Brief No. 16, August 2015

Electronic Traceability of Aquaculture Products:

the Case of TraceVerified in Viet Nam

Agricultural trade is an important pillar forsustainable growth in Asia, with increased

demand for fresh products in Western marketscreating new export opportunities. However, tradeof perishable products remains a challenge. Manydeveloping countries have fallen behind inimplementing the high food safety and traceabilityrequirements demanded by high-income exportmarkets, but some have achieved inspiring success.One stellar initiative is Viet Nam’s experience inimplementing TraceVerified, an electronictraceability, training and consultancy services

project for fisheries and other agro-product valuechains targeted at local Small and Medium-SizedEnterprise (SME) exporters. Launched in 2011 asthe country’s first paperless traceability system, ithas raised the confidence of local SMEs and theirtrade partners abroad by enabling product trackingthroughout the supply chain. This brief describeshow TraceVerified has emerged to address thepeculiar challenges of the aquaculture sector inViet Nam, and aims to share relevant insights intoimplementing an electronic traceability system forpolicymakers in other countries.

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product’s information flow; and ensure that producersmaintain high quality standards and provide verifiablerecord-keeping and documentation.

Three of the major markets for Vietnamese exports—namely the US, the EU and Japan—have issued anumber of regulations on traceability. For example, theEuropean Commission’s regulation 178/2002/ECrequires the establishment of a trace verificationsystem at each production stage. Informationproduced must be recorded and goods have to belabeled correctly to provide data on point of origintracing. The Anti-Bioterrorism Legislation issued by theUS in 2004, states that exporters must send an origintracing report to the corresponding authority fourhours before shipments reach the port. To staycompetitive, fresh produce growers and exporters ingeneral need to adhere to these requirementsconcerning food systems, offering traceable productswhich are demonstrably free of contaminations orbelow maximum residue levels (MRLs).

The Government of Viet Nam has taken steps toimprove, harmonize and modernize traceabilitythrough the implementation of the Food SafetyModernization Act (FSMA), Circular 03/2011/TT-BNNPTNT (providing guidelines for tracing the originof seafood products and revoking substandard seafoodproducts) and Circular 74/2011/TT-BNNPTNT(providing guidelines for tracing the origin of foods andfarm produce and dealing with substandard foods andfarm produce).

There are now 612 fish processing plants that meetnational standards of hygiene and have appliedHazard Analysis & Critical Control Points (HACCP),and 461 EU-qualified (EU code) plants with factoriesthat have applied Good Manufacturing Practice (GMP)and Sanitation Standard Operating Procedures (SSOP)(VASP, 2015). Nevertheless, given there is norequirement for mandatory electronic traceability bythe Vietnamese Government, traceability remains amanual process, as data is still mostly recorded inbooks. Evidence shows that the majority of foodproducers only maintain minimal tracing documents

I. Traceability: why should Vietnamesefish exporters care about traceability?

In the agricultural trade policy framework, traceabilityis part of public and private procedures for monitoringthe conformity to quality, environmental and otherspecifications related to food. Through food traceabilitysystems supply chain actors and regulatory authoritiescan track a food safety or quality issue and introduceprocedures to remedy it. The advantages forconsumers, governments and large businesses linked totraceability are well recognized. Yet for small-scalefarmers, especially those producing fishery and otherfresh food products in developing countries,traceability requirements can constitute barriers totrade.

Viet Nam is one of the largest global exporters ofagriculture and fishery commodities in the world. ManyVietnamese agricultural and fishery products are highlycompetitive: cashew and pepper export have a veryhigh value and are appreciated for their quality; riceand coffee are the second most exported product;seafood is the 5th and tea is the 7th. In the seafoodsector shrimp and catfish are two products thathave the highest proportion of total seafood exportsfrom Viet Nam.

Traceability2 of products and ingredients is a clear legalrequirement to access an increasing number of marketsin developed countries. As stated by Nguyen Thi HongMinh, prior Vietnamese Deputy Minister of Fisheries,besides being a legitimate right of local consumers,markets and certifying bodies, traceability is also arequirement for almost all imports. Traceability systemsmake information about products publicly available atall stages of production and distribution; enableconcerned stakeholders to track the movement of aproduct along the food chain; ensure the continuity of a

1 http://seafood.vasep.com.vn/660/whybuy/export-potentials.htm2 Defined as the ability to “trace the history, application or location of anentity by means of recorded identifications” (ISO8402) or “to follow themovement of a food through specified stage(s) of production, processingand distribution” (Codex Alimentarius).

The fishery sector in Viet Nam

According to the Viet Nam Association of Seafood Exporters and Producers (VASEP), in 2009 the seafoodproduction of Viet Nam reached 4.87 million MT. By 2014, the production increased by nearly 40% and thisindustry now employs more than 4.5 million people in the country. Vietnamese seafood products are currentlyexported to 170 markets and the fishery sector accounts for about 4-5% of the Gross Domestic Product (GDP) andfor about 9-10% of national export revenues. Today, Viet Nam is among the top five global fisheries producers andexporters. The largest share of exports – 75% of Vietnam’s seafood sales – is sold to the US, Japan, EU, China andSouth Korea1.

to show they have a tracing system. No companyproducing food for the Vietnamese domestic markethas a suitable traceability system in place.

Traceability is especially important if faults areidentified and food products must be recalled. RecentEU legislation obliges producers to disclose toauthorities and consumers potential risks to consumersderiving from their products. Likewise, other countriesare raising the standards of their own legislation on thismatter. At the same time, individual growers, producersand manufacturers eager to protect their brands fromthe harm of tainted materials or poorly managedrecalls, are tightening their own internal recall policiesand methodologies.

Major buyers of Vietnamese food products put in placeregulations requiring traceability information for theshipment of imported products. Many independentorganizations like the European GAP (EUREPGAP), the

US Good Agricultural Practices (US-GAP) and theAccreditation Service Council (ASC) also requiretraceability, either in paper or electronic format, whileBest Aquaculture Practices (BAP) requires electronictraceability for all food products exported to the USmarket.

To respond to buyer’s tracing requirements, Vietnamesefishery exporters are using paper-based tracingdocuments, assigning their own code numbers forproduction batches and stamping these codes on cartonboxes when shipping out. When buyers make tracinginquiries, they scan the codes on these carton boxesand send them back to the Vietnamese producers, whothen look them up in their document files and sendinformation back to the inquirer. However, this processcan only meet basic buyer’s tracing requirements and istime consuming and oftentimes unreliable.

The TraceVerified Project

With a strong belief in the necessity and potential of electronic traceability solutions for the food industry ofViet Nam, in 2011 the Sac Ky Hai Dang Company made a proposal to the Global Competitiveness Facility (GCF)funded by the Danish Government (Danida funding) to start the TraceVerified project, which included electronictraceability, training and consultancy services for fisheries and other agro-product value chains for SME exporters ineight target provinces. As a trademark, “TraceVerified” was registered with the National Office for IntellectualProperty of Viet Nam. Within eight months, TraceVerified had launched its new software at a workshop calledElectronic Traceability, held in concurrence with the Viet Nam Fisheries International Exhibition (VIETFISH 2012) inHo Chi Minh City.

TraceVerified is about verified traceability information. The system, built according to international standards, ishighly compatible with target supply chains and is simple in use for any stakeholder, from producers to processors,buyers and consumers.

Figure 1: TraceVerified Services

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Source: TraceVerified (2015)

Hatcheries• Broodstock• Chemical• Feed• Diary• Sales

information

Farm• Information

on seeds• Feed• Chemical• Diary

Collection point• Farm

information• Shipment

information• Transportion-

preservationinformation

Customers• Import• Distribution• Traceability

information

Factory• Raw

materialclassification

• Clean, wash• Processing• Frozen,

storage

II. TraceVerified facilitates theparticipation of Vietnamese SMEexporters in Global Value Chains (GVCs)

The TraceVerified project aims to develop andimplement a paperless, low-cost, user-friendlyapplication for the various aquaculture supplychains in Viet Nam (consisting mostly of SMEproducers) to electronically trace and track variousinformation along their supply chain, to ensure end-product quality, hygiene and other requirements ofbuyers, importers, import countries’ regulatorybodies and consumer associations.

Electronic traceability systems can help Vietnameseaquaculture exporters to:

• Meet traceability requirements as per rules andregulations of the EU, US, Canada, Japan andto operate in accordance with the regulationsof state agencies.

• Ensure the ability to store and trace informationof shipments through electronic systems andidentify the units of product through each stageof the production process, processing anddistribution.

• Support companies to perform recovery andremoval of unsafe/substandard units quicklyand accurately, protect consumers and thebrand reputation of the business.

• Minimize the impact of product recalls bylimiting the scope of related products toimprove business processes.

• Monitor and control the rapid flow ofinformation in the production chainfrom hatcheries, farms, collection andtransportation, processing plants, and storageto export.

• Provide importers, buyers and partners withreal-time and accurate information about theorigin of the products and materials.

• Share testing information and certification offood safety to promote a trustworthy image tothe clients.

Figure 2: Information Sources Across theSupply Chain

• Use traceability codes in accordance withinternational standards instead of using internalaccess codes limited to the operations of theenterprise setting. Make sure the access code isunique and is recognized worldwide.

• Facilitate more efficient and effective customs’clearance.

• Reduce costs and waste of time with the datamanagement in information technology, byeliminating errors in the paper records. Theenterprise information management is closer toits production.

Source: TraceVerified (2015)

.........

.......

......

.

Farm

Transportation

Raw material arrival

Factory

Storage-Export

Hatchery

categorized. This database generates a wide rangeof optional reports based on field selection. Theaccess code is unique for each shipment andconsistent with international standard codes such asS1, QR Code, and T-Code. The “TraceReport”produced can be customized for clients accordingto their export markets.

TraceVerified is a 100% Vietnamese developed,low-cost IT system that works on common platformsand devices and does not require significantinvestment in new hardware or devices. GS1 is used

III. Key functions of the TraceVerifiedapplication

Companies have to provide minimum informationfor each critical traceability control point. Allinformation recorded in the traceability system iscollected in a central database accessible by userswith individual and personal credentials. Allproducts are marked with the TraceVerified label.

The system offers a dynamic database in whichinformation can be updated, changed and

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• Relevant, adaptable to the current state ofsupply chains in Viet Nam.

• Easy to use, as it does not require biginvestment upfront, and it is affordable forsmall and medium businesses and farms.

• Easy to access for consumers and governmentagencies that can trace information fromavailable devices like smart phone and tablets.

• Useful to store and search for information inmultiple ways, including by lots, customernames, and dates.

In addition to making information available tothe public, the TraceVerified system is also a riskmanagement tool that ensures customers’information is safely and securely stored, while stillallowing government inspectors to make queries asneeded.

During the initial period of implementation of theproject, the TraceVerified team undertook a range ofactivities to identify the specific traceability-relatedbottlenecks along the supply chain informationmanagement system, and build the trust, confidenceand capacity of users. The team undertook manyinitiatives, including:

• Organizing 10 supply chain needs assessment(with reports and recommendations forelectronic traceability) to survey the followingagricultural and fisheries supply chains:shrimp, catfish, Bluefin tuna, rice, tea, sweetpotato, frozen vegetables, dragon fruit, fruitsyrups, honey, and cashew nuts, in An Giang,Lâm Dông, Cân Tho, Khanh Hoa provinces.

• Conducting 14 workshops to raise awarenessin electronic traceability in general andTraceVerified in particular, in Viet Nam, theEU and the US, and presented TraceVerifiedat numerous other workshops;

• Conducting 18 training courses on traceability,GS1, management and marketing skill forvarious supply chains and regularly distributingTraceVerified e-newsletters to update them onlatest improvements in the TraceVerifiedapplication.

• Taking part in policy consultations with theFood and Agriculture Organization’s (FAO)Viet Nam office, Ministry of Agriculture ofViet Nam, General Department of Fisheries,VASEP and other stakeholders to enforce morestringent food quality and food hygienestandards, including advocacy for tracing andtracking policies.

as base code for larger TraceVerified users who arefee-based members of Vietnamese GS1 Association.T-code (free of charge) is used for small users andfarms. Handheld, low-cost QR code scanners areused and end-users only need to have minimal usertraining. TraceVerified project provides local ITsupport (on phone and online) at very low cost tocustomers in Viet Nam.

Source: TraceVerified (2015)

Figure 3: Sample TraceVerified Stamp

Stamp Components:To the right: GS1Code; upper line:T Code (optional);

center: QR code

` ` ’

IV. How did Vietnamese aquacultureSMEs embrace TraceVerified?

Between 2011 and 2014, the TraceVerified systemwas successfully implemented in the followingsupply chains:

• Shrimp producers for export: Minh PhuSeafood Corporation, Quoc Viet Co., Ltd.

• Pagasius producers for export: Nha TrangSeafoods F17 Joint Stock Company, CanTho Seafood Import-Export Corporation(CASEAMEX), CAFATEX Seafood Corporation,Saigon-Mekong Seafood Co., Ltd.

• Tuna producer: Ba Hai Co., Ltd.

• Fresh fruit for export: Red Dragon Trading andServices Co., Ltd.

• Canned fresh juice for export: Nghe An FoodCorporation

• Supermarket: Big C An Lac (pork chain)

More significantly, in April 2014 Big C, one of thebiggest supermarket chains in Viet Nam signed acontract with Sac Ky Hai Dang Science TechnologyServices Joint Stock Company (EDC-HD), thedeveloper of TraceVerified, to pilot the electronictraceability system in their pork supply chain withE-bon, Big C’s nationwide pork supplier.

Customers who have been using TraceVerified testifythat the system has been:

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With TraceVerified, information about differentaspects of the farming process, collection ortransportation and logistics processingcorresponding to the lot of product is captured bySMS and regularly recorded on the system. Whenpacking, corresponding to each packingspecification, lot’s material, receipt place andvehicle, the producers will create a separatetraceability code (automatically issued by thesystem) and print directly onto the package label orattach the traceability stamp onto the package label.

This packing information will be recorded onto thesystem by the staff as a basis for traceability.Customers, government agencies and other relevantbodies receive trace information of product by usingsmartphones or QR code scanners.

V. Taking stock: success factors fromTraceVerified project

Reflecting on the three years’ journey to bringelectronic traceability solutions to Vietnameseaquaculture SME exporters, building the trust ofusers was identified as one if not the most criticalelement in rolling out the TraceVerified system.Three factors helped to win the trust of customersand partners:

• Partnering closely with key customers in theaquaculture value chain, and getting theirsupport to implement TraceVerified along theirvalue chain, from hatchery to farm to factory,as the best way to ensure TraceVerified servicesare demand-driven, responsive andcompetitive;

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Innovative traits of TraceVerified

1. Low cost: free to the information beneficiary (consumers, authorities, importers, buyers) and annual cost forfood producer from $1 000 to $2 000 (depend on company size).

2. Minimum investment in hardware and software needed.

3. Works on smartphones in order to encourage more farmers to use TraceVerified systems, EDC-HD hasupgraded the software so that farmers can input data into the system from mobile phones.

4. The software also includes Excel forms with pre-built formulas, as an alternative when buyers require datainputs to the TraceVerified system and there’s no Internet for online connection to the system.

5. Easy to use by small scale farmers, with minimal instructions and training.

6. Possibility to scale up initiative and to replicate within other supply chains.

Figure 4: TraceVerified Interfaces

Source: TraceVerified (2015)

• Project leader is an innovative company (EDC-HD) with a proven track record of successfullyimplementing new ideas to the aquaculturesector, as well as SME exporters in Viet Namwith committed staff not subject to turnover;

• Being a Danida grant recipient helps to enlargethe network of connections for EDC-HDmanagers and staff. Key managers were trainedin electronic traceability in Denmark and metlike-minded service providers to SME exporterslike TraceVerified from all over the world.Thanks to this broadened network, TraceVerifiedalso got to work with FAO and started to getinquiries from other countries in the region.

VI. Lessons learned

• The demand for most of agriculture and fisheriesexport products within Viet Nam and in theneighbouring countries is for raw or crudeproducts, thus the perceived need fortraceability has no urgency.

• Food exporters in Viet Nam in general are notready to provide transparent information aboutproducts unless they have pressure fromcustomers, importers or authorities.

• It is difficult to ensure complete traceability insmall-scale agriculture.

• Awareness of food manufacturers in Viet Namabout traceability and paperless trade arelimited. They are still not aware of the benefitsand the importance of traceability for thepurpose of paperless systems and tradefacilitation.

fish, shrimp, vegetable and fruit production in 12businesses that export seafood and farm produce tothe US and the EU, while a complete programme oftrace verification and labeling software for Tra fishexports to the EU was constructed.

Among the latest positive developments, inApril 2015, the Dutch SNV Inclusive BusinessAccelerator (SNV IBA) signed an agreement tosupport TraceVerified in launching a ‘’FoodTransparency Alliance” in Viet Nam, withTraceVerified as founding partner. SNV will alsohelp seek investors to further develop this Allianceand to promote the use of electronic tracing andtracking systems in Viet Nam’s domestic foodmarket.

Last May, TraceVerified also competed at TechFestViet Nam 2015 and was ranked as the second beststartup among 27 startups reviewed by internationalinvestors (among them LGT Philanthropy Venture ofLiechtenstein, and CyberAgentVenture of Japan.).

Many obstacles remain to be overcome before a fullimplementation of paperless traceability systemswill be possible. On the one hand, to carve outa niche in foreign markets, Vietnamese farmproduce brands will need to provide reliableinformation. On the other hand, to stay competitivein the global market, Vietnamese businesses needto progressively adapt to changes in these markets,to apply information and risk management toproduction chains and to be determined to applyadvanced, international standard management. Bydoing so, businesses will gain customer trust andfind opportunities to sell their products atcompetitive prices.

In the meantime, the TraceVerified team will focuson:

• Expanding service to multiple fisheries andagro-products supply chains;

• Advocating national policies for morecomprehensive, enforceable traceability andquality assurance policies;

• Working with policy makers to popularizeelectronic traceability system to all food supplychains in Viet Nam; and

• Looking for new funding support to continueimproving the TraceVerified application forcustomers’ items and to bring the system tomore disadvantaged small farmers in remoteareas.

VII. The way forward: replicability ofTraceVerified to other supply chains inViet Nam and beyond

The TraceVerified project team plans to expand theirservice to other fisheries and agro-products supplychains and advocate national policies for morecomprehensive, enforceable traceability and qualityassurance policies.

Prospects for the scalability of TraceVerified seempromising: Viet Nam’s TraceVerified system cansatisfy the latest requirements of electronic traceverification and therefore there is the potential toextend this tool to other sectors. In fact, this electronictrace verification platform has been applied to Tra

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The United Nations Network of Experts for Paperless Trade and Transport in Asia and thePacific (UNNExT) provides a networking and knowledge-sharing platform for policy makers,practitioners and technical experts to bridge the implementation gaps between the countrieswith different level of trade facilitation. Its mission is to establish an ongoing community ofknowledge and practice to facilitate the implementation of Single Window and paperlesstrade and transport in the Asia-Pacific region. The UNNExT intends to enhance capacity ofits members to make informed decisions about policy issues at stake and to implementrelated international instruments and standards. It is operated jointly by the United NationsEconomic and Social Commission for Asia and the Pacific (ESCAP) and the United NationsEconomic Commission for Europe (ECE).

UNNExT has developed a series of briefs covering a range of critical issues to be tackled inthe successful development of paperless trade and Single Window initiatives. Also, theyshowcase the best practices in the region and lessons learnt. The latest ones are about: ChinaE-Port Towards a Single Window Trading Environment (UNNExT Brief No. 14), ASEANSingle Window: A Regional Single Window for ASEAN Connectivity (UNNExT Brief No. 13),Towards Electronic TIR Customs Transit System (UNNExT Brief No. 12), Insights fromESCAP’s Trade Process Analysis Database (UNNExT Brief No. 11), Smarter Food GreeceTrade Facilitation for Export Opportunities in Agricultural Produce (UNNExT Brief No. 10).

For more information, please visit UNNExT at: http://unnext.unescap.org

This Brief was prepared by Mr. Ly Hoang Hai,with support from Ms. Elisa Sabbion, UNESCAP.Mr. Hai is the CEO of the Sac Ky Hai DangScience Technology Services Joint StockCompany (EDC-HD) in Ho Chi Minh City. Thenote expresses the opinion of the authors andshould not be construed as representing theopinion of the United Nations. For questions andcomments on the specific details of the case,readers may write to info@sackyhaidang.com.vn.The paper was reviewed and published by theTrade Facilitation Unit of UNESCAP on behalf ofUNNExT.

We welcome your feedback as well asexpressions of interest in our work on tradefacilitation. For further information on UNNExT,please write to Director, Trade and InvestmentDivision, ESCAP.

Email: escap-tid@un.org

Website: http://unnext.unescap.org