supply chain Archives — Carrington Malin

Agricultural commodities typically pass through many intermediaries before being offered to consumers as a packaged product. For example, smaller coffee and tea farmers in developing nations may sell crops to larger producers, before produce changes hands between a number of exporters, importers, traders, roasters, distributors and retailers. The complexity of the supply chain and lack of technology at the source makes it prohibitively difficult to inform the consumer exactly how and where coffee was farmed.

In our globalised economy, commodity prices may change with seasonal highs and lows in consumption, especially good or poor crop harvests in the countries where its grown, currency exchange rates and new import tariffs. Coffee prices enjoyed a high of $3.06 per pound in 2011, but have been unstable ever since, falling by more than 40 per cent over the past three years to a low of less than $1 per pound last June.

Although prices have increased during the past few months, the extended instability of global coffee prices has left farmers in Africa, Asia and South America struggling to stay in business. Consequently, many farmers simply aren’t able to pay the wages to workers that they would like to.

Under normal circumstances, a coffee or tea drinker in Europe or the US may only be aware of the product brand and price, or perhaps the commodity prices reported in the news. Consumers may feel the impact via changes in product pricing, but few are normally aware of how swings in commodity prices affect the farmers and farm workers.

Fair trade labelling has helped some promote transparency and benefited fair trade farmers. However, it doesn’t solve the issue of how to bring transparency to global supply chains.

If these new initiatives using blockchain are successful, then consumers may soon be offered more certainty that the food brands they buy not only taste good, but are good for the farmers too.