When the Sustainable Foods Summit convened in San Francisco, January 17-18, one of the topics of conversation was sustainable ingredients. Below are 5 key points manufacturers must consider when building a sustainable brand.
Regulatory and enforcement bodies have pushed data-driven systems deeper into supply chains, particularly since the Bioterrorism Act of 2002. CoC information is the basis for fast, effective food safety recalls. It's also useful for brands managing consumer confidence (did peanuts from that farm end up in my jar of nut butter?).
CoC data is also used to support certification claims: organic, biodynamic, humane, Fair Trade, or some 300 other certifications. Manufacturers and suppliers who can guarantee a trustworthy, detailed story of origins, care and quality differentiate themselves from the competition.
Being able to guarantee a trustworthy story of origins, care and quality differentiates ingredientrs from the competition, adds value and earns price premiums. Organic sugar is sweet, but without a certification, fewer shoppers will believe it and be willing to pay more. Certifications are, in very real terms, money. So we shouldn't be surprised that certification fraud is also on the rise. Industry tools exist to combat this fraud, from FDA alerts to in-house testing programs and retailer responsibility to identify vulnerabilities.
Trust the data
Chain of custody (CoC) systems create the ability to track and locate multiple steps and inputs in a supply chain. Without digital technology and common industry standards, such as GS1, CoC systems quickly fail under the realities of scale and complexity of goods changing hands, packaging and form.
Fight food fraud
Traceability offers a means by which to differentiate truly sustainable ingredients in the face of a growing epidemic of food fraud. While the industry scrambles to put checks in place, two immediate consequences are already coming home:
Global ID Group CEO Kenneth Ross calculates the annual cost of food fraud to the U.S. food industry at $10-15 billion. Global ID Group, a pioneer in GMO detection and analysis, has a portfolio of food verification and traceability solutions with global reach (including Non-GMO Project verification). Speaking at Organic Monitor's 2012 Sustainable Foods Summit, Ross explained, "Sustainability programs around the global are being challenged by this underground economy. If we fail to control the growth of inauthentic food, we're really going to undermine the products that we're making."
Beyond DNA fingerprinting or detecting pesticide residue, an emerging test promises to up the ante on verification efforts. Isotope ratio mass spectrometry (IRMS), Ross says, can detect geographic origin of foods, adulteration and organic inputs. Whether a fish was farm-raised or wildcaught, whether a cow was raised in Australia or the U.S., whether there's some low-grade olive oil in that bottle of extra virgin, IRMS can detect the subtleties.
- News of certification fraud shakes consumer confidence. In December 2011, for example, the USDA warned of five fake USDA organic certificates in circulation.
- The legal, logistical and public relations aspects of fighting fraud increase costs for manufacturers and certifying organizations—costs that eventually must be passed on to consumers.
Build trusting relationships
High tech is one side of the traceability coin. But for every system, there's an ingenious mind working on a hack. The deepest trust in sustainable ingredients also requires business relationships built for mutual benefit. That high-touch side is symbolized in the handshake.
Trust isn't just the goal of transparency, it is also its currency. Whether ingredients are sourced globally or locally, the most fundamental basis of trust is still the close-knit relationship between a producer and buyer. Call it humanizing the supply chain.
For the consumer of sustainable foods, data can't replace knowledge of people or place behind a foodstuff. (Witness thousands of origin stories marketers have slathered onto food and beverage labels, some with a deep tinge of greenwashing.) Consumers seek that connection across the table at a farmers' market or symbolically through a brand story or certification they believe in.
Close the gap
Face-to-face verification involves site visits and regular audits covering multiple aspects. These methods are often extended through "meet the farmer" consumer communications, such as stories captured on Stonyfield Farms' YoTube, with videos that showcase growers of ingredients that end up in Stonyfield yogurt tubs.
Of course no one can be watched all the time. So key to trusting relationships at any distance (but especially across continents) is business practice that rewards and incentivizes compliance.
Frontier Natural Products bridges the gap from Iowa to countries like China and Madagascar with extensive relationship building before being brought into their Well Earth supplier program. VP of Sustainability Kathy Larson explains Well Earth's co-op approach: "Our commitment to [small farmers] is to have a two-way partnership with a relationship that goes into the future, not just a buy-on-the-spot market."
Increasingly, programs like Well Earth support growers with social services and teach sustainable farming practices. This, along with ensuring a fair market price, creates bonds between growers and buyers that can help reduce incentives to cheat.
Sambazon, in the pursuit of its açai specialty, recognized that it would never be able to gain organic or Fair Trade certification using the typical Brazilian açai supply chain, an exploitative system Sambazon calls "blood health" (a variation on "blood diamond"). So the company located processing facilities in Brazil and buys fruit direct from an affiliated group of growers, injecting a sense of ethical order into the Wild West of the Amazonian açai trade.
Whether driven by data or relationships, the real question for traceability is whether it can scale. High-tech and high-touch must blend into a cost-effective system that can deliver the full potential of traceability: not simply a tool for food safety but a springboard for food integrity.
Without economies of scale, sustainable food will remain a premium niche. This is just as true for the process of traceability. UTZ (prounounced ootz) Certified may be cracking that code for growers, manufacturers, brands and consumers. The Amsterdam-based nonprofit has become the largest sustainability program for coffee worldwide, a leader in cocoa and a growing force in tea.
UTZ doesn’t certify growers itself. It’s an “architect and enabler” for sustainable supply chains meant for mainstream scale. UTZ creates chain of custody and product standards for use by third party certifiers. Monitoring is carried out by second-party impact assessment programs.
Associate Director Juliette Caulkins says, “We can’t have any sustainability without traceability. This is key to the big companies being able to talk about the fact that they are making changes and having impact. Traceability connected with impact stories will be the future.”
Supporting farmers, involving industry and delivering to consumers are pillars of the label that aims to be sustainable ingredients’ “Intel inside.” Caulkins continues, “Industry needs to take responsibility by demanding and rewarding sustainably grown products. They realize they need it, but they also need to take part in it.” Familiar to European consumers, UTZ’s presence is growing through products for the likes of Oxfam, Nestle, Mars and Heinz. Can traceability and transparency scale? Apparently, with UTZ.
Will traceability cost too much?
Whether it's third-party certification, a lab test to verify terroir or a handshake between buyer and farmer, establishing trust is the goal of traceability efforts. And all those methods—human and data-driven—will be needed to build and maintain supply chains that deliver integrity as well as the goods themselves.
As a baseline, traceability mitigates risk, supports claims and complies with regulations. But more than that, traceability is a window into the ethical dimension of food production and the integrity of sustainable business processes.
Trust is the goal. Transparency is the idea. Traceability is the process. But that formula is quickly complicated by the reach of global supply chains. For a food industry powered by big intentions and limited resources, traceability's costs can, ironically, disadvantage the small producers and companies who pioneered the space to begin with.
Jana Branch is Communications Consultant at Articulo Consulting, in Santa Monica, CA.