I interviewed Ori Zik who discussed Data Transparency in the Food Value Chain.
Can you provide us with a background of yourself?
Sure, so I'm the vice president of analytics here at Lux Research. About a year and a half ago Lux bought a company that I founded called Energy Points. Energy Points was focusing on collecting information on natural resources such as energy, land, water, greenhouse gas emission, nitrogen and so on. And providing this daytime analytics as service especially to fortune 1000 companies.And Lux is a company that specializes in science based innovation.And together we're building data platforms that allows people to make better decisions when it comes to technology, natural resources, and how to integrate more science based innovation into their operation.
One of the things that interests us is the supply because our customers take a growing interest in their supply chain in terms of not only the time and cost, and quality, but also the environmental impact. We started to provide the value on these questions.
What is data transparency in the food value chain?
So this is really interesting. If you buy food in the grocery store, rarely you know where the food actually comes from, and what is the environmental impact of this food. Now, in some case,s even the companies that produce this food have such a complex supply chain that they also don't know where it actually comes from and what is the environmental impact and what are the risks. Obviously, food companies are very careful to monitor things like health and safety and definitely cost, but the environmental impact becomes more and more important.
Most of it depends on collecting data on the farm level. This is very hard because farmers are busy enough without collecting data and reporting it.So there aren’t many initiatives to do that. The food industry is now dependent, especially in the west, on the three elements —trust, transparency and traceability.And these elements are tightly connected to the datatransparency on the supply chain...from the entire supply chain. As a concrete example, think about buying an egg. So when you buy an egg, you actually also buy the chicken feed that fed the chicken that laid the egg, and this might be corn and dependent on corn.And this corn might use a large quantity of water, and this large quantity of water might be in a place which is water scarce, and that increases the risk profile of your product.And this is something that you would like to know about from the risk sustainability and also future cost perspectives.
How is data transparency done in the food value chain?
It's currently a rapidly evolving trend. The organizations, a lot of non-profit organizations and some for profit that are charted to collect the data on the farm level, because most of the impact, as we said, is on the farm level. Organizations like field-to-market and other initiatives in the US are...that's what they do. A lot of non-profits like the worldwide life fund are interested in being part of this conversation and provide risk sustainability and formation and metrics to large companies. The standard, in terms of how to measure and how to aggregate and how to normalize the data, is not being defined yet, so there's a lot of conversations going on. There's a lot of things that are inherently difficult from the scientific perspective. For example, how do you quantify things like biodiversity or eco toxicity, which can be impacted by your farming operation. In world which is resource scarce and suffers from climate change, these become acute issues. So currently, as we speak, there's a lot of initiatives and work done in order to collect the data and standardize it.
Why is data transparency important?
Well, just last week there was a bill passed in congress to label GMO, for example, in food, so this is not directly sustainability.But it shows that customers are now interested in where the food comes from. If you follow this literature and the interviews with the CEO like from Unilever to other companies, it really talks about the fact that some of the customers find it critical for their buying decision, to know where the food comes from and what is the sustainability impact. So food companies realize that if they don't integrate information from the entire supply chain, and are not transparent and clear about how they manage this supply chain, they will lose market share. This is a huge concern.
The food industry is always changing. People tend to prefer more healthy food, more organic food, more local food and sustainability plays a key role in it, and companies that are funded by hundreds of millions of dollars,startups like Hampton Creek or Impossible Food on the premise that they can grow food with a cleaner supply chain — not dependent on this, not dependent on livestock at all.And again, hundreds of millions of dollars are pulled towards more sustainable food. That's a major concern for food companies and this is why it is important to them.
What are the key challenges?
The key challenge is collecting the data on the farm level and then sharing it. Many companies started with sheer data collection. People don't know it, but the average age of a farmer in the US is 65. So you expect the 65 years old farmer finishes a very hard day in the field, starting dealing with data and this, by itself, is a significant undertaking. And then the issue of data transparency, if a company collected this data, why would they share it? So the biggest challenge is collecting the data and then sharing it.
What do you see in the future, in the trends that you see?
It's interesting, I think that this is like unstoppable train by now. There's more and more demand for transparency, and more companies are talking about being transparent with their data and creating benchmarks and giving access to them. I think that technologies like block chain and the verification technology behind the bitcoin, will allow in the future—and this probably the far future—will allow some validation of sustainability data. I think that the trend is to more and more open data, more and more access to this data, and more and more consumer involvement and investor involvement in the interpretation of this data.
About Ory Zik
VP Analytics at Lux Research Inc.