Fragmented Food Supply Chain

By Raja Ramachandran CEO, ripe.io

The global food and agriculture sector have an estimated value of USD $8 trillion with global food retail sales at $4 trillion (World Bank, USDA). The food, beverage and agricultural business are incredibly fragmented with no concentration in any single or group of players. This means there is a vast, decentralized network of growers/farmers (one estimate is 450MM worldwide small farmers), distributors, packers, processors, third parties, brokers, and retailers (food and dining services, grocers, restaurants, home delivery). This condition has created a very challenging, fragmented food supply chain with many negative impacts, including:

Increases in food waste, costing the world nearly USD$200B and using 25 percent of the world’s waterLack of visibility of food origin and authenticity costing the industry 30-40BRises in third party food certification, a $14B business, to create trustLack of monitoring tools for food sustainability, major goal of the industryFood traceability recall costs estimated at $55B in the US alone

The amalgamation of increased globalisation, new standards for regulatory policy, and information transparency has engendered demands for an efficient, connected, and trusted global food system. With these new demands comes an imminent need to bridge the gaps between both public and private agriculture and food stakeholders and create a more quality food system for all its consumers.

Impact on Meat 

In 2016, Australian red meat exports exceeded one million metric tons valued at AUD 7.4 billion. With trends in meat consumption continuing to rise over 262M metric tons, and regulatory policy demanding more information, having an efficient system to track, trace, and authenticate meat with confidence is a priority. Food safety concerns and consumer demand for transparent food has pressured governments to evolve standards and create labeling and reporting requirements. The U.S, Australia’s largest beef import client, has mandated food and stakeholders to comply with the Food Safety and Modernisation Act, a monumental overhaul of current standards to prevent foodborne illness. The seven rule guidelines include the Foreign Supplier Verification Programs (FSVP), requires importers perform certain risk-based activities to verify food imported into the U.S has met safety standards (FDA, 2016). Current processes for documenting and aggregating data and information are outdated and unsustainable for generating on-demand reports for product certification, driving the need for a food quality and verification network.  

The key project goals for this project is to:

Bring together a comprehensive set of stakeholders in the red meats businessIdentify the scope of a pilot project that solves key problems in the red meats business and delivers new and long-term value for the same using technologies such as blockchain, IOT/sensor, cloud connectivity and other connected capabilitiesThe government and B2B participants evaluate and inform the ripe.io platform to provide improved transparency, automated regulatory compliance, increased supply chain efficiency.

Problem Statement

In the Australian red meats market, of which this project will focus only on beef, there are several key issues that face participants in the market place:

Fragmented supply chain: The product is perishable and unpredictable. Buyers and retailers work with a lot of numbers and assumptions to get product when they need it. How to reduce the volatility associated with complicated purchasing and fulfillment requirements for customers and regulators.Lack of transparency along the supply chain: Is this a way to encourage better performance by creating more knowns than unknowns? B2B Transparency is as important as B2C.Lack of “digital” dialogue amongst supply chain.Lack of consumer visibility. Currently there few to no ways for consumers to report back to supply chain: Is there a way for consumer at home or in a restaurant to feed back into the blockchain? Is this an opportunity to build a bi-directional dialogue? Possibly in a later phaseAre we touching consumers digitally or analog? Will customers pay more for transparency and confidence in food products.There are a lot of drivers that have nothing to do with the taste or feel of product. This is important for pricing management and quality determination.Regulatory compliance: Food safety traceability compliance and transparency is a requirement for the project.We are excited to be the platform provider to improve the transparency, quality and competitiveness of the supply chain from farm to fork!

Follow us @ripe.io

Work with us info@ripe.io