Traceability from Cherry to Cup, Blockchain Transforms Coffee

Ali Yilma is a coffee farmer in Dedesa, Oromia Regional State.

Now in his mid-20s, he remembers a time when low coffee prices meant that he and his family did not get enough income from their farms.

But his income increased after he began working with Moyee Coffee, a socially-conscious coffee marketer that pays him 20pc higher than the market price.

“They give us training, and they buy our coffee at a good price,” Ali said. “We are just happy and excited about any new technology they introduce.”

Guido van Staveren van Dijk, the founder of Moyee Coffee, advanced the idea of a social business to change the coffee industry called FairChain. FairChain is a concept that advocates creating more value, profit and jobs in coffee-producing countries like Ethiopia, rather than simply buying the commodity for the cheapest price possible.

It is a step ahead of the more popular coffee certification scheme, Fairtrade, a movement that promoted better trading conditions to farmers in developing countries. The Fairtrade movement grew in Europe in the 1960s informed by the slogan, “Trade not Aid”. The Fairtrade initiative was to ensure that producers in developing countries benefit more from trade. An informal association of international Fairtrade networks was established, and certifying organisations were created with the view of setting voluntarily adopted standards of business practices.

Fairtrade principles were created, and to join the scheme, farmers had to agree to meet social, labour and environmental standards. But when a cooperative has Fairtrade certification, a farmer receives a minimum fixed price,which is believed to incentivise the framers enough that they take on the extra labour and input costs needed to grow a better quality crop.

FairChain is an improvement to this idea. “We want to create ‘radical impact’, as we like to call it: create access to better quality coffee than the one sold by the leading multinationals and make sure that the people growing our coffee make a better living by bringing value-adding activities back to their countries,” says Guido van Staveren van Dijk. The goal is to divide the gains from coffee equitably between producing and consuming countries and develop an easily measurable means of splitting the profits. He believes that this can be achieved by roasting the coffee in the country of origin.

Customers can follow the transactions in real-time online using QR codes supplied by Moyee.

Moyee brought industrial roasting equipment to Ethiopia at a cost of around 40 million Br three years ago.

Moyee Ethiopia, co-owned by Ahadu Woubshet, a local investor, roasts the coffee here in Addis Abeba and exports to countries such as the Netherlands. The roasting plant is located in Bole District and has created job opportunities for 30 people. The firm works with smalscale farmers and trades with them directly.

“But how do we measure and show what we actually do?” said Moyee’s founder, describing one of the key challenges his company is facing. To solve the problem, the company partnered with bext360, a technology firm that utilises blockchain technology and artificial technology (AI) to streamline traceability. Blockchain is a sophisticated technology that uses various entries or transactions in a “digitized, decentralized, public ledger recorded in chronological order.” The system allows market participants to keep track of transactions at each node.

Bext360 has developed a machine that uses blockchain technology to automate the coffee supply chain. The machine is placed in the fields and can evaluate 50kg of coffee cherries at a time. It scans and images every single cherry that is poured into it and records them.

Factors like size, colour and density of the cherry are identified that will ultimately be used to decide on the quality of the coffee. The machine uses this information and evaluates the data to come up with a bid price for each lot.

The farmers are shown the results and offered to sell their product at the price. If they agree, transactions are recorded.

At this point, the bext360 platform instantly creates a starting transaction node, which represents the value of the commodity. As the commodity flows through the entire supply chain and values are added to the product, new transaction nodes are created.

Customers can follow the transactions in real-time online using QR codes supplied by Moyee.

Blockchain technology gives all stakeholders - farmers, roasters, and consumers - access to data across the entirety of the supply chain, according to the bext360 website.

Blockchain technology gives all stakeholders – farmers, roasters, and consumers – access to data across the entirety of the supply chain, according to the bext360 website.

“For consumers, this technology provides unprecedented levels of transparency around origin and quality; and allowing a coffee drinker in Europe to pull up this data and verify exactly where his coffee was sourced,” it adds.

This process was developed to ensure transparency and traceability between consumers and producers and to document that small-scale farmers are getting equitable prices for their products.

One of the coffee producers to partner with Moyee is Dedesa Agro & Agricultural Industry Development, which has 350 small-scale farmers working under it. It supplied 70,000kg of coffee to Moyee last year.

“Currently, we are working with Moyee to negotiate a deal with the banks to allows direct electronic payment to farmers,” Mesfin Tesfaye, marketing manager of Dedesa, told Fortune.

Dedesa, a private firm, plans to sign another contract agreement with Moyee in October when coffee harvest starts for the new year. Moyee has also partnered with nine other coffee producing cooperatives to implement the project.

Ethiopia is the fifth largest coffee producing country in the world and coffee supports the livelihood of 5.3 million farmers. Coffee farms in Ethiopia cover 1.6 million ha of land.

In 2010, Ethiopia produced 449,000tn of coffee and earned around 882 million dollars, comprising almost a third of the nation’s export earnings.

Less than one percent of the exported coffee is roasted, according to Netsanet Tesfaye, corporate communications manager at the Ethiopian Commodity Exchange.

“There should be a law that mandates value addition to coffee before exporting it, as is the case in the leather industry,” says Netsanet.

Mesfin disagrees, believing that the trick is in getting the roasting method right.

“Every country has its own unique style and way of roasting coffee that makes all the difference,” Mesfin says. “Researches and studies should take place to understand the various methods of roasting coffee in different countries before beginning such exports.”

Moyee Ethiopia exports roasted coffee to specific markets.

“Ethiopia should do more to allow more roasting companies to enter the market,” Ahadu argues.

Ethiopia should also build up its coffee brand instead of just exporting raw coffee, according to Ahadu.




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