A steadily growing number of coffee companies, large and small, are investing in Blockchain, the distributed, publicly accessible digital ledger. Proponents claim it can enhance traceability and transparency in the supply chain, but it’s not clear yet if it can really help farmers
Digital technology is spreading quickly throughout the agricultural sector, increasing transparency and efficiency along the value chain.
Among the technologies that are entering the sector are artificial intelligence (AI) and the Internet of Things (IoT), but the technology currently causing the most interest is Blockchain, for which numerous advantages are being touted by its advocates.
Proponents of the technology claim it will revolutionise the supply chain, which it might, but will those at the bottom of the supply chain – that is, farmers – benefit? Could Blockchain mean that farmers get paid a better price? On that claim the jury is still out.
For coffee companies the potential benefits seem clearest, greater traceability and transparency being the foremost examples. For farmers, potential benefits include increased bankability, the ability to ‘cut out the middlemen’ and, allegedly, higher profits, although as yet there are few examples of ‘Blockchain farmers’ being paid more for their coffee.
Unique ability to track and monitor
Farmers would also need to invest in technology – possibly only in the use of mobile phones – although dissemination and adoption of new technology has always been difficult in the coffee sector.
In a paper she wrote for the International Finance Corporation, Marina Niforos, founder and principal of Logos Global Advisors, highlighted the fact that global supply networks cross borders and connect established and emerging economies, but that operating them is complex and costly.
She said Blockchain has unique ability to record, track, monitor, and exchange assets without the need for an intermediary, and could be a solution to many of the logistic and cost issues that affect value chains, especially those in the food, agribusiness, and pharmaceuticals sectors.
“For emerging markets and industry leaders with global market ambitions, adherence to sustainable supply chain practices will become more and more important,” she said. Blockchain offers the ability to integrate and manage supply chain transactions and processes in realtime and identify and audit the provenance of goods at every link in the chain.”
Supply chain ecosystems based on Blockchain
She noted that Memphis-based Seam – which is partly owned by Cargill, Olam, and Louis Dreyfus – is working with IBM on an industry-wide collaboration initiative to create a supply chain and cotton trading ecosystem based on blockchain. The company claims to have ‘smart contracts’ that can reduce the time needed to settle a trade from three days to a few minutes.
She also highlighted other potential advantages of Blockchain including helping women in value chains. “Women represent a significant portion of workers in many value chains. However, informal roles and comparatively low access to credit and identification are an obstacle to women’s access to jobs and assets, as well as to the creation of productive, sustainable markets,” she said.
“Blockchain can help address some of these challenges,” she suggested, noting that access to financial services such as credit, savings, and insurance are considered one of the major barriers to growth for women-owned businesses and that laws and cultural norms often restrict women from obtaining finance.
“Supporting women’s roles in agricultural value chains can increase productivity, profitability, and sustainability for actors along the chain,” she claimed.■ C&CI
This extract is from an article that first appeared in the September’18 issue of C&CI, click on subscribe now if you wish to read the article in full and other informative articles in the September and future issues of C&CI.