Traceability
Visioning Workshop April 2005
Traceability
The customer’s perspective
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Contents - Summary
Customer needs Legislative Requirements Fonterra’s traceability What it could be - questions
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The Customer needs
Assurance of food safety (Food is SAFE) Compliance with legislative requirements Truth of identity and labelling Ability to immediately confirm or deny product safety or contamination threats – traceability “fork back to farm” Ability to rapidly contain and manage any food safety risk .........and all this at no significant additional cost
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Customer requires evidence of traceability
Nestlé - via NQS Kraft – Supplier and Co-manufacturer Quality Expectations Tricon – Pizza Hut, Restaurant Brands
Traces of product to ingredient , or ingredient to product (e.g. evidence of mock recalls) and other audit standards e.g.
AIB EFSIS ISO 22000 – Food Safety Management Systems
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Customer requires True Identity Special identity value added products Kosher and Super Kosher Halal Organic Hyper-immune milk Colostrum and Allergen traceability
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Gathering Momentum Walmart require RFID on all inward pallets
Top 100 by Jan 05, Top 200 by Jan 06
US Bioterrorism legislation
Leads to
NZ Customs Secure Export Partnership
Leads to
Security and traceability in production transfer back down the food chain
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NZ Dairy Legislation – farm dairies
A Product Safety Plan shall provide for: • only milking animals free of diseases capable of contaminating milk with pathogenic organisms • excluding milk that may be contaminated with extraneous substances, toxic substances, or pesticides,capable of rendering raw milk unsafe • cleaned with approved detergents and sanitisers • cooling milk to at least 7 °C within 3 hrs of finishing milking • colostrum shall not be sold or supplied to dairy manufacturer unless it is clearly stated in writing to be colostrum
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NZ Dairy Legislation – transport
A Product Safety Plan shall provide for: • minimised proliferation of pathogenic micro-organisms • minimised development of toxins in relation to dairy produce manufactured or stored • where it (or the ingredients it was manufactured from) came from, and when it or they came; and • where it went to, and when it went.
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NZ Dairy Legislation – manufacture
A Product Safety Plan shall provide for: • only safe dairy produce (milk) to be used • monitoring of the safety of all milk received • labelling and recording of use of all ingredients so as to ensure traceability to the product to which they are added
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NZ Dairy Legislation – SAFE
Safe means: • fit for human consumption • not having in it or on it any pathogenic organisms
- present in an amount that makes the product harmful or injurious to the health of the people who may eat or drink it; - able to produce toxins to make the product potentially harmful
• not having in it or on it any harmful or injurious substance in an amount that makes it harmful or injurious to the health of people who may eat or drink it or dairy products made from it • not affected by disease
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EU – Veterinary Agreement
Recognises equivalence of NZ legislation with EC Directive 92/46 EEC “Production & Marketing of Milk Products”
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EU – General Principles of Food Law
The traceability of food, feed, food-producing animals and all substances incorporated into foodstuffs must be established at all stages of production, processing and distribution. To this end, business operators are required to apply appropriate systems and procedures
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Regulation EC 178/2002 procedures in matters of food safety
Article 18 Traceability 1. The traceability of food, feed, food-producing animals, and any other substance intended to be, or expected to be, incorporated into a food or feed shall be established at all stages of production, processing and distribution. 2. Food and feed business operators shall be able to identify any person from whom they have been supplied with a food, a feed, a foodproducing animal, or any substance intended to be, or expected to be, incorporated into a food or feed. To this end, such operators shall have in place systems and procedures which allow for this information to be made available to the competent authorities on demand
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Regulation EC 178/2002 (continued)
Article 18 Traceability
3. Food and feed business operators shall have in place systems and procedures to identify the other businesses to which their products have been supplied. This information shall be made available to the competent authorities on demand. 4. Food or feed which is placed on the market or is likely to be placed on the market in the Community shall be adequately labelled or identified to facilitate its traceability, through relevant documentation or information in accordance with the relevant requirements of more specific provisions. 5. Provisions for the purpose of applying the requirements of this Article in respect of specific sectors may be adopted in accordance with the procedure laid down in Article 58(2).
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Advantages of Traceability Positive evidence of exclusion or absence......... is better than testing with negative results Sampling and testing is not sufficiently reliable Finished product testing is too late and too costly Get it right first time, with proof that it was
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Traceability is not new
Fonterra already provides ‘traceability’ Integral part of product safety / food assurance programs and supply chain activities and seemingly as well as or better than many of our competitors and peers although reliant on a effort and time consuming process involving disparate electronic and paper based systems and we do have a complex manufacturing matrix
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Going forward & Questions
Traceability either continues to be a ‘cost of doing business’ ..or we ‘make it pay’ by getting ahead of the game, Change in ‘increments’
(as little as possible, at the lowest possible cost)
Closing gaps, finding low cost solutions Making traceability a competitive advantage What are they willing to pay for? This leads to the key question: what is the “size of the prize” in traceabilty..........and is Fonterra able to capture it?
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Dimensions of Traceability
It is useful to define the boundaries of a traceability system along four basic dimensions:
The amount of information the traceability system records Breadth
– e.g. the number of processes, events, attributes and supply chain steps that are recorded and traced
How far back or forward the traceability system tracks Depth
– e.g. will the system provide line of sight back to the factory, collection, farm or even back to the farm inputs (bovine genetics, feed / pasture supply?
Precision
The degree of assurance with which the tracing system can pin-point a movement of characteristic
– e.g. do we propose to trace raw milk product from individual cows, farms or processing plants, and dairy product by the bag, pallet, container or shipment
The delay with which the traceability system can respond to a trace-back query Latency
– e.g. can a customer or authority view (all / some) traceability records in real time (e.g. online) or does it take 12, 24, 48 hours to get a response?
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Source:
USDA Economic Research Service (2004), Foodtrace Generic framework (2004)
The economic imperatives of a traceability system for Fonterra, incremental to ‘must do’ food assurance activities (‘cost of doing business’)
Benefits
Value ascribed by our customers of differentiation of food products with credence attributes – Content attributes (e.g. non-GMO) – Process attributes (e.g. factory or transport processes)
Competitive Differentation
Reducing the imposition cost of regulation
Reducing the cost of ‘incremental compliance’ as regulations evolve Value of reducing market access risk or liability cost from food failure or animal decease outbreak
Less cost of implementing and operating a traceability system = net benefit (or cost)
Benefits to Supply Chain Management
Value of enhanced tracking technologies to supply chain management – E.g. increased ‘precision’ with electronic tracking of individual bags
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Source:
“USDA Economic Research Service, Traceability in the US Food Supply” (2004)