Herd Check

All hail the food supply chain

COVID was a cruel wake up call that our agribusinesses and food supply chains weren’t as resilient as we’d have liked to believe. Now that ship has sailed – what can we do to improve in the future?

I was privileged to attend the annual Organic and Non-GMO Forum (held digitally of course) put on by HighQuest Consulting and got to sit in on a host of insightful speakers. Even if this area of interest isn’t your specific niche, there is a lot to be learned from this sector, especially along the lines of resilience and marketing. However, that’s not what I want to focus on today. One theme that continued to come up was supply chains, and how we can best manage them for optimum integrity and resilience while feeding a world of hungry people.

Maintaining the organic supply chain

Jennifer Tucker from the USDA Organic Program gave an interesting presentation on how the organic supply chain has faired successfully – and what the next steps there will be going forward.

Despite it being a rocky year, the organic sector stayed pretty busy. Some of the successes Tucker listened include continued importer oversight and surveillance, 60+ lessons in the Organic Integrity Learning Center and new trade arrangements, among many others.

One of the keys to protect the integrity of the organic label is having accredited certifiers and inspectors to avoid fraud. This is integral when it comes to the murky waters of the export market where it’s easy for things to get overwhelmed and lost.

“Certifiers in industry are key to fraud prevention,” Tucker explained. “Fraud is never acceptable.”

Integrity is key to a prolific organic supply chain.

Part of that is training certifiers to be vigilant and nip red flags right in the bud. (You will see that training is a theme in throughout this article.)

I think all the behind the scenes effort that goes into keeping organic authentic in its labeling is something anyone interested in branding and its maintenance can learn from. Some of the concluding highlights Tucker concluded with in how this will be accomplished moving forward are as follows:

Having strong organic control systems – This includes risk-based auditing, import certificates, data analysis strategy and trade partner engagement.

Robust Reinforcement – Involving case management, collaboration, risk-based regional surveillance and the Livestock Compliance Program.

Develop Standards – Such as strengthening organic enforcement, knowing the origin of livestock, having national list rules and collaboration with National Organic Standards Board

Engage with partners and stake holder – Through engagement events, more learning, the Human Capital Initiative and outreach with organic import certificates.

Acknowledging and accessing risk

Risk is all around us in our personal and professional lives. Risk assessment and acknowledgement is an integral part of any supply chain, as sooner or later risks become realities in some capacity.

Ahmet Hepdogan of the Ferrara Candy Company gave one exceptional presentation I think is worth sharing.

“Early on I adopted the view that risk is all around us, its around us every day and its in every corner of the globe,” he said in his opening statement. “I’ve taken it a little more seriously and I’ve sought to make it part of every enterprise I have ever touched, it’s a mindset really.”

It’s virtually impossible to make day-to-day choices without some element of risk

I think this can resonate with all sectors of our agribusinesses. We have crop insurance and integrated systems specifically designed around the idea of risk. However, we should be wary of “The Boy who cried Wolf” syndrome by being a bit too paranoid.

A “wolf” can be things like reputation, human rights and corporate corruption in our businesses. With our fast-paced digital world, there are lots of wolves out there who can wreak absolute havoc if they are ignored. Not all of these can be controlled, but the ones who can be mitigated will only be done if they are acknowledged ahead of time.

“If a natural disaster struck I cannot afford to not have my brand on the shelf. So do I have the sourcing strategy to be able to mitigate that risk?” was the example Hepdogan gave.

To better grasp this, Hepdogan advises agribusinesses see risk as a type of radar. You can have multiple entities on the radar, and some may be closer than others and require more direct action to mitigate.

Speaking of risk avoidance, let’s talk more about that. You see, it’s not just your specific company, your farm or your employees who need to manage risk for your business – it’s the whole supply chain. And I think that’s something we tend to forget.

The supply chain can be likened to an intricate ecosystem, and if some small level collapses it impacts everyone around it. This is why it is so important for agribusinesses to be invested in the other segments, or at the very least pay attention to them.

I’m talking things like the stock market, the economy, the retailers, your buyers and sellers. There are so many tiny components to the food business, it can get incredibly overwhelming, making it easy to forget nothing begins and ends on the farm or retail levels.

Another point Hepdogan addressed was the significance of diversification. In certain cases, would you and competitors be able to come together and help each other fill the needs of the others?

“I think everybody should really, think about now is how do you weather the next storm that is already predictable?” he posed to his audience. “It’s going to happen again. It might not be a pandemic next time, but you saw the weather change. We are getting impacted more and more.”

I concur.

The dark side

I would be remiss if I neglected to add another less-discussed, but extremely thought-provoking, presentation. The most resilient supply chain in the world doesn’t mean much if it’s unethical. And unfortunately, our food supply is riddled with unethical practices and human rights violations.

William Semins of K & L Kates provided a very real look into the brutally ugly parts of agriculture. At this time, there are more slaves than at any other point in history. Agriculture is, unfortunately, by its nature an industry at extremely high risk for this sort of activity to occur within its supply chain.

“In addition to government action we’re seeing consumer action effecting brand reputation and motivating change in that way,” said Semins.

Fortunately there are some steps companies can take to help eliminate slave labor in their supply chains and take steps to a more ethical world.

Semins gave four practical steps food and agribusiness companies can do to help be part of the solution.

These include establishing and sticking to codes of conduct, training employees to identify the “red flags” of human rights violations, ingredient and commodity suppliers having codes of conduct (this is especially important for large, corporate international companies) and having good contract provisions that allow for things like audits and compliance with due diligence efforts.

There are more slaves in the world now than at any other point in human history.

Similar to assessing risks and avoiding them in cases of natural disasters and economic hardship as discussed by Hepdogan, companies can also assess risk for human rights violations at various levels of their supply chains. This can allow them to avoid doing business with certain partners or countries who are at high risk for human trafficking.

This is an issue with many layers, and I hope to delve into them deeper in upcoming blogs. However, I will leave you with this closing statement Semins left in response to a question from an attendee.

“Big companies are the most attuned to the issue because the threat of reputational damage is so great. Additionally, the laws often apply based on sales revenue for retailers exceeding a certain amount — e.g., the CA Transparency in Supply Chains Act applies to retailers and manufacturers doing business in CA with more than $100 million in gross revenue globally. The proposed Washington State Transparency in Agricultural Supply Chains Act applied to retailers with more than $200 million in global sales. That said, in the U.S. small, local farms face exposure under the Migrant and Seasonal Agricultural Worker Protection Act, and TVPA litigation is becoming a growing industry among plaintiffs lawyers, so the threat is still there for companies of all sizes.”

Let us all stay vigilant and keep working to make the world a better place with equal rights for all laborers in all parts of the world.

Leave a Reply