A survey by the National Coffee Association finds that 64 percent of Americans, age 18 and over, drink coffee daily. After factoring in the less-caffeinated casual coffee drinker, this results in 400 million cups of coffee consumed daily in the United States. That may seem like a lot, until compared with most European countries who drink even more coffee on a per-capita basis. All this to say, there are a lot of coffee drinkers! Yet despite this growing coffee culture, most consumers have no idea where their coffee actually originates. While the coffee we drink may be advertised as “100% Brazilian Arabica,” this provides about as much detail as saying our leather shoes come from a cow somewhere in Brazil.
As consumers, we typically delegate the responsibility of knowing a product’s origin to the organization from which it was purchased. However, the organization itself is often unaware of the product’s origin and unable to verify any existing knowledge. Consequently, there are significant challenges in trust and transparency across the complete supply chain for coffee and other products.
One of the biggest challenges facing this industry is the use of unethical labor practices. While retailers may not buy directly from blacklisted plantations, they lack the full ability to trace and verify the provenance of each bean. Even the largest coffee retailers in the global coffee market cannot guarantee the use of ethical labor practices in the plantations that supply their coffee. Why? Because they have limited upstream visibility within a complicated supply chain of middlemen, resellers and shippers.
This is where blockchain comes in.
Blockchain has the unique characteristic of immutability. Once data has been written to the blockchain, it cannot be removed or edited. Couple that characteristic with the ability to automatically record data to the blockchain without human intervention and you have a cryptographically secure, tamper-proof record of transactions. In the coffee industry, there are two key components necessary to verify that beans have been ethically sourced.
In general, supply chains have been slow to adopt new technologies, with much of the transaction and legal documentation still paper-based. By digitizing these workflows not only can organizations reduce costs, they can also introduce trust and transparency into their supply chain. Coffee beans can be traced using simple radio frequency identification device (RFID) tags attached to the coffee bags or other transportation containers, which can be scanned at each point along the supply chain. Organizations can also record characteristics such as the coffee variety, processing method, bean grade and even sugar content to ensure the beans inside the container match the data associated with the RFID tag.
One of the biggest problems facing coffee plantations are lack of worker documentation, non-existent labor contracts and forced labor or low pay. When plantations utilize forced labor, one of the first things they seek to do is erase documentation associated with the workers; as such, the first step in addressing this problem is to document the workers. Once each worker has trusted identification represented on the blockchain, plantation owners can then create and record a labor contract that specifies information such as payment terms, expected work hours or output, contract length and labor conditions. Workers can then receive payment digitally, of which the receipt is automatically recorded to the blockchain and payment confirmation is shared with organizations downstream.
While blockchain is capable of recording the data, the success of this use case is predicated upon its adoption and enforcement. Similar to other labor-practice certifications, farmers and cooperatives would be incentivized to adopt this solution as a means of increasing the value of their produce. Since data including origin, product quality and labor data can be verified, the beans would inherently represent less downstream risk increasing their appeal to buyers. As farmers seek to differentiate from competition and increase the value of their produce, more plantations and co-ops may adopt the solution. Eventually, there may be a tipping point where an origin country may enforce heavier regulation, requiring exporters to submit origin and labor compliance documentation prior to export approval.
Moving toward reality
While ending unethical labor practices with blockchain may sound overly optimistic, many of the technological and social components are already in place to bring it to reality. With farm to shelf food tracing, supply chain digitization and identity consortiums already using blockchain to disrupt their industries, connecting the pieces has potential to drive social change on a global scale.
While there have been innumerous technological advancements over the last 30 years, none of them have been able to solve the problem of trust. With the advent of blockchain, however, we can finally begin to solve these problems — all that remains is connecting the pieces.
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