TOKYO – After scanning a barcode in the Indonesian Blue Korintji Coffee chain, paying customers can identify the farmer who grew their coffee, the company that roasts the beans, and even the logistics involved.
Powered by blockchain, the response of modern technology to building trust among an otherwise unconnected group, the initiative is an original idea of the Singaporean start-up Emurgo, which joined forces with Blue Korintji to create a premium product that ultimately increases farmers’ incomes.
Using blockchain technology would help Blue Korintji differentiate its product in an increasingly competitive market where consumption has almost quadrupled since 1990, company founder Budi Isman told Nikkei Asian Review.
Knowing which farmers made a cup of coffee, “in terms of history and for consumers, is very beneficial,” said Isman.
With people more willing to pay higher prices for products they can trust, Budi said Blue Korintji would also pay a premium if he could be sure of the farmers who produced the coffee beans.
As Asian tastes become more sophisticated and consumers are more concerned with the way their food is produced, including its impact on the environment and the working conditions of those involved in bringing it to the table, farmers in the region are adopting blockchain to help improve supply. transparency and add value to their products.
The Food and Agriculture Organization of the United Nations (FAO) is working with hog producers in Papua New Guinea to use the blockchain to prove that their livestock meet international standards and help them access international markets. .
The international charity Oxfam is also working with Cambodian rice farmers to help them use blockchain technology to promote fair trade by ensuring that farmers are paid well and that consumers can make informed decisions. more informed purchase.
While the churn rate for blockchain startups tends to be high, according to FAO chief investment officer Gerard Sylvester, “develop expertise in a specific area [such as agriculture] will be useful and even in this area, focusing on an important value chain will help maintain solutions. “
However, with many blockchain agriculture projects still in the pilot stage, challenges remain.
According to Emurgo Indonesia CEO Shunsuke Murasaki, one of the main reasons why the main obstacles to the introduction of blockchain are to help farmers understand what is ultimately a very complex tool.
“They need time to explain to them what the benefit is and what the concept of blockchain technology is,” said Murasaki.
Khim Sok, director of Oxfam in Cambodia, said another challenge was the fact that “the majority of farmers who do not use smartphones” and many blockchain projects had not yet established a detailed business model .
Still, added Sok, there was no lack of enthusiasm.
“All the players in this organic rice supply chain are interested in blockchain technology and are committed to implementing this project together,” he said.
Earlier this year, US tech giant IBM also announced the launch of an app that allows consumers to follow the coffee supply chain in partnership with major global players Beyers Koffie, the Colombian Federation of Coffee Producers and the Itochu Corporation.
For Blue Korintji Coffee, the decision to use blockchain technology was born from a social project aimed at increasing the incomes of the 500 farmers with whom it works near the Kerinci Seblat National Park on the island of Sumatra.
Farmers and businesses record their transactions on their smartphones based on each invoice, which is then stored in the database powered by the blockchain.
Blue Korintji’s parent company, Lembah Kerinci Developindo, currently has six cafes in Indonesia that grossed $ 117,000 in 2019, is looking to triple its revenues over the next three years and capitalize on what research firm Statista calls the “New discovery” of the young generation for locally produced coffee. . ”
While the Blue Korintji Coffee project is still in the pilot phase, Murasaki of Emurgo said his company is already in talks to sell the concept to suppliers of other in-demand products such as palm oil and beans. cocoa.
Founded in 2017, Emurgo is part of the Cardano project, centered around a blockchain platform developed by the American startup Input Output Hong Kong and is linked to the technology behind the cryptocurrency Ada.
According to Murasaki, Emurgo’s blockchain database could also be useful to banks and other financial institutions by providing data such as crop yields and sales needed to determine the credit worthiness of farmers.
Not currently having access to this data, Murasaki said the end result was higher interest rates for farmers.
“Each transaction was based on paper before this blockchain, which means they cannot build trust,” said Murasaki.
The new database, he added, would give them the means to “prove themselves”.