Food supply chains today are increasingly complex, global affairs – the agribusiness titan Cargill ($107.1B revenue in 2016) employs 155,000 people across 70 countries . Cargill’s supply chain starts at the farm, where it buys crops and animal products from a network of 650,000 farmers . The company also handles storage, transportation, and ingredient manufacturing.
Although Cargill’s global footprint is massive, in 2017 scale is no longer as differentiating of a competitive advantage as trust. Several high-profile consumer food scares, such as Chipotle’s 2016 E. Coli outbreak, have led to a breakdown of trust between customers and Big Food companies – only 43% of millennials currently trust them . The source of Chipotle’s E. Coli outbreak was never traced to a single ingredient; the ensuing public humiliation and 60% drop in Chipotle’s stock served as a wake-up call across the industry . In today’s world, Cargill can build trust with a more transparent and traceable supply chain for customers. Consumer trust will flow through to Cargill’s bottom line – a recent poll found that 99% of consumers would pay more for transparent products and that 94% would show brand loyalty to fully transparent companies .
So how does Cargill become fully transparent? Supply chain digitalization via blockchain technology is the panacea to their predicament. Blockchain is a cryptographically secure (i.e., unhackable) ledger that permanently captures data inputs in a string of digital blocks that can be viewed by anyone around the world .
The consequences of permanent and secure data on the blockchain are primarily three-fold. First, customers will gain unprecedented visibility into the source of their food – just imagine the satisfaction of scanning a QR code on a package of turkey legs to instantly glean the exact farm your protein came from. Second, food fraud – a $40B global issue per year – will be squeezed out of the supply chain as food attributes, including organic/conventional, country of origin, and quality, are permanently and digitally recorded on the blockchain . Lastly, blockchain bolsters Cargill’s food traceability efforts – as a result, the company can accurately and quickly tie food-borne illness outbreaks to the source, saving the company’s brand equity and preventing financial loss.
Cargill recognizes the stakes and has leapt to the forefront of the blockchain supply chain revolution. In 2017, the company announced a new initiative with its Honeysuckle White turkey brand that will allow shoppers to trace turkeys from farm to store. On the Honeysuckle White website, customers can enter a code listed on their package of turkey meat from the grocer. Here, one can not only see which farm their turkey is from, but can also read about the farmers who grew the birds. Additionally, there are videos and photos of the farm, anecdotes about growing techniques, and suggested recipes. The net effect is an unprecedented level of trust between consumers and Cargill. In the next few years, Cargill will expand its digital blockchain supply chain to additional crops and proteins.
Cargill has several sustainability goals over the next 3-10 years that will benefit from a blockchain-based supply chain. The Palm 2020 Roadmap aims to increase the traceability rate of its global palm oil production. In 2017, Cargill traced 94% of its palm oil to the processing mill, but only 42% to the plantation where the palm fruit was grown . The Cargill Cocoa Promise similarly aims to facilitate a self-sustaining, vigorous global cocoa industry .
Recommendations: Cargill should pursue an aggressive global rollout of its blockchain supply chain. Although Cargill is the largest U.S. private company and hence does not face the same quarterly pressure as its public competitors do, they should not sit on their laurels. Blockchain supply chains are the way of the future – companies like Walmart, Tyson Foods, and Nestle have already partnered with IBM on implementing similar blockchain solutions. However, due to the inherent complexity of global supply chains, it would be prudent to focus efforts on implementing its blockchain system on a commodity-by-commodity basis. Let’s get the turkeys plated before diving into the corn.
Key Questions: What information do consumers really want to know about their food? If such information is available on-demand, will we consult the blockchain about our food as normally as we check our Instagram and Facebook feeds?
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