The Business Case for Food Chain Transparency

Industry experts, governments, regulators and academics, all concur that food safety needs to be non-competitive and non-negotiable and with such an approach, one could argue that food has never been safer or better controlled. However, despite such measures, we may be just one bite away from the next food crisis.

If we take food safety as one example, the World Health Organization (WHO) says that there are 420,000 annual deaths arising from the consumption of contaminated foods, and around 48 million people get ill from foodborne illnesses annually just in the U.S. alone. This clearly shows us that there is no room for industry to relax.

Extending beyond food safety, the world is facing significant health and socioeconomic burdens that are impacted by food chain transparency, or the lack thereof. An example of this is the global antibiotic resistance crisis. While largely due to over-prescription and human misuse, the additional overuse of antibiotics in animal production compromises the treatment of infectious diseases and undermines decades of medical advances, according to the WHO.

There are several other global concerns related to the food industry including obesity, malnutrition and non-communicable diseases (NCDs). According to WHO statistics, 800 million people are undernourished, 2 billion people suffer from micronutrient deficiencies, 1.9 billion people are overweight - of which over 600 million are obese - and the diabetes epidemic has 422 million people living with the type 2 disease.

Food scientists advise that a healthy, balanced diet will protect against NCDs such as malnutrition, obesity, diabetes, heart disease, stroke and cancer. Intervention programs in these areas are complex and constrained by national resource capacity and political priorities. New legislation may take years to ratify and changing consumers’ consumption habits requires a whole-of-society approach.

In my opinion, we need effective public-private partnerships (PPPs) to strike a timely balance between lengthy, complex legislation and voluntary industry measures, such as product reformulation, to reduce sugar, salt or (trans) fat content and reduction of antibiotic misuse. Transparency on the usage of antibiotics in the human health and animal food chain is now critical to public health and safety and will likely require targeted transparency or mandated public disclosure. Ironically, the U.S. Food and Drug Administration (FDA) cautioned in April 2016, at the GMA Food Science conference, that many of the foods it encourages Americans to consume for the prevention of NCDs, such as fruit and vegetables, have themselves a high risk of contamination for foodborne disease. From a consumer perspective, the question then becomes one of who and what information to trust.

Transparency business case

If businesses are non-responsive to the drivers for increased transparency, it is likely that targeted, mandatory transparency becomes a reactive and likely costly norm. Transparency is defined as "the extent to which all supply chain stakeholders have a shared understanding of, and access to, product-related information that they request, without loss, noise, delay and distortion".

With this definition in mind, transparency is used effectively today by leading food businesses as a valid defensive and operational tactic (defined by Hofstede as history and operations transparency) focusing on production input, output and related information sharing. This can extend beyond classic tracking/tracing and recall capability for risk mitigation in a crisis and include supply chain mapping for example. Transparency also benefits supply chain governance and help's to reduce opportunistic (bad) behaviours; reducing trading partner conflict. Whereas strategic transparency amongst trading parties allows for collaboration to exploit market opportunities, innovation and gain competitive advantage with ethical and honest signals of credibility and product credence such as sustainable, fair trade, organic, non-GMO, etc.

The incentives for businesses to proactively embrace and invest in food chain transparency are many and span across supply chain governance, cost optimization, revenue growth and increased profitability. If the information sharing is viewed as authentic and trustworthy, it also enables consumer trust and loyalty (consumers are alert to the alternative; cause-related marketing and greenwashing). Beyond this, collective stakeholder efforts through public-private partnerships and a balance between voluntary and mandatory transparency can drive significant socioeconomic improvements in health and wellbeing and saves many lives.

John Keogh is the president and principal advisor at Shantalla Inc., which provides advisory services in the areas of trade and supply chain management, food safety and public-private partnership.
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