The global coffee industry is now worth some $200 billion (Dh734.64bn) a year, yet the average income for coffee farmers has not changed in two decades. This is according to UK advocacy group Fairtrade. Meanwhile, most coffee drinkers are blissfully unaware that for every $3 to $5 cup of coffee they buy, the original coffee producer may actually make less than 1 cent.
Consumers, as always, wield all the power. They not only play a pivotal role in pushing for higher service standards, but also higher standards of corporate, social and environmental responsibility. In response, many companies have invested in making it easier for consumers to learn more about the products they are buying and the production process. However, transparency has proven difficult to deliver for many food products, including commodities such as coffee and tea.
So, how does a socially conscious consumer make informed choices about what coffee or tea they buy? How does one have any certainty about the sustainability of farming practices or the impact of their purchase on the farmers themselves?
A new blockchain initiative unveiled at this week's Consumer Electronics Show (CES) 2020 in Las Vegas may shine a light on the way forward. Farmer Connect, an independent ecosystem of coffee farmers and the coffee industry, and IBM rolled out 'Thank My Farmer’, a mobile app that allows consumers to view information drawn from a network of farmers, traders, roasters and brands.
Built using IBM’s blockchain food safety solution, the new app helps close the gap between a consumer’s coffee purchase and the farmer who grew the coffee beans. Using blockchain to ensure the integrity and security of the data, IBM Food Trust allows all coffee industry partners to share food information, creating a more transparent and trustworthy global food supply chain.
According to founder and president of Farmer Connect, David Behrends, the aim is to humanise each coffee drinker's relationship with their daily cup of coffee. The app will allow consumers to play an active role in sustainability governance by supporting coffee farmers associated with their coffee brands. The app also gives consumers an opportunity to donate funds directly to farmers around the world, or to help fund sustainability projects in the farmers' local communities.
Many in the food industry have been developing blockchain solutions to help make the supply chain traceable and more transparent. Last year, the 180-year-old tea producer Assam Company and US-based technology firm SmartFarms unveiled plans to develop a blockchain solution to trace tea leaves from the farm to the cup, together with a consumer app that would also allow consumers to thank farm workers directly.
Agricultural commodities typically pass through many intermediaries before being offered to consumers as a packaged product. For example, smaller coffee and tea farmers in developing nations may sell crops to larger producers, before produce changes hands between a number of exporters, importers, traders, roasters, distributors and retailers. The complexity of the supply chain and lack of technology at the source makes it prohibitively difficult to inform the consumer exactly how and where coffee was farmed.
In our globalised economy, commodity prices may change with seasonal highs and lows in consumption, especially good or poor crop harvests in the countries where its grown, currency exchange rates and new import tariffs. Coffee prices enjoyed a high of $3.06 per pound in 2011, but have been unstable ever since, falling by more than 40 per cent over the past three years to a low of less than $1 per pound last June.
Although prices have increased during the past few months, the extended instability of global coffee prices has left farmers in Africa, Asia and South America struggling to stay in business. Consequently, many farmers simply aren't able to pay the wages to workers that they would like to.
Under normal circumstances, a coffee or tea drinker in Europe or the US may only be aware of the product brand and price, or perhaps the commodity prices reported in the news. Consumers may feel the impact via changes in product pricing, but few are normally aware of how swings in commodity prices affect the farmers and farm workers.
Fair trade labelling has helped some promote transparency and benefited fair trade farmers. However, it doesn't solve the issue of how to bring transparency to global supply chains.
If these new initiatives using blockchain are successful, then consumers may soon be offered more certainty that the food brands they buy not only taste good, but are good for the farmers too.
Carrington Malin is an entrepreneur, marketer and writer who focuses on emerging technologies