Visibility into The Food’s First Mile – A Prerequisite for Sustainable Food Production

by Anne Jorun Aas Our food system is broken: The environmental and societal challenges related to our food production are massive. Unlike the energy and transport sector, where we know we have to stop using fossil fuels, we have to produce food in the future. The challenges are complex, intertwined and range from deforestation, use of illegal chemicals and loss of biodiversity to child labor and extreme poverty. The problems also reinforce each other – the agricultural sector is directly responsible for around a quarter of our climate emissions and is the sector that is most affected by climate change. Key attributes for sustainable food production – traceability is a prerequisite! If we simplify the food supply chain and look at what sustainable food production can look like, we have the following:

• Farmers must have the knowledge to produce sustainably and be enabled (have access to right input and capital) and incentivized to produce food sustainably.
• Buyer/sourcing companies must only buy from those farmers that produce sustainably and make sure the farmers get rewarded for the right sustainable behavior.
• End consumers must have sufficient information on the sustainability of products and choose sustainable products.

The majority of agricultural challenges happen on the ground: 570 million smallholder farmers produce a large portion of our food – including our precious morning coffee, cocoa and nut treats and spices that flavor our food. Most of these farmers are impoverished, lack access to finance or farm inputs, and produce inefficiently under social unacceptable standards and with unnecessary environmental costs. If we look at the reasons for why our food system is broken, we see that the majority is connected to what happens on the ground, what we call the “food’s first mile”. To address the challenges, we need visibility of the food’s first mile. To deal with a problem, it’s crucial to understand what’s happening. Given the opacity of first mile operations, with thousands of farmers, 1-2 hectare plots, middlemen and to a large extent still paper-based records makes that a difficult task. Digitizing this step and collecting insightful and actionable data is hence a prerequisite to creating transparency and traceability down to farmer and field. Traceability has moved from a nice to have to must have. While traceability has been high on the agenda for many sourcing companies for a long time, it has been a “nice to have”. This is shifting now that regulations world-wide come into force and financial penalties can be the consequence if the importers don’t have the proof required to demonstrate that their products are deforestation-free. This is changing value chains as we speak, and the need for traceability has truly become a “must have”. Strong forces against transparency that must be acknowledged and addressed: Having digitized the operations of more than 1.2 million farmers across various crops and geographies, some lessons learnt emerge.

1. The actual value chain structure is always more complex than it appears: A working digital system tries to mirror operations in real time. During our business analysis, when we get an overview of how operations are done – it is always more complex and involves more actors and steps than you thought it would be – and also needs to be.
2. Middlemen are often in control – and provide a lot of value “for free”: Middlemen are often pictured as the “bad guys” – extracting value without providing anything back. That’s not true. They often do lots of valuable work, including managing relationships or transporting of goods. If they are to be removed, it needs to be compensated in some form.
3. Unsustainable farming practices are more profitable short term: For a farmer, it makes economic sense short term to use cheap illegal pesticides or cut down trees for extended land use. The fact that the illegal pesticides deplete the soil or harms the workers health is a longer-term consequence that the farmer can’t afford to think of.
4. A transactional un-traceable supply chain is more profitable, more flexible and practical for most actors in producing countries and only changes with market pressure. A supply chain with facade sustainability and transactional operations is the second option of choice.
5. Solving the issue in one place often just moves the problem. Its key to identify the root causes and actual concerns to be able to find long term and sustainable solutions. This is not always easy nor evident.

So, with this – what are characteristics of digital transparency solutions we see that works on the ground? Lessons learnt from numerous successful (and unsuccessful) deployments shows that the digital solution must:

1. Address customer needs and requirements on the ground: This means that the solution needs to be comprehensive and efficient, but at the same time simple and reliable. Finding this balance is crucial, and not always easy. There is so much data that can be captured, hence it’s critical to understand which ones are crucial and ensure the system captures these in an easy and robust way.
2. Backed and pushed by powerful actor – such as a buyer, government, village chief or other to overcome disincentives. Its naïve to believe that collecting digital data will happen by itself, considering all the forces that are against transparency, it will not. Hence, someone has to own and push the process – and this someone, has to be someone powerful. Stakeholder buy-in is key.
3. Implemented by a team that understands the dynamics on the ground: As stated above, the actual value chain structure is always more complex than it appears. Hence, the digital solution needs to be able to handle the variety of situations that may be present, and relate to the actual structure, not the ideal one.
4. Tested elsewhere – do as little as possible for the first time.
5. Recognize technical & non-technical problems – technology is an enabler, but the solution is usually related to human/commercial/organizational.

When these digitalization steps are followed, we’re a huge step forward on fixing our broken food system. That’s something worth working for!

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About the Author Anne Jorun Aas (PhD in nuclear chemistry from the University of Oslo and Cern) held several board positions in listed and private companies, before pursuing her purpose as the CEO of Farmforce, a Norwegian agritech SaaS company providing visibility into the food’s first mile. Their traceability solution is used by over 65 customers across 30 countries and they currently have data on 1.2 million smallholders on their platform.

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Sasin Collaborative Thought Leadership: Transforming Our Critical Systems Complex multi-actor systems have developed around satisfying critical human needs, such as nutrition, mobility, energy, or housing. These systems, as well as enabling sub-systems such as education, finance, etcetera, represent most of our economic activity, but there is also enormous inefficiency embedded in the complexity and dynamics through which these systems have evolved, making them responsible for most of humanity’s environmental and social impact. Current efforts to reduce our negative impact can hardly be considered successful, because too much focus is still on marginal improvement of our traditional models. Only 18% of the 169 targets set for the 2030 SDGs are on track to be reached (most targets show virtually no progress and 15% are in fact reversing). This is why increasingly, scholars and practitioners are trying to understand the nature of systemic change, the radical reinvention of our critical systems. Cambridge University Press recently published ‘Transforming our Critical Systems – How Can We Achieve the Systemic Change the World Needs’ by Sasin professor GJ van der Zanden and researcher Rozanne Henzen. Sasin has invited thought leaders and practitioners from around the world to share their visions and insights on the reinvention of the systems that they are part of. These pieces provide a rich variety of perspectives from business, policy makers, civil society, academia and think tanks, as well as enablers such as finance, technology and start-ups. In systems change, incorporating perspectives from multiple stakeholders is essential to come to a shared understanding of the system dynamics and challenges, develop a shared vision of the future and explore possible interventions and collaborations.

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