How Aanika Plans to Revolutionize the Multi-Billion Dollar Food & Agricultural Insurance Industry
By: Aanika Biosciences
Tags: Startup, Biotechnology, Agtech, Foodtech, Biology

As all leaves of lettuce are almost identical, there is no rapid method to determine origin. Even the FDA have expressed their frustration at this state of affairs in a 2018 update on an outbreak of E. coli O157:

“Traceback involves working backwards from the point of consumption or purchase of the product through the supply chain. It often includes investigating the multiple steps along the way. These steps can include suppliers, distributors and processors where the lettuce was chopped and bagged, and then back to the farm or farms that could have grown the lettuce that ended up in those bags. It’s a labor-intensive task. It requires collecting and evaluating thousands of records; and trying to accurately reproduce how the contaminated lettuce moved through the food supply chain to grocery stores, restaurants and other locations where it was sold or served to the consumers who became ill.”

Traceability is Important for Insurance Carriers

Tracing food contamination and recalls are an especially thorny problem for insurance carriers. Insurance rests on assigning liability. Take an example where you live in an apartment building. Imagine you come home one evening to a flood of water engulfing your carpets, damaging your furniture, soaking your electronics and destroying your personal belongings. You notice that water is leaking from the ceiling so you call a plumber to investigate. He inspects the apartment upstairs and finds that it too has been flooded but he cannot find a leaky faucet or any source of the water. He moves to the other apartments on the floor but cannot pinpoint the source of the leak. So he checks units on the next floor up, the next above that floor, the 20th floor — nothing. Imagine that after inspecting 100 water-damaged units they still cannot find the origin of the leak. It is not coming from the building or the roof either! Who would pay the insurance claims? Perhaps some of the tenants in the building have policies that will cover them in an absolute sense but perhaps many of the policies in the building will seek damages from the negligent party. Imagine a scenario where the carrier will not cover you because it claims that you could be the negligent party as there is no proof to the contrary. The point being that, without a clear and rapid way to determine origin, an otherwise simple system can resemble that of an M.C. Escher work.

M.C. Escher, “Relativity”

And while the example above is unlikely to happen to you, this is exactly what happens during recalls in the food industry. Considering the average food and beverage recall costs about $10 million and there were 337 such recalls in 2019, this problem is non-trivial. Agricultural insurers have used a plethora of data sources such as remote sensing and satellite imagery to mitigate potential losses. The ability to capture faster, granular data translates into more accurate risk pricing and both reducing the probability of a payout and/or reducing the amount of a payout altogether. While a number of data gathering tools exist, the ability to gather traceability data, especially in a recall, continues to be time-consuming and inefficient, relying on growing and harvesting patterns for example. Blockchain technologies such as IBM Foot Trust only address the integrity of the data but cannot bridge the gap between the physical product and its digital barcode. There’s a need for a better solution.

A Unique Insight

“Working with the FDA to destroy thousands of pounds of contaminated seeds turned a passion project into a nightmare” recalled Aanika Biosciences co-founder and CEO Vishaal Bhuyan. It was 2016, and he had just launched a consumer packaged food product. When a shipment of seeds arrived riddled with insect debris, he found himself getting a crash course in supply chain vulnerabilities. “Going through the process of sourcing a niche agricultural commodity from farms in rural India, organizing trucking, shipping and warehouse logistics gave me first hand insights into how complex and fragile our food system is” said Bhuyan. “I began to imagine all the ways technology can improve and de-risk it.”