TRACEABILITY IN AFRICA

Africa, specifically South Africa, leads the world in the traceability of leather, especially crocodilian and ostrich leather. Created decades ago, the trace and tracking system adapted for the high value exotic skins was implemented to prevent skin theft, and to monitor the value of skins (to enable the final payment to co-operative farmers based on final skin grade).

In contrast, the Global North have progressively (and slowly) seen the need for traceability of all materials (even low value items), relatively recently. The driver for this, minus the virtue signalling, is to minimise brand risk. It is probably true that some consumers want increased visibility of the origins and sustainability credentials of products, but this author would claim this is a minority and the chief purchasing driver is price (specifically value for money). Regardless, the march towards increased tracking and tracing is in the interest of a supply chain that can gain advantage from increased control and measurement.

EUDR
The EU Deforestation Regulation 2023/1115 ensures that a value chain (specifically named products) have a clear line of sight of whether the products are complicit in the removal of forests, globally. It is a noble and much needed regulation for obvious reasons – but like in all current ideological sentiments – the devil is in the detail. Nobody has really thought that the name of the cow is far from what the regulation sets out to achieve. Even the name of the farm the cow lived on (especially for commercial reasons) is proving to be problematic. A cow rarely travels great distances, so it is highly likely that the abattoir an animal was killed in is either close to a deforestation area or highly removed from such hotspots. The EU has finally realised this and is rapidly altering its level of traceability information. Batch information is becoming the preferred method for tagging a raw hide and skin.

With that lesson learnt it is making it a lot easier for a highly unregulated industry (like the African slaughterhouse network) to be part of the supply chain quest to improve provenance information. Increased African traceability also gives rise to a host of meaningful opportunities.

Employment
Africa is famous for tokenism with regard to employment. A job in a business must add value to a business - as well as adding advantage of that business/industry to the greater national economy. Gross domestic product, GDP, (for good or bad) encapsulates that added value. A construction company can buy a sign warning motorists of roadworks for a minor sum, or it can employ a worker to wave a flag (in the name of increasing national jobs). Supporters of this logic will argue that the national economy benefits as the new flag-waving employee will spend that income - and there is an element of truth in that logic. However, the employer has increased their business costs and will pay less national tax (depriving the economy) AND will be less competitive against companies that simply used a sign. In other words, the sign-using company added value to the business through their choice, while the mass employer made themselves less profitable and endangered their business viability.

A final word on GDP-harming that can help settle the benefit/disadvantage argument about token jobs is the principle through Proof of Utility. Human behaviours, especially business strategies, live or die through their utility. Ideas that are profitable succeed and loss-making ideas die with the businesses they take out. Globally, streamlining the workforce and using automation is a pervasive idea. Businesses become viable as they remove non-value-adding jobs - while creating or migrating personnel into value adding jobs.

Traceability officers
It could be argued that brands and retailers will pay for increased information that helps to minimise their supply chain risk. They will argue that it is the end user who wants this and should end up paying for it – these are purely semantics – suppliers will pay for it and transfer the cost onto the brand and end user. The supply chain will find economies of scale and will cut costs in other areas of their business to pay for traceability business functions. Traceability can reduce costs in other parts of the business (like downstream claims through increased batch information and quality control improvements).

So, is the farming and slaughtering sector making full use of this yet – especially in Africa? Not yet, but it does have an opportunity (especially through government support) to generate a new workforce of people whose job is to collect the much-needed data that downstream users are looking for. The information is valuable. If the information is not valuable enough for the downstream users to pay for it, then through Proof of Utility it will die a very quick death.

A mechanism of how it can prove utility is through the following value propositions:

• Proof of deforestation commitments. Deforestation vs non-deforested products must have a price difference with that difference being transferred up the supply chain for certification purposes.
• Animal welfare guarantees. As with deforestation claims, farms that practice good treatment of the animals must be producing products (like Organic) that ensure the farms have the necessary capital to continue doing their work.
• Tracing information. Batch tracing for quality control and fault prevention will automatically generate their own capital. This category can be expanded and focussed on because there are currently loads of hidden costs that can be used to pay for traceability officials.

The African workforce is soon to include traceability officers and officials who co-ordinate the manual or electronic collection of data that can then be placed by officials into certification systems. The thousands of jobs that this will create will be paid through increased revenues from downstream users who are reaping the benefits of reduced cost or through increased revenues by products that add value to the country’s GDP.

In the next issue: Land use and land use change (LULUC) - it is said that one of the main contributors to climate change is the way in which land is used, or how the land is changed into another use. For example, changing land from a forest to a field for corn will obviously release lots of carbon from the trees, but it will stop the land from storing carbon in the way that the forest did. In this article, S&V African Leather will investigate if it is as simple as that. Currently, penalties are allocated if LULUC occurs in a product or organisational footprint.