Let’s ring in the New Year with a hot brew of your favourite Coffee and while we are at it, let’s read up what goes on beyond our hot cuppa.
Coffee has long been the traditional drink for many and is the second most traded commodity in the world. Innumerous coffee chains and major retailers have been in the constant battle for sourcing the best Ghanian coffee beans, some even share the story of sustainable practices. However, the coffee industry is far from being organized or transparent. Today, quality issues, unfair labor, dilatory transportation, inventory mismanagement, and non-sustainability are only a few of the many coffee industry’s challenges.
Over 80 percent of the world’s coffee is produced by smallholder growers. Despite their integral role, these agriculturalists face substantial challenges that lurk their livelihoods and the long-term sustainability of the global coffee supply chains.
Despite multinational companies and retail brands procuring their coffee beans, pods and more recently green coffee (unroasted beans); limited access to financial aids, newest training methods lend the farmers vulnerable to decreased productivity or fluctuating market prices. To add to this, climate change brings larger challenges – being a heavily traded agri- commodity, devastating shocks from drought, unreliable rains, pests, and disease are common. It has been estimated that the changing climate will halve the total arable land suitable for coffee production by 2050.
Having said all of the above, the global coffee industry has already modified and adapted to reduce its carbon impact and perhaps a digital revolution that could integrate farm-to-retail would change and save losses, protect farming lands and thus enable growers to concourse to an efficient, equitable, and reliable coffee supply-chains in the near future.
Traceability has a lot to offer when it comes to the coffee industry. When traders can trace the coffee right to the farms, it allows them total control over quality. Traceability enables traders to record production data from the farms and store them using mobile apps or online traceability platforms. Traceability in the supply chain helps traders know which batch of harvest takes how long to reach the stores and into customers’ hands; this makes for a flawless transportation schedule and delivery so that traders never run out of stock for whatever reasons.
In time delivery, stocked inventory, and quality coffee makes for a good brand value and helps brands boost their reach by tapping new customers. Moreover, consistency with quality enhances brand value and opens new pathways for the brand to compete with a better, higher class. Blockchain based supply chains are transparent, and traceable throughout the multiple actors in the value chain, this allows for an online data backed verification; traders can log into an app or an online verification website to know its farmer,country of origin, grade at harvest, quality reports etc. The digital identity of the batch code or serial number enables them to fetch more significant data such as ethical farming methods, fair labor, farming practices, track farm reputation, trade history, and much more.
One of the best examples is the world’s largest coffee trading group, Neumann Gruppe GmbH (NKG), which has made pioneering efforts to address the agricultural productivity of coffee cooperatives in Honduras and Kenya. NKG has directly invested in smallholder-focused services to help increase the productivity and resilience of these marginal growers and the cooperatives.
With the application of GAP (Good Agricultural Practices) like pest and disease management, fertilizers, pruning, the production of fresh cherries per tree can grow from current 4 pounds (2 kilograms) to 11 pounds (5 kilograms) and even more. However, approximately 40 percent of smallholder farmers in Kenya face financial exclusion and need access to knowledge, financing, and inputs to invest in their lands. The cooperatives with NKG jointly aggregate, wash and dry members’ coffee beans, and later market these beans through either auction on the Nairobi Coffee Exchange or through direct sales outlets. Many traditional ways of working have been replaced for e.g. the paper-based system has turned electronic, use of SMS messages provide farmers with their coffee-related information like crop volume, ripening etc. Third-party units have been actioned loans, training for purchasing agri-inputs like fertilizers and processing equipment, and guidance to update their aging farms with more productive, disease- and drought-tolerant coffee trees.This has tremendously improved farmer livelihoods.
Consumers are in for a long ride. For the first time, traceability enables consumers to scan a barcode, input an alphanumeric code on an app or an online portal, and see everything about the product they are looking to buy in retail. Consumers can know when and at which farm the coffee was grown, where the coffee was stored and for how many days, which chemicals/pesticides were used to keep the coffee fresh, exact time of shipping all the way upto the retail store, the real best before date, and many other things. With just a barcode scan, consumers can determine if the sustainability and security commitments were met while growing or transporting the coffee to the shelf.
Traceability assures quality as every supplier or wholesaler will have to mandatorily undergo training on adopting, implementing, and exercising traceability in the supply chain to ensure it meets the strict governmental norms. With blockchain based traceability, mapping of source to retail will come into existence, which keeps track of the grower’s and supplier’s record of dealings, logs of customer complaints, past quality issues in the past, to name a few in an encrypted, safe digital ledger format.
The most economically challenged countries in Africa, Asia, Latin and Central America are facing challenges for the coffee supply chain post-harvest with delays up to four weeks longer than usual. This significant delay has impacted the quality of our favorite coffee.
Liam Broody, President of Sustainable Harvest Coffee Importers says, “All the pieces in the coffee value chain have never been tested at the same time. We have dealt with political coups, tsunamis, labor strikes, low price crises, but we have never had to have all elements of the chain stressed at the same moment.”
Colombia, the world’s third-largest producer of coffee, on the other hand, is concerned about the well-being of its workforce. The coffee companies are raising relief funds to help coffee farmers and growers who have limited access to resources. They are also planning to train the local workforce to bring back the consistency in handling specialty beans to brew coffee.
Sustainability is the way to go. It is best for the environment, and it is just what consumers demand. The high demand for sustainability pushes the market to grow fast by adopting sustainable and responsibly sourced products. Sustainable products prove to be an opportunity, much less expensive for brands, leading to an efficient supply chain producing handsome profit margins.
Today, consumers want to be sure about the products they want to buy; they expect sustainable products at a reasonable price, with transparent data about the supply chain. They are looking for certainty, and for achieving that, various programs have been implemented. These programs include barcodes or smart labels on the coffee packaging that change color or carry a code that brings out a brand’s total supply chain data. Many third-party international organizations undertake the verification of the traceability; they certify farms or traders as per the international laws, which boosts the brand’s credibility and makes it easy to sell based on the trust gained.
Traceability uses technology and data to transfer information to the endpoint to render accountability vital to delivering quality and assurance. By implementing smart labels, barcodes, and more, consumers or traders get an overview of all the major stakeholders in the coffee supply chain. Growers can enhance the quality, and traders can improve storage, security, and other factors necessary to deliver sustainable trust products and gain trust.
Nestlé has recently adapted to IBM Food Trust Blockchain for its select editions of Zoégas. Their premium coffee range is 100% Rainforest Alliance certified blend of arabica coffee beans from three origins – Brazil, Rwanda and Colombia. Through blockchain-recorded data, buyers of the coffee will now be able to trace their coffee back to the different origins.
Partnerships like these will be a way forward as many food producers, processors will adapt the journey of accountability, sustainable sourcing, traceability and transparency as the digital ledgers created in the supply chain independently provide reliable data beyond what is usually disclosed by any brand or company. This forms the basis for data based decision making and larger analytics for sustained growth of organisations.
Supply chain traceability for bulk coffee production and supply can be a complicated task. The supply chain is lengthy,has multiple actors in every cycle and there are multiple issues at every level. Many unethical practices are happening behind closed doors to meet consumer demands; mixing coffee lots, poor storage, and contamination are among the most common issues that directly affect coffee quality at the endpoint, leaving consumers unsatisfied.
As the food industry moves towards becoming robust with digital value chains, it is time that essential commodities and high-value most-traded products like coffee,cocoa,spices, rice and more are centralised by use of blockchain traceability and legit information is processed for faster response time to any recall or for consumer complaint redressals. Backing the supply chain with the digitised data and DLT(digital ledger technology) is the way ahead for food producers worldwide. Technology helps track and trace each step of the product life cycle from the co-op to cup, bringing transparency in the journey and bringing trust in the mind of the consumer.
More importantly, with tools like IBM’s farmer connect, this APP even makes it possible to contribute back to the grower. Essentially, you can know the farm that grew your brew and probably give-back to the coffee farming community by sending them a tip via the APP. This is truly a Circular Economy, we would want to nurture.
Today, at SourceTrace we’re happy to share our moment of pride and fulfillment, having made it as the cover story in the Food and Beverage Tech Review.
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'Traceability in 2020: Global Scenario with a focus on India'