Blockchain Storytelling in Coffee

Problem

Coffee production supports low income families and rural communities across Colombia. Although Colombian coffee is among the best in world, inefficient supply chains, exploitive labor practices and complex financial relationships between the intermediaries too often means coffee farmers do not receive their fair share of profits.

Solution

Our solution provides end-to-end traceability for coffee supply chains using blockchain technology and IoT. With data transparency in coffee supply chain processes, we can bring accountability to the farming methods, labor practices, and the carbon footprint. With the platform, the issuance of certificate of origin generate data-driven storytelling connecting consumers and product.

Impact

It will not impact just on the quality of the coffee that we drink, but also on the lives of the families who grow and harvest the world’s coffee. Transparency in farming practices and supply chains will bring awareness to food safety concerns, equitable labor issues, and sustainable agriculture. 

According to colombian demographics around 21% of population who lives in rural areas are in a 14-35 range of age. In general, young population in the rurality are less prepared for a globalized economy than their rural's counterparts. Being unable to access education and social mobility opportunities.

Less prepared population in the coffee plantation zones means that the coffee harvests are not always aligned with international markets needs, due to the unskilled labor force in aspects such as sustainable labor practices (including gender equality) and best practices regarding the organic and premium certification in their products. 

Added to this, industrial farming practices and lax oversight of pesticide use have lowered the quality of some coffee produce, that could forests dry soil and higher costs in recovering the fertility rate of the plantations.

Lack of international standards and unpreparedness of peasants provoke the colombian coffee is mainly trade as a mere commodity and not as a premium brand worldwide, impeding that families could get a fair piece of the profit and depend less of volatility prices of the stock markets. 

The blockchain solution provides the following services: 

a) Product & Origin Authentication, the accountability with the blockchain infrastructure design can guarantee the entire process has not been manipulated by any.  

b) Supplier Authentication, by being interoperable with the provider's supply chain data systems is easy to corroborate the coincidence in the custody.

c) End-to-end Traceability, between the farm and the sales place (retail, café or e-commerce). 

d)  Digital Certification, the Non-GMO, organic and certificate of origin may be replaced by a more transparent platform. 

e) Disintermediation of brokers, the descentralization of the supply chain can easily integrate all the agents into the descentralized blockchain.

f)Data-driven storytelling, is the marketing aspect that enables to add more value to the product reliable of its origin and the practices beneath it.

Transparency in farming practices and supply chains will bring awareness to food safety concerns, equitable labor issues, and sustainable agriculture. A number of reports and commercial test cases indicate that consumers will pay a premium on products that are ethically sourced and sustainably farmed. Traceability will be transformational to supply chains and sustainable food systems. Our solution is scalable, commercially proven, and interoperable with existing inventory systems, including CRM and ERP systems.

The Project will map the entire value chain, from harvest to endpoint and integrated data on the various key stages into the blockchain. The farmers and their legatees, who will be trained on site, will be able to test the technology under real conditions, involving the tracing of its upcoming production. 

In parallel, jointly with Juan Valdez will be carried out advocacy and awareness-raising actions through reportage, interviews and workshops in the plantations. Through its projects, Human Leap promotes the exchange and dissemination of knowledge of 4th industrial revolution technologies in coffee zones.

With rural coffee organizations, with this project we propose to capitalize on project experience and develop a longer term plan with stakeholders to further develop the sustainable cocoa sector with blockchain technologies 

The accountability and authentication to guarantee the low-carbon and sustainable practices in coffee production could not be easily displayed in incumbent circumstances. That is why blockchain provides as a immutable, descentralized and self-reliant technology that may prevent counterfeit and fraud in certificates of origin, non-GMO and organic products. 

With the supply management 4.0 we will be able to bring these approaches to a wider audience, the colombian coffee will finally be able to have a higher value correlated to best practices pegged to the inherent production.

Right now, is a semiotical change in the way we commercialize organic and non-GMO coffee products that will bring for our farmers a leverage in comparison with other rural areas overseas. 

Our solution has to integrate blockchain with existing rural enterprises, so at the technological level, we can deploy interoperable solutions between public (Ethereum) and private protocols (hyperledger fabric or Bigchain DB, LAC Chain) with existing CRM's and ERP's in our clients, regardless its business size. 

By doing so, we are connecting the entire supply chain stakeholders in a transparent, accountable, and immutable decentralized network that may help us to understand in a non-tampered manner the multiple process present. At the same time, we are breaching the old practices by causing a beneficial disruption in the value of the products.

We can create an interdisciplinary solution holistically because we envision the product to escalate in multiple facets since the technological, social, legal, and business-oriented solutions.

Right now, is a semiotical change in the way we commercialize organic and non-GMO coffee products that will bring for our farmers a leverage in comparison with other rural areas overseas. This is a way to show the people they can trust in a traced product that exudes high quality. 

The innovation is we learn the solution must be focused in the product and not in the technology itself, that is why we consider the blockchain layer should be the refinement needed, but the product is what gives the value and social benefits accordingly.

Blockchain protocols have been used in the solution, this type of project is classified as a Dynamic registry paradigm for DLT. 

Specifically for the pilot we deployed nodes in the Hyperledger network to create a transparent and public display of the information, the back-end infrastructure have dealt with topology, decentralization and cloud services matters in the proof-of-concepts tested by the team. 

In the pilot we design the requirements about nodes' roles (validators and proposers), because the project requires good design and good tooling we do have services provided by Amazon Web Services as a cloud backup in the setup. 

The system will be interoperable with existing CRM's and ERP's in the colombian stakeholders, that integration must permit the ease of our scalability in the country and region, that will benefit completely the farmers involved in high quality coffees grouped in the National Coffee Federation. 

Blockchain can increase the efficiency and transparency of supply chains and positively impact everything from warehousing to delivery to payment. Chain of command is essential for many things, and blockchain has the chain of command built in.

According to Forbes, In the food industry, it’s imperative to have solid records to trace each product to its source. So, Walmart uses blockchain to keep track of its pork it sources from China and the blockchain records where each piece of meat came from, processed, stored and its sell-by-date. Unilever, Nestle, Tyson and Dole also use blockchain for similar purposes.

BHP Billiton, the world’s largest mining firm, announced it will use blockchain to better track and record data throughout the mining process with its vendors. Not only will it increase efficiency internally, but it allows the company to have more effective communication with its partners.

Currently there are providers such as Consensys, VeChain, Treum, Ambrosus, Arc-Net and many others that are implementing technology likewise in many sectors of industry and agriculture.

In business and economics, decentralization often refers to the ability to participate in a market and exchange value between peers without the interference of a third-party intermediary who most likely controls and restricts barriers of entry. As Ethereum co-founder Vitalik Buterin explains in his blog post “The Meaning of Decentralization,” blockchain is politically and architecturally decentralized, meaning no entity one controls it and there’s no central point of failure in its infrastructure. In this way, a decentralized supply chain would allow for a frictionless vehicle of business-to-business value exchange amongst even the smallest players in the industry.

This is especially necessary in the supply chain industry, which has historically suffered from a number of issues that hinder its efficiency. Its main roadblock is that current supply chains are unable to become agile, which poses a significant problem in a market in which they must be able to change their configurations quickly and continually to meet the constantly-changing dynamics of supply and demand. Another major disadvantage is that methods of communication tend to vary greatly, with some companies still relying on manual paperwork. As a result, data storage becomes locked away in in proprietary systems that don’t allow for collaboration.

Supply chain companies also tend to face cultural and organizational issues, such as executing operating plans due to corporate goals, board restrictions and the competitive nature of the market. Consequently, companies have revoked social contracts, mistreated skilled laborers and underutilized their professional talent assets.

This mismanagement has serious financial consequences: for instance, $4.2 trillion is locked up in net working capital in today’s supply chains.

When looking at its positive implications, blockchain is the most logical next step for supply chain managers and logistics providers. Blockchain was brought to the mainstream through cryptocurrencies. It creates an unchangeable digital ledger that provides a record of financial transactions in chronological order. This technology has been increasingly adapted to address gaping deficiencies in other fields, from education to voting to real estate. Through blockchain, massive networks of decentralized autonomous individuals and organizations can grow and operate seamlessly within a distributed operating platform.

Our blockchain services in supply chain commodities goods we are serving at this moment are: 
- Penta’s Blockchain Rice solution is featured in the USA Rice Federation’s winter 2018 edition of Whole Grain.
- Juan Valdez Café
- La Meseta Café.
We consider the next year to have approximately 10 companies involved in organic coffee exports aligned with our platform, in doing so, we can forecast our impact in the rural population will be around 100 families having the chance to register its products in the mainnet.
In five years, we envision being the leader in Hispanic coffee producers countries (Colombia, Honduras, Peru, and Brazil) in premium coffee organic, non-GMO, and gender equality certification. Meaning to have more than 100 companies under our network (including stakeholders) and with that, we can impact over 1000 middle and low-income families in our farm sector.

The goal next year is simple: to achieve sustainability and growth by tenfold in the number of services provided in the platform linking organic and premium coffee harvested by families across Colombia. 

Having our infrastructure layer as a service leverage we can aspire to create a wide implementation of the product at least in Colombia, with commercial traction on road it would be easier to attract big players to the supply chain ecosystem, by being agnostic our versatility with integrating to big agents allows our organization's equilibrium in operations. 

The goal in five years is to become the certificate issuance provider in Colombia, Honduras, Peru and Brazil for coffee premium with traceability and insights enough to predict trendings in the market that could promote better techniques and practices in rural areas in each country. 

In five years we must be the most prominent Blockchain B Corp in the Americas.

We as implementators are eager to demonstrate the scalability of the solution to create an important ecosystem lead by us where you can witness the added value in the product with a clear social content. 

The most important barrier is the lack of believing in the product, the customers and stakeholders are not persuaded enough right now to allow a full-scale development in a the way of a blockchain traceability platform. 

The main obstacle we have addressed is because is a decentralize process (farmers, transportators, warehouse, brokers, authorities, ports, retails, shipment, etc.) every agent had its interest and its own ERP and CRM software. 

The lack of knowledge regarding the technological implementation in rural areas is a cultural variable to take into account as well, this is why is so important to involved the local youth in the initiative. 

The IoT sensors presents some intercommunication troubles through the pilot's timeline, the tampering of the devices may threat the data collection in partial time lapses. 

We need to persuade the stakeholders by implementing pilots that demonstrates a profit-proven scenario, if we can demonstrate them certificate immutability and transparent could be translated in more consumer's trust ergo higher price, we would've succeeded in our quest to promote decentralization with blockchain in the coffee industry.

Having a sparsity in supply chain management softwares is the obstacle we are seeking to solve the most, by filling the gap between non-existent softwares in farmers and different ERP and CRM's in every agent in the chain. This solution is completely interoperable and integrated with existing softwares, that can be deployed either in private or public blockchains.

The evangelization process of the rural communities with the 4.0 technology is a process we have been doing since the past year, our main lesson learned is the people familiarized more with the technology if is plausible the benefit they can get from it. Our campaign will be pragmatic in that sense and we are going to address with adolescents and young adults for better understanding on technicalities needed to yield accountability in the platform.

Regarding the communications troubles that IoT devices may be facing, we have decided to use QR codes and existing code bars in SAP systems, for instance, that could made more scalable and client-friendly the solution. 

We are an alliance between Juan Valdez (the most important coffee brand in Colombia), Penta Blockchain (SME in America) and Human Leap (Colombian Startup). The parties involved directly in this challenge are Human Leap and Penta Blockchain, Juan Valdez is our ally in the sector of coffee in Colombia.

Full-time Staff: 

Felipe Montoya R - CEO of Human Leap

Daniel Malaver - CTO of Human LEap

David Ritter - CEO of Penta Blockchain

Camila López - Sustainability Manager Juan Valdez

Mariana Maldonado - Sustainability Coordinator Juan Valdez

Steve Melnikoff - CTO of Penta Blockchain 

Ed Kazmierczak - Product Owner of Penta Blockchain

Part-time Staff: 

Juan David Martinez - COO of Human Leap

Andrés Yepes - Public Relations of Human Leap

 William Zuo - Penta Consultant

Charles Cai - Penta Consultant

Maria Paula Dulcey - Marketing Director Juan Valdez

We are well-positioned to address the challenge and escalate our solution because we have learned from previous obstacles, this would be our second year of full deployment and we can assure we are going to apply these lessons learned: 

- The scalability has not been made with more than 10 nodes in private blockchain without an interoperable feature.

- The systems are usually socio-technically based, so we have to take into account the specifications of geographical circumstances.

- It is hard to show people the value of the blockchain layer, unless you can prove they are having more profits by using them (apply to companies and farmers). 

- The blockchain are just a mean, they are not the center of the solution. 

- Adding a blockchain layer to a system fundamentally changes its nature to a decentralized dynamic. 

- It is needed good architectural design and toolings.

We are partnering with Juan Valdez and they have gave us the inputs necessaries to start making pilots, the sustainability and social impact have permitted to interact and create impact in coffee plantations and with their respective farmers. 

So with Juan Valdez the brand campaign SEO and community management has been carried out, the commercialization of the tracked and certified products will be with channels of the entire company worldwide. 

So in this case, Juan Valdez is using the campaign as a socailly motivated campaign that could create new trends in consumer willings. 

Juan Valdez has also facilitated the interface testing of their own supply management database system (SAP-based), so right now we possess know-how in how to replicate a solution with the same characteristics.

Our key resources must be the capital to costs expenses, our IT infrastructure in cloud, online and VPN services is crucial with the optimal performance of the solution. Our Partners are the Blockchain implementators in America plus Juan Valdez in our country, of course, the most important key players are the farmers communities needed to be empowered by the technology deployment.

The beneficiary of the solution are the stakeholders presents in the supply chain: coffee producer companies, farmers, transporters, authorities, retails, cafés. The type of intervention will be a SaaS format. 

The customers who will pay for the solution will be every stakeholder agent in a specific premium coffee product, all but the farmers. 

The guy who purchases the cup of coffee will be connected by a storytelling to the farmers involved in the growing and manufacture process. Via the commercial package is going to be show our social impact in the visibility of the coffee growers. That will bring trust needed to obtain a higher value from there.

Cost Structure: 

Our biggest expenditure areas are the maintenance cost in the Cloud Services, VPN and VPS servers. Also, the development team budget is our principle priority to setup the integrations offered in our services and the evangelization of the communities. 

Our surplus will be invested in creating an initiative of a blockchain-certificated Colombia coati dung coffee plantation as well, which is the most expensive coffee kinds worldwide. The profits would bring huge impact to the community surrounding the project.

Solve can help us to create a more viable and easy-to-deploy solution for interoperability between blockchain and CRM's and ERP's. By doing so, we will be pioneers in that race globally, which has a major stars IBM, Microsoft, EY, PwC and others incumbents. 

We can use the team as an important leverage in our blockchain expertise and we can capacitate our IT department in first world standards in development. 

The business model and the commercialization of the product still needs some help, we need to work how to make profitable this initiative without being labeled as a luxurious gadget.

The distribution, in PR and promotion the help will be more than welcomed, we can compete with the existing solutions and all we need is higher exposure in social media, entrepreneur ecosystem and that may enable us to show the world the solution we are building. 

Funding is the vital aspect, we need to cover the high intensive work that is the backend integrations, we need to be able to jump start and be established as a well-respected consulting firm in the blockchain matters. For that, we need to raise some capital and reputation spike that could be given by obtaining an important sum of backing.

FAO could help us to escalate the solution not just nationally but regionally and globally. Bid Labs could also help in investing in the local ecosystem.

MIT Blockchain focus group would be great to be in touch, to see if we can implement some updates in the trending. 

Safi Sarvi by Takachar 

In our team is composed by mainly half of women intra-preneurs in Juan Valdez and one blockchain developer in penta blockchain, so we take the gender equality as a serious matter.

The coffee growers mainly are led by single mothers, this is why we think a program such like this we'll benefit mostly to women.

Our solution could have the impact to change at least more than three million people just in Colombia, if applied by scale this could mean a significant uptick trending in quality of life in Latin America (Honduras, Peru and Colombia for example). 

Blockchain as a disruptive technology will be applied in every aspect of the industry and agricultural processes, so it is going to be used in every sector of the economy and in Colombia coffee could not take the risk of avoid this.