. While we know that food systems as a whole are responsible for 25% of global greenhouse gas emissions, 70% of freshwater withdrawals, and 60%–70% of biodiversity loss, we lack a discrete understanding of what actions are needed to drive change to reduce this environmental impact.

Second, this disconnect makes it difficult to validate where our food came from; crack down on fraud (approximately 33% of seafood in the US is mislabelled); and meet our health and nutrition goals (is our food antibiotic free?).

Third, complex supply chains make it difficult to efficiently address food-borne illness outbreaks, because it takes a long time to identify the contamination source. Fourth, it creates added inefficiencies – one third of all food produced is wasted or lost in the supply chain.

In 2017, The World Economic Forum’s Food System Initiative launched "Innovation with a Purpose", to support innovation and technology adoption in the food and agriculture sector to address challenges like this.

The following year, the Forum published a report on this topic, which identified 12 high potential technology solutions for food systems (called “The Transformative Twelve”), and focused on key opportunities for innovation. For example, the report found that scaling mobile service delivery by 2030 could increase farmers’ income by 3%–6% and reduce food loss by 2%–5%.

Launched today, a new report, “Innovation with a Purpose: Improving Traceability in Food Value Chains through Technology Innovations”, explores a number of these transformative technologies – internet of things (IoT), distributed ledger technology, food sensing technologies, etc – and how they can increase visibility into the production and delivery of our food.

By making what has previously been “invisible” now “visible”, these technologies could improve traceability and help address many of the aforementioned challenges.

For example, if we are able to measure and evaluate the required water usage of two different production methods for the same crop, we can help incentivize the method that is better for the planet, and thereby reduce agriculture’s impact on freshwater withdrawals. Likewise, better data collection can provide the transparency consumers desire about how their food was produced.

In addition, this transparency could decrease the amount of time it takes to identify the source of a food outbreak and better identify loss points or causes of inefficiency in the supply chain. These new capabilities will go a long way to help meet sustainability goals and consumer demand for transparency, while also improving operational efficiency and food safety.

Traceability requires action from the full supply chain and, as a result, collaboration is at the crux of what will make traceability effective.

Joint venture initiatives with representation across the value chain, international organizations, civil society organizations and governments have started to emerge, and will need to continue to make lessons on traceability broadly available.

These pilots and initiatives should aim to define best practices and tailor these to the unique aspects of each region to answer the following:

1) How will consumers respond to improved traceability in food value chains?

Consumers across the world are asking for increased transparency into the contents and production of their food; however, it is not yet clear how consumers will respond with significantly improved supply chain visibility. Will they be willing to pay more for traceable products? Will they be more loyal to brands that provide this level of visibility? Will the ability to measure the environmental impact of different production processes inform buying decisions?

Several studies indicate that consumers are willing to pay more for traceable products; in certain contexts, willingness to pay may be as high as 10%. However, the research is not conclusive, and it is possible that these studies are not representative of broad-based willingness to pay.

If consumers are indeed willing to pay more for traceable products, or if traceability created clear long-lasting brand loyalty, industry would have a compelling business case to invest in new capabilities.

And if consumers were better equipped with the right knowledge and tools, and applied increased visibility into the environmental and social impact of food production to inform their decision making, enhanced traceability could be a powerful driver of social change.

2) How do we create clear, consistent and globally harmonized standards related to data collection, governance and ownership, and sharing?

There is no broadly accepted definition of what information can and should be collected through traceability. Some countries and companies have their own traceability requirements today; however, new technologies make it possible to collect information that was previously unavailable or inaccessible (for example, soil-bound sensors could measure how much water was applied to the crop and link to precision irrigation systems).

For data collection efforts to be consistent and manageable, countries, companies, and others will need to create consistent standards on what information should be collected and how it must be collected. These standards will need definition of who “owns” the data and how this information is kept secure.

For example, if a farmer is involved in a traceability initiative, it will be important to define what data must be provided (e.g. is any of the data personal information the farmer may not want to share with a broader population?); what data can be accessed (e.g. can the farmer access the full aggregated dataset of the information being tracked?); and how will it be determined who has access to the data (e.g. will consumers be able to access all of the information the farmer provided?)

3) What economic models do we need to pursue to make models of improved traceability sustainable in the long run?

If consumers are willing to pay for traceable products and companies use improved supply chain visibility to improve their efficiency, business could have a lot to gain by investing in traceability. However, these benefits will not necessarily be captured equitably across the value chain.

For example, a consumer may be willing to pay more at the grocery store for a traceable product, but will that transfer into improved revenue for the farmer that grew that product? This becomes particularly challenging when you consider that producers are very often the ones that need to invest in new technologies but may not have the capital on hand to do so.

As a result, collaborations will need to identify strategies to catalyse financing and support policy incentives that can make new technology adoption feasible. In addition, commercially viable models that focus on sharing value across the supply chain will be important to ensure that traceability initiatives are sustainable in the long term.

4) What is needed to ensure that traceability is accessible and inclusive?

Approximately 2.5 billion people in developing countries make their living from the food and agriculture sector, and about 60% of those individuals live in small-scale producer households. As such, small-scale producers are critical stakeholders for new food related innovations, including the advancement of traceability.

In the near term, without effective support, small-scale producers in developing countries will be vulnerable to traceability requirements. Traceability is likely to entail more demanding requirements, including added cost. In the absence of effective support, these requirements risk favouring larger producers or companies in developed countries that can more easily absorb the added cost and adjustments.

However, traceability offers a potential upside for small-scale producers as well. If these producers were able to access and leverage the data collected through traceability initiatives, they could apply it to produce food more efficiently, navigate markets more effectively, and even gain access to new premium markets. In addition, traceability initiatives could provide the digital identity necessary to gain access to affordable capital, a challenge facing many small-scale producers today.

If used correctly, end-to-end traceability enabled by technology could be a powerful tool to create tangible benefits for businesses, consumers, governments, producers and civil society.

However, to be successful and meet food systems aspirations to sustainably, inclusively and efficiently nourish a growing population, it will require collaborations and cooperation across the food ecosystem.

The Forum encourages and invites other stakeholders to join us in exploring the potential of technology innovations in truly bringing this transformational change in food systems.