Could COVID-19 be the biggest food supply chain disaster ever?

COVID-19 is already having a significant impact on the way consumers view the food supply chain and where their food is coming from.  Consumers have their “risk goggles” on and now more than ever have the time and inclination to reconsider their food choices.   While there may be limitations in the short term for some foods, like canned goods and pasta, it is only temporary. The habits and consumer choice patterns evolving from the pandemic are beginning to shape the buying behaviour of the future.

In the public mind, the origin of COVID-19 seems well fixed. In late 2019 someone at the Huanan seafood market in Wuhan, was infected with a virus from an animal. While there is uncertainty about several aspects of the COVID-19 origin story that scientists are trying hard to unravel, the association with food sources has stuck. Regardless of the facts many in the general public will hold onto the perception that the virus originated in the food supply chain.

Consequently, COVID-19 could be labelled the biggest disaster stemming from a food supply chain ever.  Regardless of the science and the outcome of the investigations, according to the “court of public opinion”  people already have the images firmly etched in their minds that the virus came from a seafood market in China.  On top of that, the origin of the pandemic has been linked to what many consider unacceptable and illegal practices in the food supply chain.

China’s food safety woes are well-known. Exposés have become all too common, especially after the 2008 scandal over melamine-tainted milk. From gutter oil to fake eggs to contaminated strawberries, the long list of food safety incidents in China means that domestic Chinese consumers are understandably worried about the food they can buy and eat.  Considering a lot of food and ingredients are imported from China, international consumers are also worried about the safety of their food.  As a result, consumers are now taking a much closer look at the source of origin of their food and ingredients. China’s food safety and security image was already tarnished before the onset of COVID-19 but now it is under the spotlight again.

Research conducted in the United Kingdom in 2019 before the pandemic, indicated that consumers are disillusioned with Fast Moving Consumer Goods (FMCG) manufacturers:

¨  31% do not trust food brands

¨  25% say trust has deteriorated in 2 years

¨  51% believe it is important brands monitor supply chain

When you compound these statistics and the perception that the virus originated in a seafood market, then it is very likely that consumers with their “risk goggles” on are going to be critically looking at where their food is coming from. In addition, children are now more exposed to information about the food supply chain than they have ever been.  The “pre-pandemic child” knew little about food safety and source of origin. The “post-pandemic” child is becoming very aware of sanitation and food hygiene practices and is asking where their food is coming from. Our children will grow up knowing that COVID-19 came from a Chinese seafood market. This is significant as the habits they are learning during this pandemic are going to shape their consumer behaviour in the future.  

Prior to the pandemic, companies were already under enormous pressure from various stakeholders to divulge supply-chain-related information about ingredients, food fraud, social accountability and to be more transparent.  The reputational cost of failing to meet these demands is getting higher, but even though indications are that consumers are willing to pay more for supply chain information, it is not always clear how to define transparency in a supply chain context and the extent to which companies should pursue it.  This strong trend coupled with the implications of COVID-19 indicate that in order for FMCG companies to be competitive in the emerging post-pandemic market,  supply chain transparency is going to need to be front and centre in how products are marketed and differentiated.

Supply chain transparency requires companies to know what is happening upstream in the supply chain and to communicate this knowledge both internally and externally. A lack of supply chain transparency can now stop businesses cold. For example, shipments that are missing the source of origin documents are being held up and turned away at ports, causing costly disruptions that ripple through supply chains and this is bound to escalate even further.

If supply chain transparency is so important to customers then why isn’t it evolving faster?

One reason is that supply chains are not designed to be transparent as many stakeholders fear that divulging too much information would undermine their competitive advantage or expose them to criticism. Another reason is that relevant information is not being collected or if it does exist, it is erroneous. Also, the return on investment (ROI) for investing in transparency does not always satisfy near-term business requirements.

Pressures on supply chain transparency and food protection are mounting, and our current food safety practices are not designed to protect us from these types of widespread crises. Global supply chains are complex and offer a potential opportunity for criminal activity to profit from food fraud or to disrupt supply chains. This also impacts on food safety. While traditional food safety systems have been used for decades, these do not address all of these food risks. We know too well that significant food safety problems still arise, even where food safety systems seek to address these.

The industry is in desperate need of the next level of security and it is irresponsible for us to not act now.

“So, what can be done?”

The food supply chain sits at a transformational pivot point.  As I look at the technologies that we have at our disposal as well as where the food industry is going as it relates to food protection and transparency, the post-pandemic landscape provides all the right ingredients to embrace blockchain technology.

Blockchain  has long been touted as a technology that can provide more transparency to the supply chain. Blockchain provides a solution that is immutable, incorruptible, decentralized and recorded via public ledger.  In terms of the food supply chain  it is trustworthy, offers increased security, is transparent and verifiable.

As well as offering numerous benefits to the industry such as track and trace optimisation and securely managing certificates, it also creates an opportunity for the industry to communicate with consumers.  Consumers want to trust the information that is communicated to them.   Blockchain does this by engaging the consumer and ultimately making them more trusting and loyal.  The use of blockchain is an opportunity to provide the next level of security and produce tangible evidence that the industry is doing something.  A complete blockchain solution will make the customer feel more secure and confident that their food isn’t coming from an unscrupulous wet market somewhere in the world.

“What is the future?”

Supply chain transparency relies on creating a culture of continuous improvement within organisations and across value chains. The demand for transparency is unlikely to abate. It requires the collaboration and action of all the stakeholders in a food supply chain.  Today, supply chain transparency may not specifically fall under anyone’s job description, but after COVID-19 stakeholders will demand it and the systems of the past will be inadequate. Blockchain technology stands out as a viable solution that will provide the next level of supply chain security and transparency that consumers want and the industry needs.