The age-old adage “you are what you eat” has never been more top of mind. As customers demand more transparency regarding what they eat and how it is grown, multi-national food producers are being forced to adapt and modernize systems to provide this information. This, coupled with the challenge of serving a burgeoning middle and the importance of food safety in countries like China, creates the ultimate burning platform for those in the industry: Reinvent the supply chain or face disruption by those who do. Companies in the food production industry are now focused on embracing Supply Chain 4.0 and have begun to establish better performance management and tracking systems1.
One such company is Cargill, a global commodity and poultry leader that is the third largest turkey producer in the United States2. Recently, Cargill announced it would begin piloting a new turkey tracking program leveraging blockchain technology. This pilot aims to improve the transparency that Cargill can provides not only to the retailers that it supplies, but also to the customers the company feeds3. While this is merely the first step (and at first glance may have seemed like a gimmick given the news coverage with titles like “Track Your Turkey” and “Turkey Tracer”), the potential impact is incredible, especially in two key areas: food safety and sustainability.
The turkey and chicken industry has come under scrutiny of late with the Avian flu pandemic. In 2015, over 50 million birds were destroyed across the United States after an outbreak that spread to over 230 farms4. The ability to track birds that were responsible for the spread of the disease was challenging, and often led to the slaughter of entire flocks to prevent contagion. While farmers were able to identify and remedy the issue, this was done without a central database which caused substantial delays and the inability to trace where the potentially contaminated products had been shipped. Had the farmers been able to leverage a centralized digital tracking platform, they could have identified the spread of the disease and potentially mitigated its spread more rapidly, while immediately identifying all suppliers and distributors that may have been impacted.
In addition to the food safety benefits, the industry will be better equipped to monitor issues in the supply chain. While increasing transparency of the supply chain alone is a win, the key implications center on the topics of feeding an ever-growing population, while reducing the overall environmental impact of resource intensive products like turkey (it is estimated that one pound of turkey requires over 500 gallons of water). In 2015, of the 580 million pounds of turkey purchased in the United States, only 65% was consumed. Americans tossed out what amounts to over $250 million of turkey, which is the equivalent of wasting over 100 billion gallons of water5. With better insight into the supply chain and consumption patterns, companies like Cargill can not only work to better forecast demand and project necessary resources, but also are able to provide transparency to customers regarding the inputs required to grow, process, and transport their turkeys this Thanksgiving. One can hope that this might provide an impetus for change in behavior, i.e. keeping those leftovers.
As Cargill considers its role in the future of the agricultural industry, it should immediately take steps to communicate the environmental impact of food production to its customers, and leverage data from this pilot to substantiate its claims. Additionally, Cargill must consider how to align its interests with those of the retailers and food service companies with whom it currently partners. Only then will the feedback and information loop be completed. After a successful pilot phase, Cargill should then consider collaborating with key competitors like Butterball and Tyson Foods, as it looks to become an industry leader in transparency, food safety, and sustainability. These problems are not just Cargill problems, and together the industry should look for a collaborative solution, which not only makes the all companies more successful through the sharing of best practices, but also improves health and sustainability across the globe.
I believe two key questions remain:
- How does technology like blockchain successfully scale in the food industry without altering the cost structure of firms like Cargill?
- Should governments play a role in helping establish blockchain in industries that could dramatically improve the safety of their citizens?
1) “Supply Chain 4.0 in consumer goods,” https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/supply-chain-4-0-in-consumer-goods
2) Based on 2015 National Turkey Federation data, http://www.eatturkey.com/why-turkey/stats
3) Wall St Journal, “Latest Use of Blockchain Technology: Tracing Turkeys From Farm to Table,” https://www.wsj.com/articles/latest-use-for-a-bitcoin-technology-tracing-turkeys-from-farm-to-table-1508923801
4) Capital Journal, “South Dakota industry recovers from 2015 avian flu outbreak,” http://www.capjournal.com/news/sd-turkey-industry-recovers-from-avian-flu-outbreak/article_33dbff8e-b074-11e6-adfe-e74db88f0094.html
5) Natural Resource Defense Council, “This Thanksgiving, Be More Grateful than Wasteful,” https://www.nrdc.org/experts/dana-gunders/thanksgiving-be-more-grateful-wasteful
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