Building Resilient Food Supply Chains In ASEAN In The Face Of COVID-19

Thursday, August 13th, 2020

Building traceability and transparency in complex supply chains isn’t easy, but it can be done in ASEAN through Blockchain technology as it offers a continuous way to monitor and report the impact to consumers. Contributed by Patricia Yim, General Manager at IBM ASEAN.

In the midst of one of the most widespread pandemics in recent history, it’s nothing short of a miracle that our global supply chain has been able to consistently deliver food to the people that need it. However, this strain on our global supply chain isn’t likely to subside any time soon and companies will need to remain dexterous in order to respond to future shocks. 

The spread of coronavirus is putting our global food supply chain to the test. As workers fall ill, plants, processers, and retailers have been forced to shut down unexpectedly. Combined with the financial impact of a global economic slowdown, resiliency in the face of this uncertainty may mean the difference between businesses staying open or closing their doors.

 

The Challenge To ASEAN Food Supply Chain

During the pandemic, we saw whenever ASEAN governments announce a lockdown or curfew, citizens flock to markets. The uncertainty and fear drive people to stockpile food and necessities, but this panic buying can throw off global supply chains and expose gaps in their systems. To address the surge in demand, some supermarkets restrict the number of essential items a person can purchase, but workers still struggle to restock empty shelves. ASEAN nations generally score above average on food security, according to the Economist Intelligence Unit’s Global Food Security Index

The annual study rates countries on three areas: the affordability, availability and quality and safety of their food supplies. Laos is the least food-secure nation in ASEAN, apart from Brunei, as the developing country struggles with agricultural infrastructure and dietary diversity. As COVID-19 disrupts food supply chains and markets, the country will face additional challenges. 

Singapore, however, ranks first in the world, despite being a small nation that imports over 90 percent of its food. This is because the country has developed successful and resilient food safety net programmes, including a rice stockpile program that ensures private importers supply the country with adequate reserves. These safety net programmes are being put to the test as the pandemic throws food imports into question and disrupts transportation. Singapore’s approach to food security is to grow its “three food baskets”—to diversify its sources of imported food, encourage firms to grow food overseas and expand its local produce industry.

Building A Sustainable ASEAN Food Value Chain 

The food and beverage industry, which includes agriculture, contributes about 17 percent of ASEAN’s gross domestic product (GDP) and accounts for about 116 million jobs, or about 35 percent of the region’s total labour force. 

Brunei and Singapore both stand out as exceptions with little dependence on the sector, but both countries are vulnerable to a reduction of imports due to a shortage of supply. 

More agricultural ASEAN nations, on the other hand, worry about being unable to get their perishable products to market. This could negatively impact GDP and lead to possible unemployment in the agricultural sector. 

Exporters like Thailand report lower demands for certain agriculture products like fruits and root vegetables. Cassava, for example, is one of Thailand’s top exports to China, worth over US$880,000 in 2018. However, due to lockdowns in China beginning in February 2020, prices fell by 0.5 percent to 3.1 percent. Tropical fruits like durian saw larger decreases in price as producers struggled to sell off the excess crops they grew in anticipation of increasing demand. 

As the COVID-19 crisis continues, the food and agriculture economy may see a 10 to 15 percent reduction in production and revenue. As for the impact on employment, the drop ranges from five to 10 percent.

If the pandemic has made anything clear, it’s that it is essential for countries and food companies to build sophisticated contingency plans to respond quickly and safely to disruptions in their supply chain. The challenges facing the food industry are shared by players across our global food supply chain and too often, companies struggle to meet regulatory and safety requirements when finding replacements to missing links in their supply chains, even when both parties are in compliance but can’t track down and share their paperwork.

In this high-risk environment, it’s especially important to ensure that new partners are certified and meeting quality standards to help reduce the likelihood of unsafe or stale food, diseases jumping undetected from animals to humans as well as minimising food waste in the food supply chain. With 85 percent of retailers yet to digitise their operations, sharing these certifications is a major obstacle which has been made even more difficult as employees globally have been required to work remotely.

 

IBM Food Trust—A New Era For The World’s Food Supply

IBM Food Trust is a blockchain-enabled data-sharing platform for the food ecosystem that offers a holistic approach to streamlining this certification process with its Documents module to help store, track and share all documents. Linked to a broad network of global food supply chain members, IBM Food Trust Documents could speed up your transition to a new partner meaning less downtime and better business continuity.

For growers and producers—Facilities can upload and manage business-enabling licenses, share authorisations, and validate certifications with Food Trust Documents. Users can customise the type of document and tag by product identifiers for easy search and viewing.

For food logistics managers—Logistics organisations can store and access quality assurance data, such as testing analyses and inspection results. Conflicting or outdated documents can be easily flagged for review or renewal.

For retailers and suppliers—With increasing consumer and retailer focus on the integrity of goods, the Food Trust Documents module helps map the product journey with compliance statuses and supplier credibility.

In order to help companies and their supply chain partners remain resilient in these unpredictable times, IBM is providing no-charge access to IBM Food Trust Documents through 20 August 2020.

 

Helping Stretched Supply Chains

In today’s world, certificates and related documents are essential for complex supply chains. They can help confirm that a facility is properly inspected, that products have been treated according to law, and that organisations are certified according to industry standards. However, verifying that these documents are complete, valid, and current is complicated by their abundance, complexity and variety. In a time when supply chain disruptions are becoming more frequent and the speed at which companies can replace a broken link could make the difference between staying in business or shutting down, adopting a platform to simplify and accelerate the approval process could be a critical factor in their business’ success.

While it is too early to assess the full impact of COVID-19, the pandemic-related disruptions on travel and supply chain markets will have potential risks on the availability and prices of food and agriculture produce in the region depending on the duration of the outbreak and the severity of containment measures needed. There will be immediate effects resulting from such measures adopted by several countries, and these measures will also have long-term effects on agriculture and livelihood, including the ASEAN economy on a broader scale.

 

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