Coffee supply chains are now going the blockchain way

Though blockchain has found traction in certain sectors within the international logistics space, its use case within food supply chains has been one of the most convincing yet. Blockchain technology is nothing if not utilitarian, with it essentially tackling the two cardinal problems prevalent within supply chains – the lack of visibility and transparency among stakeholders.

For centuries, coffee has been one of those commodities that has truly been traded across continents, as coffee plantations invariably were situated around the equatorial belt while the beverage has been enjoyed ubiquitously around the world.

Fascinatingly enough, blockchain’s possibilities in the coffee value chain transcend the usual trope of visibility and trustability. Coffee cultivation is still caught up in the clutches of forced and child labor across large swathes of Africa and South America, the likes of which could be brought to light by adopting blockchain. It also can help to reduce the lopsided financial equation of the coffee value chain, as studies show coffee farmers earn as little as 7 percent of the retail price of coffee.

Across the world, several blockchain pilots exist within coffee supply chains, mainly to understand its provenance and thereby assure quality to consumers. This March, the Indian government approved the ‘Coffee Blockchain Initiative’ that is expected to help integrate coffee farmers with the markets in a more transparent manner. The government expects blockchain to delete several layers of redundant middlemen and helps bridge the gap between consumers and producers.

“This initiative will help in creating a brand image for Indian Coffee through traceability, by reducing growers dependency on intermediaries and having direct access to buyers for a fair price for their produce,” said the Indian Ministry of Commerce & Industry in its statement. “Blockchain helps in finding the right coffee suppliers for exporters and within the stipulated time to meet growing demands and in building better trust and long-term relationships.”

Halfway across the globe, a Dutch startup called Moyee Coffee is disrupting the African coffee supply chain by using blockchain to guarantee a ‘clean’ coffee value chain. Since November 2017, the company has been running a pilot blockchain project along with Denver-based bext360 and the FairChain Foundation, with the intent to create more value for Ethiopian coffee farmers by increasing their share of dividends.

“The bext360 platform gives all its stakeholders – farmers, roasters and consumers – access to data across the entirety of the supply chain. This data enables complete analysis of the supply chain to identify supply chain efficiencies,” said the startup in a writeup. “For consumers, bext360 provides unprecedented levels of transparency around origin and quality; and allowing, for the first time, a coffee drinker in Europe to pull up this data and verify exactly where their coffee was sourced.”

Starbucks had been one of the earliest adopters of blockchain within the coffee ecosystem, launching its two-year pilot project across its sourcing farms in Costa Rica, Colombia and Rwanda. Starbucks’ involvement in blockchain is heartening because the company, the world’s largest coffeehouse chain by far, can create a seismic fear-of-missing-out (FOMO) pressure for businesses within the ecosystem to try blockchain out. This May, Starbucks announced that it is partnering with Microsoft’s Azure Blockchain Service to track its coffee shipments and bring real-time traceability to its supply chains.

“For Starbucks, which has long been committed to ethical sourcing, knowing where its coffee comes from is not new. Last year alone, Starbucks worked with more than 380,000 coffee farms,” said the company in its statement. “However, digital, real-time traceability will allow customers to know more about their coffee beans. Perhaps even more important and differentiating are the potential benefits for coffee farmers to know where their beans go after they sell them.”

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