Pressure on the world’s supply chain from Covid has been compounded by Russia’s invasion of Ukraine. Kim Berry talks to forensic provenance and supply chain expert, founder and managing director of Source Certain, Cameron Scadding, about the work the company is doing to secure supply chain integrity and transparency for Ukrainian crops.
When Russia invaded Ukraine, countries around the world decided on a course of financial sanctions as opposed to military intervention.
Founder and managing director of supply chain and forensic provenance company Source Certain, Cameron Scadding, says that as the war goes on and more sanctions are applied, there needs to be nuanced discussions about their implications.
While Covid had already disrupted commodity supply chains in the region, the Russia conflict heightened the focus on food security. But according to Scadding, “there is a lot more to this than, ‘we need more food’.
“There’s also a cost aspect; food needs to be affordable and it also needs to be able to get from one place to another.
“It’s less about there not being enough food and more that we can’t move it around cost effectively; or that it’s not as close to the end consumer as it needs to be.”
In 2021, Russia and Ukraine were in the top three global exporters of wheat, barley, maize, canola (and oil), sunflower seed (and oil).
This year, 40 per cent of Ukraine’s annual corn and wheat shipments were headed to the Middle East and Africa, two regions experiencing historic droughts.
“If you take a whole country offline, which happens to be a superpower when it comes to exporting food, of course you have supply chain ramifications and significant impact on the food security network,” he says.
Scadding points out that global supply chains work well when everybody is supplying, and everybody is buying.
UK calling
Source Certain has established credentials across myriad industries when it comes to forensic provenance, from Australian prawns to the international diamond trade. Somuch so, the UK government approached the company to see what it could do to protect the trade of crops grown in Ukraine.
For Scadding, the possibility was not only building a service for Ukraine to secure its grain trade and identify potentially stolen grain, but to identify Russian grain as well be being mislabelled or misrepresented in the market.
Source Certain’s system builds a fingerprint database based on the scientific analysis of markers, like trace elements, found in grain sampled from Ukrainian farms.
Initially in Ukraine each fingerprint would represent a region, but the capability is there to create fingerprints at the farm level.
“The first phase of the work is to collect reference samples, which then enables us to get into the supply chain and do actual verification and investigations on where the particular grains have come from,” he says.
Next is surveillance or ‘in-market verification’ for grainsold in the market.
For the Ukraine project, Scadding expects that will be regulators or large customers wanting to ensure banned or sanctioned Russian grain isn’t coming into its supply chain.
And then there is supply chain communications telling all stakeholders inside the supply chain what the company is doing and why it is doing it.
“It is a very simple security strategy that says: ‘We are here,we are checking, and we are pushing the bad actors outof the supply chain,” Scadding says.
Moving quickly
After establishing the service with the UK, which involves Ukraine and some bordering countries, the company will be able to verify where wheat, sunflower, barley, and maize has come from.
“It means that hopefully by next year we will be able to see ifa grain export has been trans-shipped, mislabelled or country washed when it arrives at the importing company. It is happening very quickly.”
The process has moved quickly in part due to Scadding’s background, having grown up on a sheep and wheat farm in Western Australia.
“I have good networks so between those and industry connections, we have been able to find excellent contacts in Ukraine with industry-to-industry support. It has allowed us to be quite agile and get organised over there.
“By the end of this year, almost all the grain commodities coming out of Ukraine will be verifiable.
“If there is a claim it is Ukrainian, we will be able to provide a clear picture as to where out of the Ukraine it has come from,” he says.
Global push
For Scadding, this brings us back to the decision to use financial instruments like tariffs and sanctions.
“In the real-world application, the rubber hits the road in the supply chain. All of these measures require action within a supply chain somewhere if they are to work as they are intended,” he says.
But for Scadding, the focus on Ukraine needs to be broadened to other major grain producers including Canada, Australia and the US.
Transparency is key, he says, because a more transparent global supply chain pushes customers to execute care anddiligence around where commodities are coming from and what the transaction of these commodities could befunding.
Scadding explains that even if a country chooses to buy the grain, knowing it is stolen, because its population hungry and there is a lack of food security, at least there’s some transparency in the transaction.
“It also means if you then want to use sanctions or tariffs, not only can you do it, but you can also enforce them or at least have accountability around them,” he says.
“The next step is to determine who intervenes with these supply chains and how we go about educating governments that the technology is in play – and that they are able to run these checks. I think it will probably be the big customers, the big brands that take it on.”
For Scadding, this is a prime opportunity for government and large FMCG companies to “implement a simple system to make it hard for product that has a poor history, maybe stolen, or potentially funding a regime engaged in conflict, from entering the supply chain”.
“There is a great tension here. We have a real threat around food security and a need to ensure that supply chains are not funding conflict. How do we manage that? It is a policy discussion I am happy to contribute to, but I don’t have the solution – two wrongs do not make a right but I accept that these are hard discussions and not often not binary.
“It requires more discussions and open dialogue,” he says.
Australia’s choice
Scadding says Australia should invest in a similar service for its wheat, barley, and canola, if for no other reason than to hold up an Australian provenance promise in the market. But also to avoid Australian product getting tangled up in what isbecoming a messy global supply chain.
“Our Australian produce is incredibly good, so let’s add some demonstrable evidence and lean into the origin promise, rather than just relyingon a written ‘Australian grown’ claim,” he says.
Source Certain’s clients range from high value products like diamonds, to some of the lowest value commodity food products. Scadding says this reflects a new reality, that regardless of the product, the primary focus now is the “how and where”.
“The world has changed so quickly that the how and the where is more important than ever before.
“Covid sped it all up, then Russia went and redefined what a conflict source is, and now it is not negotiable,” he says.
Consumers want more confidence around the specific sourcing of where a product has come from and how it has been made or grown. Source Certain is answering the call.
This story first appeared in the August issue of Food & Drink Business magazine.
