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Traceability: a growing consideration for crop farmers

In Ontario’s crop sector, some farmers have embraced traceability as a valuable business tool. Others see it as a non-issue for their own operation or have concerns about things like cost and liability. But the ability to trace a product through all stages of production and distribution is becoming increasingly important in agriculture.

One of the main factors driving traceability is food safety. “You just have to look at the paper and see, for instance, how almost half a billion eggs were recalled because of Salmonella and you know there are some really good food safety drivers showing that we need to be able to say this is where our product has been and it’s part of the contaminated batch or it’s not part of the contaminated batch,” says Dr. David Sparling, who holds the Chair of Agri-Food Innovation and Regulation at the Richard Ivey School of Business at the University of Western Ontario in London.

He adds, “That’s primarily why governments are interested in traceability, to ensure the public is as safe as possible and that our industry is protected. If a problem occurs, then we can say it’s small and very contained, and we know exactly where that product is so we can recall the right product. Then you don’t have a massive public backlash, which is the response: ‘I’m not going to eat spinach or processed meat or whatever because I’m not really sure what’s safe.’”

That consideration also ties into traceability as a tool for market access. “Often your ability to sell products into global markets depends on your reputation. Governments and industry want to protect Canada’s reputation as a high-quality producer of safe food,” says Sparling.

Another traceability driver is the benefit to a business’s internal operations and its relations with buyers and suppliers. “There’s a greater realization amongst businesses, whether they be a producer or a processor, that the more they know about what happens to their product and about the product itself, the more they can manage their businesses to make sure their processes are effective and efficient,” says Martin Gooch, director of the Value Chain Management Centre at the George Morris Centre in Guelph, Ontario.

David Hendrick of Hendrick Agrifoods says, “Traceability for us as a company establishes rigour and protocol and process in our own operations and allows us to measure performance and identify problems. But what is most important is understanding the meaning of traceability in the eyes and mind of the customer and responding to that.”

Hendrick Agrifoods, based in Inkerman, Ontario, specializes in the production, processing and export of edible beans, including identity-preserved (IP), non-genetically modified (non-GM) soybeans.

In effect, traceability is a tool for meeting the expectations of buyers and end users and for assuring them that a grower is indeed meeting their requirements. Gooch says, “Consumers expect people to know what happens to food products at every step of the way. They are becoming more concerned about food safety, and certain segments of the population are becoming more concerned, for instance, about how food is produced, whether it is organic, or minimal chemical use.”

So traceability is also linked to market advantage. Sparling notes, “Are there ways your product has special value to some segments of the market? It could be organic, fair trade, environmentally friendly, omega-3, or many different things. You can catch that value if your traceability system can prove your product has those additional elements.”

Challenges to adoption of traceability
Despite these drivers, agriculture is “decades behind other sectors” in adopting traceability, according to Gooch.

What is preventing the move to traceability? “I think it boils down to a question of trust,” says Brian Sterling, chief executive officer of OnTrace, an industry-led, not-for-profit agency that oversees traceability initiatives in Ontario’s agri-food industry. “Maybe it’s because the agri-food sector is quite siloed. For instance, typically the producer deals just with the next person downstream buying the product; you have these artificial barriers all along the supply chain, and that leads to lack of trust.”

He believes that the lack of trust influences three common concerns in the agri-food industry about traceability: cost, liability and privacy of business information. “For instance, the farmer will claim, ‘The meat processor isn’t going to give me a fair price if I give him too much information,’ and the processor says, ‘The retailer is not going to give me a fair price if I give him too much information’, and so on. They don’t trust the government and they don’t trust their value chain partners to be careful with their information. And they don’t trust that the public won’t get hold of the information and sue them if they have a problem.’’

However, trust and mutual respect can be built into a value chain. “The players in the value chain need to be respected and to be clearly told what is expected of them, but also what they can expect from us,” explains Hendrick.

“We have a grower manual that we encourage our identity-preserved soybean growers to follow. In our IP protocol, we make it clear that we do not want to have, for example, GM soybeans in our non-GM fields; we don’t want dirt tagging on the soybeans. All of those types of things involve special time and attention by the grower. The grower is critical to the success of our program, and we expect a lot from the grower. But it works two ways: we have to reward the growers duly to reflect the effort they are making.”

“Traceability systems do have a cost,” Sparling says. “If you capture more value from a market, then you may not mind absorbing that cost. However, if the product is just going into commodity markets, then it’s less clear to farmers why traceability will benefit them. So they are not that interested in spending the money, and other members of the supply chain may not be that interested either.”

Where there is not a strong financial incentive to adopt traceability, Sparling thinks everyone involved needs to look at whether traceability is important for the entire industry. “That’s when governments need to say: ‘Traceability is important to us and you need to do it for these reasons, whether it’s food safety, protecting our non-GMO market, or whatever reasons, and so we will help fund the cost.’”

Gooch views the cost issue from another perspective. “Agriculture is the only sector I’m aware of that has taken traceability out of the overall information system, put it by itself, and then said, ‘How do we make money from this?’”

Instead, he believes traceability needs to be seen as a strategic tool to improve competitiveness. He gives an example: “I know of a group of about 300 wheat producers who have enabled themselves to capture extra revenue by enabling the miller and the retailer (with numerous in-store bakeries), to reduce their costs and differentiate themselves by offering a product with more consistent quality. That has come about by developing a traceability system where producers are able to measure what is important to the entire chain’s operation.”

The producers have used the resulting information to determine how things like the seed they grow, the fertilizers they use and a host of other factors, are connected to the quality of their final product. That has allowed them to tailor their product to the needs of their processor and retailer and to save costs themselves. And that has enabled everyone in the value chain to benefit.

With respect to the issue of liability, Sparling says, “There is a perception that if you have a traceability system and there’s a problem, then it could be traced back to you. But if the problem started from you, it probably should be traced back to you. Then you can fix the problem so that it doesn’t affect the entire industry.”

In fact, traceability can help prevent liability problems. He says, “If you are collecting data and analyzing what’s happening in your system and along your supply chain, then you usually find ways to do things better and avoid problems. Furthermore, if you are doing things really well, you would just as soon your product wasn’t downgraded by mixing with somebody else’s.”

Sterling agrees, “It’s been proven time and again that traceability can really make the difference in containing an industry disaster. A classic example is the “tomato and Salmonella” outbreak in 2008 in the United States. Most people don’t realize that the outbreak was not actually caused by tomatoes. The poor tomato industry got absolutely hammered and had nothing to do with the problem. With a traceability system, you can quickly prove if you’re not part of the problem.”

In the long run
What is the outlook for traceability in the crop sector? “I don’t think adopting traceability is a choice. It’s a question of how do we do this in the best way possible, and how do we take advantage of the opportunities that are emerging,” Gooch emphasizes.

“I think traceability is ultimately just really good business. We want to be at the leading edge of markets and we want to explore all the ways we can capture additional value,” notes Sparling. “While it is harder to justify in commodity markets, more people are getting into differentiated markets even in the crop sector.” 

Hendrick says, “I believe more IP, more selective targeting of markets, is to come in the future, and in order for us to support that properly, we are going to have to maintain and improve on an ongoing basis our traceability systems.”

November 30, 1999  By Carolyn King