Transparency in the Coffee Value Chain
We believe that the entire coffee value chain needs to be reinvented to become more efficient and able to generate win-win economic transactions even for the weakest players in the chain, the producers. This page illustrates how the application of blockchain technology to the industry can overcome some of the challenges described previously and provide a way to tackle the imbalance in the coffee value chain highlighting a path that leads to creating a more balanced and sustainable industry while simultaneously creating additional value in both producing and consuming countries as well as at the consumer end.
The first step towards doing so is to bring transparency into a complex, opaque and closed value chain.
What is Blockchain?
Blockchain, or distributed ledger technology (DLT), is a distributed environment that combines different well-known technologies (such as hash functions, asymmetric cryptography, digital signatures peer-to-peer networking) to store any type of data in a distributed fashion among its participants. The data is organized in transactions that are embedded into blocks. The DLT encodes the rules that nodes must obey in order to participate in the network and create transactions that can be accepted into the blockchain ledger. The ledger acts as a shared record of trust agreed upon by all participants.
A blockchain environment is called public if anyone can freely join its network as a node. Otherwise, if only authenticated nodes are allowed to become part of the network, then the blockchain is called permissioned. While public blockchains are still important and valuable options for certain use-cases, we believe that permissioned DLT systems are in general more suited to business applications, especially where some level of confidentiality or secrecy of the transactions –or the transactions’ details– occurring in the system, must be ensured among participants.
Towards a new model
Changing the status quo in order to redesign the entire value chain to make it more transparent, efficient and more inclusive is a collaborative process that requires the effort of all the players involved in the supply chain and this won’t happen overnight. However, we believe that this is a necessary step in order to ensure the sustainability of the coffee industry in the long term. Enabling end-to-end traceability and full transparency into the whole coffee supply chain is key for a number of reasons.
First, end-to-end traceability guarantees provenance and enables users to gain a clear view on how long the coffee has been travelling. In the case of coffee, we tend to think that freshly roasted coffee is important; however, roasting a freshly harvested coffee is even more important. Secondly, being fully transparent about the quality and origin of the coffee enables to build trust into the coffee chain, and gain consumer confidence. Furthermore, full transparency is essential to ensure that growers are paid fairly for their crops and helps to ensure conformity to standards at origin and throughout the chain.
Full transparency translates into full accountability for every player of the chain, reducing waste and mitigating the possibility of food fraud. Finally, the combination of verified provenance with complete end-to-end traceability and transparency enables inclusive business models, in which coffee growers can be rewarded for the quality of their work, enabling them to break free from the speculative pricing of commodity markets, on which they have otherwise no control.
Fantine & Transparency
Behind each lot of coffee in Fantine, there is a producer or a group of producers that make it possible with a lot of effort. It is the producers who decide the selling price of their coffee.
Transparency in coffee is one of the most complex and substantial topics. We do our best to transmit the information that we consider key to understanding the economics behind coffee.
In order for the international coffee trade to take place, there are several necessary actors such as exporters and logistics companies. On Fantine, producers have already connected with their customers. Therefore the bargaining power remains in their hands and those of the roasters, allowing the other actors to capture the margin based on the value they generate in the chain.
When they talk to you about coffee you have to know that the reference price is related to the form (type) in which the coffee was sold. Not all prices at the farm gate are equivalent because not all coffees were sold in the same way.