The Next Big Destination for Investment and Innovation: Traceability in Agri-tech

Agriculture Industry needs Technology Innovation Investment
India is the second largest producer of vegetables and fruits globally. Its food industry has also been growing consistently contributing increasingly to the world food trade every year. Yet, the value of wastage of India’s fruits and vegetables annually is estimated to be about 13 billion USD, due to paucity of cold chain infrastructure and adequate harvesting technologies.

To bring about a transformative impact in the modern supply chain and bring equitable access of resources to millions of people, the country can harness the power of technology.

Traceability- a paradigm shift, can be used to trace use of raw materials into a product manufacturing and tracking the entire lifecycle.

Agriculture and food sector hold much importance as they not just employ the largest number of people in India, about 40per cent of the total workforce but also contribute about 15 per cent to the country’s GDP.

According to an Ernst and Young’s report on agri-tech potential, India’s current market of agri-tech stands at 204 million USD, just 1 per cent of the potential 24 billion USD that the industry can grow to in the next five years. The report suggests that tech enabled and market linkages would be accounting for the largest segment by 2025. The opportunity in agritech includes institutional quality management and traceability, digitising records through farm management and facilitating input market linkages supported with robust physical infrastructure network. The report also highlights that quality management and traceability itself has a market potential of 3 billion USD. By April 2020, the Agritech players had cumulatively received financing off 532 millionUSD.

The strategy, ‘farm to fork’ traceability facilitates preventive as well as remedial measures to be taken as per the FSS (Food Recall Procedure) Regulation 2017 for food businesses in India.   In the last few years, The strategy, ‘farm to fork’ traceability facilitates preventive as well as remedial measures to be taken as per the FSS (Food Recall Procedure) Regulation 2017 for food businesses in India.

The strategy, ‘farm to fork’ traceability facilitates preventive as well as remedial measures to be taken as per the FSS (Food Recall Procedure) Regulation 2017 for food businesses in India.  In the last few years, the Agricultural and Processed Food Products Export Development Authority has adopted electronic traceability system for some of its products. This can go a long way in implementing traceability across food supply chains in India.

Although the country has come a long way in food traceability, there is still a long journey ahead.

Traceability – a Panacea for ending many ills

Globalisation has resulted in augmenting the complexity in managing food safety concerns. Additionally, consumer consciousness and demand for fresh food and ideal storage conditions are placing responsibility on food businesses for giving access to trusted product information to alleviate safety concerns.

Factors contributing to food hazards include inappropriate agricultural practices, lack of hygiene at any stage of food chain, use of contaminated materials, improper storage, contaminants including biological toxins and adulteration, allergens, genetically modified organisms and growth promoting hormones used in animal products. Furthermore, over 10 per cent of global greenhouse gas emissions are linked to the non-consumed food.

The United Nations Global Compact states that supply chain policies and programmes, such as traceability, offer vital opportunities for companies to scale up sustainable practices. This contributes to advancement of Sustainable Development Practices such as:

• SDG 2: Zero Hunger
• SDG 9: Build Resilient Infrastructure, promote sustainable industrialisation and foster innovation
• SDG 12: Ensure sustainable consumption and production patterns
Stakeholders including the government, technology companies, retailers, agribusiness companies, food producers and the civil society will all need to make concerted efforts to make an impact.

Developed regions like the United States, EU, Australia, New Zealand and Japan have robust and impactful laws that harness the power of traceability.

A 2018 report by the World Economic Forum said that Global food-system transformation will entail a multipronged approach focusing on emerging technologies to make traceable food systems meet consumer demand for transparency, reduce losses and support optimisation of supply chain.

Importantly, traceability can ensure development of consistent and harmonised standards for data collection; governance, ownership and sharing besides helping small-scale producers get access to advisory services.

Despite 75 per cent of agricultural value-add coming from developing countries, only 25 per cent investments in technology are dedicated to these countries. This demonstrates the severe need for agricultural technology in these markets.

Furthermore, The Food and Agricultural Organisation estimates the annual estimated cost of food fraud being 30-40 billion USD, which can be significantly reduced by deploying traceability techniques.

Industry Opportunity

Traceability can also play a pivotal role in improving farmers’revenue and opportunities and market access. Since traceability can create tremendous opportunity for producers, consumers as well as supply-chain operators, it has the potential to ensure inclusivity and empower small-scale producers for better market visibility as well as access to new resources. With this objective, the Ministry of Food Processing Industries launched Operations Greens in 2018-19 with the endeavour to increase the value realisation of farmers, reducing post-harvest losses through development of agro-logistics as well as setting up of a network to collect data on demand and supply of crops.

The Global Food Traceability market was estimated to be 16.18 billion USD in 2020. This is expected to surge to over 30 billion USD by 2027, witnessing a Compounded Annual Growth Rate of 10.9 per cent during the period of 2021-2027. Some of the factors that are expected to play a key role in the growth include growing consumer demand for safe to consume products, legislative frameworks as well as standardisation by different governments for food traceability as well as increase in foodborne diseases due to unsafe food.

The detrimental impact of coronavirus pandemic is also expected to boost the need for traceability significantly with human beings increasingly being at risk due to infection transmission. This may spur government regulations to become more stringent making it mandatory to have food tracing systems.

The sector presents tremendous opportunity for companies involved in RFID (radio frequency identification) technology, barcodes, holograms as well as other tracking mechanisms for monitoring production process. Traceability can scan a novel code on every food product enabling information access on the batch number, production and expiry dates as well as the sourcing origins. Efficacy in tracking mechanism will also facilitate authenticity besides quality and safety for the end consumer.

Technology is causing a significant disruption and internet of things (IoT) can facilitate in mitigating the losses through the food sector each year. Sensors monitoring location and other factors like humidity and temperature can help companies achieve efficiency and sustainability at the same time.

Harnessing the power of extracting information about sourcing practices and manufacturing processes, the process enables companies to make predictions and streamline operations. Furthermore, it can help identify supply chain opportunities and reduce impact of any disruptions.

Some of the leading players in the food traceability market globally include Honeywell, SAP, IBM, Intelex Technologies, Trimble, Intact, Food Decision Software, Mass Group amongst others. The key components of a traceability system include data elements, sensor technology and blockchain enabled system.

It is not just the bigwigs but also startups that are finding investor interest. Two of them include supply-chain software tracking food safety, FoodLogiQ and blockchain-based traceability solution, Ripe.io.

The years to come will witness higher involvement of both consumers and corporate, leading to never-seen-before innovation and investment in traceability specifically in agri-tech sector.

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