Livestock Products Traceability – A Game Changer to Livestock Sector in India

December 9, 2022

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Livestock Products Traceability – A Game Changer to Livestock Sector in India

Consumers are making dietary shifts towards sustainable and reliable products due to disease outbreaks and food contamination. Blockchain based traceability solutions deliver a digital footprint of the product and assure compliance to quality standards.

The food industry was shaken by the advent of food traceability based on blockchain technology. For its decentralized and tamper-proof system, it is already the point of no return for any company that wants to survive to the wave of consumers who demand transparency, quality, good practices, and the lowest environmental impact; for the livestock industry especially, so closely linked to sanitary emergencies and ecological repercussions, food traceability is the only point for moving forward.

How’s the livestock industry scenario worldwide?

As the world’s population increases, global meat consumption is expected to grow steadily in the coming years. Between 2016 and 2020, the volume of meat production worldwide has increased from 317 million metric tons to 328 million metric tons and, according to a 2021 report by Statista,

According to Statista, the market value of the meat industry is expected to increase from US$838 billion in 2020 to more than US$1 trillion in 2025.

By far, the largest share of the world’s meat is produced in Asia, which generated 136 million metric tons of meat, and pork and poultry are the most produced types of meat, with sheep being the least produced. Although many people refrain from consuming pork for nutritional or religious reasons, pork production is widespread in China and Europe. Some of the world’s largest meat producers include Tyson, Hormel Foods, and National Beef.

What Is India’s current livestock trade scenario?

India is the world’s top exporter of buffalo, sheep, and goat meat. These animals produce approximately 53% of India’s milk and 74% of its meat. Its livestock sector accounts for 4.5% of India’s GDP, with two-thirds of this pastoral production. In addition, poultry farming is one of the main sectors contributing to the country’s economic development. According to Statista, poultry was the most produced meat in India (2019), with over four million metric tons by volume. Along with buffalo and goat meat, they were the most significant contributors to total meat production across the country that year.

Between 2000 and 2016, the country’s agricultural production has surged from US$101 billion to about US$367 billion, driven mainly by high-value segments such as horticulture, dairy, poultry, and inland aquaculture. During this period, meat, fish, and processed products exports grew between three to five times.

To achieve its full export potential, India’s Ministry of Commerce and Industry emphasizes, in its Agricultural Export Policy 2018, the need to build around agricultural infrastructure and the digitization of supply chain processes, and has pointed livestock traceability as a critical enabler to ensure the efficiency and compliance with global quality standards to integrate livestock products into the global value chain.

Traceability in Livestock Products Supply Chain

Traceability is not a new concept. It has existed in various degrees of importance across multiple supply chains, more so in B2B parts of the chain, where the transaction volumes are high. However, end-to-end traceability had few takers. The assumption so far has been that the end consumer is indifferent to the origin of the product as long as it is value for money. However, traceability is not just about the origin of the product but also about what happens to the product as it moves through the chain.

In the post-pandemic world, consumer behaviour has changed irreversibly, especially when it comes to a category like food. The Indian food supply chain has one of the highest degrees of opacity between the farmer and the consumer, separated by about 6 to 8 layers of intermediaries in between. This is one of the reasons for the disparity between value creation and price escalation as products move from farm to consumer.

The question is, do consumers care about the farmer who is growing their food or want to know more about the food before buying or eating it? The answer is, not all, but at least some consumers might. In my opinion, this portion of “some” consumers in a post-Covid world could be at least 1/3^rd of the urban population—let’s say about 200 million—and the number is going to grow further.

There are three fundamental reasons for increasing propensity of consumer to buy and pay for traceable food:

Traceable food is also safe food as it not only establishes origin but also the condition in which the food was stored, transported and processed
Traceability establishes trust in the supply chain between different actors including farmer, consumer, aggregator, processors and distributor. The trust factor is of high importance especially in products which are commoditised or unbranded such as fruits, vegetable, staples
A section of consuming class is the ‘fair-trade’ consumer who cares about the price that producer is getting. Traceability solutions have the power of getting the equation right between consumer price and farmer’s share

The next question is, what kind of supply chain would drive the adoption of traceability solutions in Indian context?

GI (Geographical Indication) tagged products
There are about 360 GI-tagged products in India, most of which fall in the food category, right from Kashmiri saffron to alphonso mangoes to Darjeeling tea and Tirupati ladoo. GI-tagged products have competitive advantages that we have not leveraged enough. One reason is lack of trust in the origin and authenticity of the product, which traceability can address.

Export-linked supply chain
India exported about $41 billion worth of food products in FY21, a jump of 17 percent from previous FY on the back of increase in demand during Covid-19 times. India can consolidate its position in the world market by increasing its share of about from about 3 percent in world food trade to about 7 percent to achieve the $100 bn export target set by the government. This can happen by increasing our share in strategic categories like rice, tea, spices, and adding new products. Last year, we exported many products for the first time in sizeable volumes including Himalayan millets, jaggery powder, red rice, jamun, black rice, litchi, jackfruit etc

Having said that, Indian exports are facing more scrutiny than ever before. EU has already banned imports of products with traces of insecticide like Tricyclazole, Buprofezin; which are commonly used in Basmati rice cultivation. Government has banned use of these molecules and made the inspection of export consignments mandatory to check for residual levels. This is where traceability solutions become important who can give information on critical criteria like pesticides used, residual levels. India can be proactive by implementing these solutions across all key export linked supply chains, not just for Basmati rice.

Organic products
Organic foods consumption in India has remained below $ 1bn (out of about $500 bn of food consumed) and we continue to be insignificant players in world organic trade, exporting about $1 bn worth (world organic food consumption is about $ 220 bn). One fundamental reason of low penetration despite high demand is the lack of trust between the consumer and the producer on the authenticity of the organic claim; for which consumer pays a premium. Traceability solutions can plug this trust gap through documented certification and drive organic consumption in India, as well as exports.

Supply chains prone to adulteration
There is no dearth of food supply chains in India where adulteration levels are rampant. According to a survey by the Food Safety and Standards Authority of India (FSSAI), 70 per cent milk samples collected across the country by the authority did not conform to standards. The common adulterants used in milk are water, urea, detergents, liquid hydrogen. A recently study on the honey supply chain claimed rampant adulteration in honey with sugar syrup. Likewise, many ground spices like chilli, coriander and cumin have adulterants like sawdust, artificial colours and flavours, husk etc.

As consumer awareness about food safety is going up in a post-pandemic world and regulations becoming more stringent, there is potential to integrate technologies to detect and report adulterants, accurately and in real time. We should also think of ways to empower end consumers, retailers and other supply chain members to test the quality with the use of user-friendly technologies.

The key to adoption and scale is to smartly manage the data accuracy, authenticity, auditability, sharing, interoperability with use of relevant and right mix of technologies for traceability such as barcode, geotagging, IoTs, stickering, spectrometry, RFID, blockchains etc. I also believe offering traceability, quality assaying, certification and market linkage together is more compelling value proposition for customers than offering one of them in isolation.

The success of food supply chains will depend not only on how efficiently goods move but also on how efficiently data is captured and shared with multiple actors to make the supply chain more traceable, transparent and accountable to the benefit of farmers and consumers.

Imagine that by scanning the unique code on each food product, you can access information including the product batch number, the production and expiry dates, the region that the raw material was sourced from and a certificate of inspection. Being able to determine where food has come from and that it is safe to consume is important to an end consumer. There is also a strong link between authenticity and produce origins, and food safety and quality.

Traceability is a paradigm shift in modern food supply chain. And the technology is already available to trace each raw material that goes into a product and follow how a product is used and where it is discarded. The rise of the internet of things (IoT) will also help in tracking of food products in supply chain. Sensors are coming onto the market that track not only the location of goods, but also the orientation of crates (containing food packets) and factors such as temperature and humidity. Traceability enables companies to meet and balance a broader set of business objectives, including efficiency, resilience, responsiveness, and sustainability.

Traceability gives companies the ability to follow products and goods as they move along the value chain and to extract information about the origin of inputs, supplier sourcing practices, and manufacturing processes. With that data in hand, companies can make predictions, run production scenarios, and streamline operations. Companies can also identify strategic supply chain opportunities, innovate faster, minimize the impact of internal and external disruptions, and certify sustainable processes and products.

Food Sector – Supply Chain in India

The food and agriculture sector are the single largest employer in India. India witnesses nearly 5-15 % (About $ 13 Billion in value) wastage in fruits and vegetables annually, due to lack of modern harvesting technologies and cold chain infrastructure. And a rising population, expected to reach almost 1.6 billion by 2030, exacerbates our already strained food systems. Hence it is very important to focus on the supply chain to figure out the inefficiencies and weed them out so that our food supply chain is able to withstand the growing demand.

People ask about connection between sustainability and traceability, and it is often misunderstood. Traceability is the ability to follow materials from the beginning of the supply chain to the customer who purchases a product. With this data and information, traceability plays two roles that support sustainability. It provides visibility on inputs and processes across the value chain, and it provides the source information for its origins and sustainability certifications. It could potentially facilitate comprehensive tracking of the environmental, economic, health and social consequences of different agricultural production processes, even making it possible to calculate the true cost of food to consumer, which will help meet consumer demand for transparency. Consumers might favour a locally grown produce than a produce which has travelled a long distance to the retail shelf. In addition, producers, including small-scale producers, also look to harness potential efficiencies brought about through traceability-enabled transparency, such as associated cost savings and new value sources. Traceability could also improve farmers/producer revenue, market access and opportunities for affordable access to capital.

Circularity – A special mention

It is a recent industry phenomenon which can be broadly understood as reuse, restoration, and recycling of Industrial waste. However, it is one important topic that’s being discussed by industries globally. I was talking to a global food processing company which is going to set up a plant in India and they were concerned about wastewater from their plant and were investing a huge amount in its water recycling plant looking at the future trends in waste management. Similarly, an Indian FMCG conglomerate was concerned about the plastic waste generated from their packaging waste. These companies are looking at sustainable waste management solutions. Capturing the economic and material value of industrial waste, rather than allowing it to enter the environment, requires a system wide approach that leverages opportunities across the food supply chain. Effective solutions that can track the waste and its proper management will provide a broad set of investment opportunities across the manufacturing sector. We at Invest India have a dedicated team (Waste to Wealth) that helps companies find innovative solutions to waste management at their manufacturing plants.

Initiatives of Government of India

Traceability provides a significant opportunity to create value for consumers, producers, and supply-chain operators. One key opportunity is the potential to identify and address loss points in the supply chain, which is a particular challenge for India, and it holds a distinct promise in helping drive food-systems transformation. It has the potential to strengthen inclusivity and empower small-scale producers with improved market visibility and access to new services and resources. However, to ensure that its potential impact is maximized, the traceability agenda must focus on ways to introduce inclusive scaling, particularly in relation to medium and small-scale industries.

With this in mind, Ministry of Food Processing Industries has launched Operation Greens with the following objectives.

Enhancing value realisation of farmers by targeted interventions to strengthen production clusters and their Farmer Producer Organisations and linking/connecting them with the market.
Price stabilisation for producers and consumers by proper production planning in the clusters.
Reduction in post-harvest losses by creation of farm gate infrastructure, development of suitable agro-logistics, creation of appropriate storage capacity linking consumption centres.
Increase in food processing capacities and value addition in value chain with firm linkages with production clusters.
Setting up of a market intelligence network to collect and collate real time data on demand and supply and price of crops.

The scheme will have two-pronged strategy of price stabilisation measures (for short term) and integrated value chain development projects (for long term).

Challenges in implementing Food Traceability

Full-scale traceability would be difficult for a food value chain player to achieve alone, as barriers to adoption are significant on a large scale (the financing of capital expenditures and establishment of consistent standards, usage of technology). Collaborations will likely come in one of three forms: horizontal (the largest global retailers and food companies work together to align on standards and put pressure on the rest of the supply chain to comply), vertical (one retailer collaborates with their full supply chain to align on standards) or multi-stakeholder (companies collaborate with players from throughout the entire value chain with support from government and consumers). Multi-stakeholder collaboration is preferable to the other two forms because it helps set consistent standards, taking into consideration the needs and perspectives of the full supply chain.

Traceability in food value chains, coupled with multi-stakeholder collaboration, has the potential to fundamentally improve food supply chains. To achieve its full potential, stakeholders will need to come together to enable emerging technologies and to install a broad system and standards in traceability. Without multi-stakeholder collaboration, the impact of traceability could be limited. Traceability requirements could become operationally and financially burdensome, with complex and inconsistent standards, providing limited benefit to consumers and stakeholders alike. For example, if downstream players pursue traceability in silos, food producers will need to comply with several different types of requirements and the associated costs. This risk is already apparent in the proliferation of voluntary market standards for different foods (e.g., organic food standards, Food standards/certifications for Import/Export) and if horizontal collaboration between retailers is not deliberately designed to be inclusive, it could exclude small-scale producers from markets entirely.

Way Ahead

In the last few years, the Agricultural and Processed Food Products Export Development Authority (APEDA) has been shown growing interest in electronic traceability system for farming products while simultaneously providing guidelines to the farmers about good agricultural practices as well as focusing over the food safety standards for improving better production and distribution. Nowadays, building up traceability system for exports has become easier with help of APEDA Tracenet Module. These steps will go a long way to implement traceability across food supply chains in India.

India has come a long way in the journey of food traceability in the last decade with initiatives from private as well as public sector. There is still a long journey ahead for food traceability India.

Once implemented across supply chains, food traceability will impact our supply chains in the following ways:

Meet consumer demand for food production transparency
Enhance the ability to identify, respond to and even prevent food safety issues
Support supply-chain optimization and reduce food loss
Validate sourcing claims to support sustainability goals

However, the most important questions today are – which food company will take the lead in implementing traceability in food supply chain? Is the consumer ready to bear the higher cost owing to increased usage of technology in implementing traceability? What will be the role of government regulators in implementing traceability in food supply chain? There are no easy answers to these questions, however, we as a consumer must ask all the stakeholders to implement traceability in food supply chain. No single company will be able to solve the complex issues underpinning traceability agenda alone. Building sustainable value chains in traceability will take a strong commitment and collaboration between public and private players.

For companies at fence evaluating their options, it’s time to act. For those piloting and experimenting, it’s time to scale. And for companies operating full-scale projects, it’s time to scale up the benefits and share the learnings with other industry players. It is also time for Indian food processing sector to be at the forefront of the upcoming food supply chain revolution!

What is the importance of livestock traceability?

Traceability is the ability to follow an item or group of items from one point in the supply chain to another, either backward or forwards. Traceability systems are essential and practical tools that can be used for many things, including animal health protection, public health, and food safety.

They can help reduce response time, limiting the economic, environmental, and social impacts of emergencies such as disease outbreaks and environmental disasters like floods and fires.

From the last two decades to date, there have been more than a dozen meat scandals around the world (clenbuterol-contaminated pork in China (2009); dioxin-contaminated meat in Germany (2011); horsemeat residue findings in Great Britain and Ireland (2013); listeriosis outbreak in South Africa (2017); all have put the health of many people at risk while undermining customer confidence in meat products, leading to a number of challenges in the livestock sector.

Legislations around the world, led by the World Trade Organization and the Food and Agriculture Organization of the United Nations (FAO) through the Codex Alimentarius Commission (CAC), have contributed to international trade by creating standards that allow for a common trade language and define the commercial quality of food. However, meat traceability, full compliance, and transparency within supply chains have not been fully achieved due to the lack of adequate tools and continuous communication between all actors in the supply chain.

A fully functional traceability system for the livestock industry should be based on three pillars:

Animal identification – Associating a unique identification number to an animal (i.e., attaching a marker to an animal);

Premises identification – Assigning a unique tracking number to a specific land location (i.e., description or geo-referenced coordinates) by a territorial premises registry;

Animal Movement – Recording the change of location of a uniquely identified animal at a given time/date.

Blockchain-based livestock traceability enables livestock producers and meat processors to comply with the strictest legislation and helps them demonstrate full traceability in their supply chain; this assurance of good practices and quality will facilitate opening doors to the international market.

Brands such as Unilever and Cargill already operate a blockchain solution, and the UN – which started using it for back-office activities – began implementing it in livestock traceability, land registration, and, most recently, for seafood, according to its 2020 report on the application of blockchain in seafood value chains.

How are consumers and regulations leading livestock companies to embrace food traceability?

The effects of climate change coupled with a population with more access to diverse sources of information have led consumers to make dietary shifts towards low-impact foods and alternatives in their diet and consumption patterns in general.

This makes them look for sustainable and reliable products and openly reject those that do not implement sustainability strategies and good practices; It is also reflected in the requirements and certifications of independent and governmental regulatory bodies that corroborate that companies carry out such practices and open the doors to international markets.

Leading food companies such as Walmart, Albertsons, Unilever, and Nestlé have begun implementing blockchain in their supply chains, implementing initial versions of the technology to improve track and trace and food safety.

According to research firm Gartner, 20% of the world’s top supermarkets will be using blockchain by 2025.

For its part, India´s livestock supply chain management is now leaning towards a more holistic approach to boost its exports, taking into account food safety, processing facilities, infrastructure bottlenecks, and emerging technologies, as well as evolving certifications and stringent regulations, looking mainly to The European Food Safety Authority (EU), U.S. Food and Drug Administration & Department of Agriculture (U.S.) as examples for implementing and monitoring food safety standards, and the Federal Service for Veterinary and Phytosanitary Surveillance (Russia) and European Food Safety Authority (EU) for both agricultural production and trade, all driven by the digitization of supply chain data.

Traceability of animal-sourced food is the natural consequence in the quest for higher productivity and responsible positioning of brands, which must step up on essential aspects such as animal welfare and sustainability to ensure the viability of the global food system.

Transparency and livestock traceability are in great demand globally. It allows companies to validate quality clams like organic and natural with regards to the livestock, especially if they are grass-fed, free-range and humanely raised. According to Innova market insights, the growth in demand for such sustainable products has risen from 10 to 32%

Industrially produced meat has taken a heavy toll on the environment using a lot of resources like water, energy, and land and emitting large carbon emissions. This has led to the adoption of sustainable practices to reduce the environmental footprint. Livestock traceability solutions drive sustainability and ensure a safe future.

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