Wednesday, 27 May 2020

Ethiopian Coffee Company Uses Blockchain to Keep More Profits with Farmers

Ethiopia is known as the birthplace of coffee, which, legend has it, was discovered in the eighth century by a shepherd who noticed his goats were bleating and jumping after eating coffee berries. More recently, the home of coffee has started experimenting with a new technology: blockchain.

Last June, Ethiopian-Dutch company Moyee Coffee partnered with its sister company FairChain Foundation and tech company Bext360 to create Token, a new brand of coffee entirely powered by blockchain. As the name suggests, each bag of coffee contains a namesake token worth €0.50, ($0.56 USD), which consumers can give directly to the farmers or the FairChain Foundation, or put towards a discount on their next bag of coffee. Then, using blockchain, they can trace the impact of their donation.

Obviously fifty cents is just a drop in the bucket in terms of farmers getting a larger piece of the profit. Moyee also hasn’t released any data about how many of these tokens were used or how much they increased the income of growers. But even fifty cents can seem like a good bit of money when coffee farmers only net an average of $1.30 for each pound of Fair Trade beans they sell — beans which will go on to retail for roughly $15.

In addition to being a smart marketing play, Moyee’s initiative also serves to get both consumers and farmers more comfortable with the often-intimidating technology that is blockchain.

Now, according to the Thomas Reuters Foundation, Moyee is increasing its investment in blockchain with new capabilities. The company will use blockchain to enable traceability on the buyer’s side, so that roasters and consumers can see exactly where and when their coffee was sourced. They can also access the profiles of Moyee’s 350 grower partners to see how much they’re paid for each pound of coffee. With this new technology, farmers can also deal directly with buyers, cutting out the middleman (exporters, importers, etc.) and, at least theoretically, giving them a larger piece of the profit.

Buyers can also use a mobile app to tip individual farmers and fund projects like planting programs which will help make coffee farms more resistant to climate change.

Moyee isn’t the only one working to make the (often lengthy) coffee supply chain more transparent. Last March Starbucks launched a traceability program which outlined coffee’s journey from “bean to cup.” This seemed to be marketing play more than anything, since the company didn’t call out any specifics on how it would use the data to help farmers or ensure more sustainable supply chains.

Nonetheless, the growing number of coffee transparency programs highlights a consumer desire for traceability beyond just the world of food safety (cough, romaine, cough). People want to know more about where their food and drink comes from, and are also seeking out sustainable, ethical products. In response, companies are turning to blockchain to do everything from improving accurate seafood labeling to fighting wine fraud.

But that doesn’t mean blockchain is a magic bullet to fix the entire food system. As traceability startup FoodLogiQ’s Chief Marketing Officer Katy Jones pointed out when we spoke last year, blockchain is only as strong as its weakest link. If the data that goes into tracking, say, a bag of coffee beans isn’t 100 percent accurate at each step of the way, then the integrity of the entire chain is shot.

And giving farmers a slightly better percentage of coffee profit or a few €0.50 tokens will not solve the issues of drought, fluctuating prices, or credit access that plague many coffee growers. But it’s a step in the right direction putting more power in the hands of the growers themselves. As climate change makes coffee more difficult to cultivate, farmers will need a lot more resources and support — unless we end up just making our coffee without the beans in the future.

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