Knowledge Share

New Normal, Digital Transformation, Industry 4.0

Trust | Transparency | Traceability

Food Traceability

21 May 2021   |    Blockchain, Emerging Tech, Supply Chain, Traceability

The world that we live in is awash with information. There’s information available to consumers on almost everything, including manufacturing processes, technologies and products. We have a personal relationship with the food we eat. This primarily stems from the fact that it enters our body, is the source of our nutrition, and impacts our health. Therefore, people are increasingly interested in knowing about what goes into their food.

In the post-pandemic era, the importance of food traceability is growing in magnitude. Consumers want to know everything about the journey of their food from the farm to their tables. People want to know about the ingredients, chemicals, fertilizers, pesticides and other additives that go into producing their food, including the geo-location from where the foods have been sourced. That’s where traceability comes in.

So, how does traceability work?

We have approximately 130mn farmers in our country, who cultivate 195mn hectares of land. In reality, this is the backbone of our economy, employing 58% of our population. Agriculture, forestry and fishing added a staggering 18.55 lakh crores (USD 265.51bn) to our GDP in 2019. Traceability helps build trust and confidence amongst all these players within the supply chain, including the customers, agricultural companies, wholesalers, and farmers. Let’s take a quick look at how traceability starts at the very inception of the food chain.

Quality of seeds

It all starts with the seed itself. Of course, the source is the primary input of any agricultural process and plays a significant role in attaining higher crop yields and sustained growth. Genetically modified (GM) seeds adversely impact the quality of the crop. To pursue organic cultivation, high-quality organic seeds are essential. The distribution of quality seeds is as critical as their production. The vast majority of Indian farmers do not have access to high-quality seeds due to their exorbitant prices. Another challenge is the availability of spurious seeds. Believe it or not, 60 to 65% of seeds used in the country are unlabelled. In India, around 35% of seeds in use are from the cultivated crops saved by the farmer. Only 45% go through the ICAR system, with certifies the products. The balance comes from private companies and doesn’t go through an authorized certification process. A fool-proof traceability and certification system is, therefore, the need of the hour. According to reports, agricultural productivity could increase by 25% if such a system were introduced.

Organic production

Apart from the quality of seeds, soil quality plays a vital role in producing organic food. Genuinely organic food products must not be grown on soil that has traces of chemical fertilizers or pesticides. For this to happen, the soil has to be remediated completely. In many cases, non-organic farming may have taken place on a piece of land. It may take up to 3 years for contaminants to be dissipated completely. During this time, the produce coming out of this land in the first year will not be completely organic. In the second or third year, the organic value of the product starts to increase. Natural fertilizers like Neem seeds or natural compost are often used in this process. There are certain disadvantages that the farmer faces when pursuing organic cultivation. The most crucial factor is that the volume of production falls. So, a multi-crop strategy needs to be implemented and balanced to ensure that production numbers do not reduce drastically. For example, millets can be grown along with lentils. If the farmer impacted financially, he would lose interest in organic farming.

The role of certification

Certification plays a vital role during these processes. An authorized certification agency plays a pivotal role in the transparency of information, which takes everything into account, from the quality of seeds and organic production to the quality of the end product that reaches customers. Once the product becomes 100% organic, it commands far better prices, and the farmer starts realizing returns at this stage. APEDA (Agricultural and Processed Foods Products Export Development Authority) has made traceability mandatory for food products to be certified as 100% organic. This includes traceability of seeds introduced at the inception stage and verification of all processes and practices used during the food production cycle. Traceability is starting to play a significant role in the procurement of food products in the country.

How can blockchain enhance traceability?

There is an incredible opportunity to enhance traceability in the agricultural sector by using blockchain technology. This process commences at the seed level and goes all the way up to the final stage, right through the entire supply chain. An advanced form of traceability of this nature can enhance transparency in the industry. Consumers can benefit by knowing about the quality of seeds, the handling of food products, production processes and whether or not the produce is genuinely organic.

Blockchain technology has manifold advantages. Since all the data gets recorded on a distributed ledger system, it becomes tamperproof. The immutability of the data creates absolute transparency and accountability. Verification becomes easy at every level – for regulators, quality certification agencies, manufacturers, wholesalers, retailers and consumers. It’s not just about verification. These initiatives can build brand value for organic food companies. It is a significant shot in the arm of the trust economy, where agricultural companies can convincingly prove their products’ health and nutrition benefits. The good news is that blockchain technology is already starting to empower the agricultural sector in India. Many manufacturers are fast moving towards the adoption of this technology throughout their processes.

Blockchain technology can connect all stakeholders within the food industry.

Government support for traceability

A technology initiative of this magnitude can only work if it receives support from the government. It is the need of the hour, and ministry backing is crucial. The Finance Minister, Nirmala Sitharaman, has recently unveiled an economic package that includes Rs 100 million (US$ 1.33 billion) to finance food and agricultural start-ups. Industry studies show that only 830,000 Indian farmers are involved in organic agriculture out of an estimated 200 million. However, the Indian organic vegetable market alone is worth Rs 40 billion annually. In a land where there has been historically little or no impetus towards food safety and accountability, these guidelines have now made it a mandatory requirement for exports. India is the second-largest producer of food globally but surprisingly has only a 2% market share in global agriculture exports. Therefore, the government and all stakeholders within the industry need to work hand-in-hand to implement a traceability framework that enhances food safety. Organic farming requires soil improvement and other processes to be implemented that can only be achieved via a more substantial relationship within the entire supply chain network. It is a market that is expected to grow annually by 10 to 15%. The introduction of a traceability framework by the government is now long overdue.

Similarly, the urban population in India is currently 377 mn and expected to grow to 404 mn by 2050. Many Agri start-ups are exploring urban farming. For all these initiatives, in the rural and urban sector, the requirement of traceability is paramount. From food safety to farmer’s incomes and the promotion of exports, traceability plays a significant role across the spectrum. It results in packaged produce containing verified information about the origin and production practices. It also allows the consumer to scan the products and find out the farmer’s name and location, the type of seeds used, and the production methods used to form the food.

In conclusion

The agri-tech sector can benefit immensely from the implementation of a blockchain-based traceability framework. It is our nation’s gold mine and was valued at Rs 18.55 lakh crore in 2019. It is expected to grow annually by 10.2% until 2024. Approximately 60% of our country’s population is dependent on agriculture. These are three fundamental reasons for the entire community to work hand-in-hand with the government and the regulators to implement a robust, blockchain-enabled traceability system. Such an initiative will bring immense benefits in the long run and can play a turnkey role in aligning the supply chain network from farm to fork, resulting in a win-win situation for everyone.

Share Blog on: