Fantine

Coffee is primarily bought and sold as a commodity crop, meaning its sale value is tied to international futures markets like the NYSE, and is not reflective of an individual farmer’s true costs of production. Farmers can be forced to sell their beans at a loss, which is unsustainable in many developing economies.Fantine allows farmers to transact directly with roasters and buyers, as well as to set prices for their coffee beans based on their real production costs. Fantine’s blockchain-based marketplace offers a new pricing index that is fair, open, and auditable through data stored in the blockchain ledger. This empowers coffee growers to break free from the top-down speculative pricing of traditional commodities, as well as removes some of the import/export middlemen who create unnecessary costs and market complexities without adding real value to the consumer.

Currently, even though there are widely varying levels of quality among beans, coffee is primarily bought and sold as a commodity crop, meaning its sale value is tied to international futures markets like the NYSE, and is not reflective of an individual farmer’s true costs of production.This is a major problem for coffee growers, who experience widely varying agroclimatic conditions that can drastically affect their real costs on the ground, but who still remain bound as sellers to the pricing volatility of far-flung international commodities markets. This means farmers can be forced to sell their beans at a loss, which is unsustainable in many developing economies where crop subsidies and insurance are not as prevalent to help protect growers.

Currently, coffee farmers earn on average less than 5% of the value that end-consumers pay for each cup of coffee—this is simply unfair, especially to the growers of the highest quality beans. There is also a huge disparity today between the coffee crop commodity pricing index versus the consumer prices of a cappuccino in the rich world. As a consequence, more than 25 million coffee farmers are feeling the pricing pinch.

Fantine is a blockchain-enabled marketplace that allows farmers to transact directly with roasters and buyers, as well as to set prices for their coffee beans based on their real production costs. This empowers coffee growers to break free from the top-down speculative pricing of traditional commodities markets by connecting growers directly with roasters and buyers, as well as removes some of the import/export middlemen who create unnecessary costs and market complexities without adding real value to the consumer. Buyers receive full transparency about coffee’s quality and origin, better prices and fresher coffee. They can also certify consumers that the coffee they are buying is truly fair trade, as its price is based on the real production costs. Our platform also allows consumers to send a tip directly to the farm. Fantine delivers unprecedented transparency into the coffee value chain, whose absence is one root cause of the inequality in the industry. Considering that many coffee growers don't even have a bank account, in the beginning we must remain flexible in terms of ways to handle payments with farmers. However, we are working on a digital wallet built on blockchain that enables unbanked farmers to access credits at low interest loan.

We believe that impact is at least as important as revenue, and that's why we designed Fantine specifically for creating an inclusive trade for smallholder coffee farmers. Differently to our competitors, we don't want to partner only with large-scale intensive coffee production cooperatives. In fact, due to the detailed care coffee requires, smallholders have the highest potential to produce great coffee, when trained correctly.

Fantine’s positive impact on society is manifold. We believe that government aid, charity and social programs should be only temporary solution to the problem and are not sustainable in the long term. That’s why at Fantine we are tackling the root causes of inequality. On the one hand, providing open and inclusive trade opportunities for all, and especially for smallholders, is paramount to ensure prosperity reach the billions people of rural communities who are currently living in extreme difficulty. On the other hand, reducing intermediaries permits farmers to sell their crops at higher prices.

In terms of social impact, this project helps improving peace and stability in producing countries, as Fantine mitigates or even eliminates altogether the farmers’ need to flee their country or region in order to achieve better living conditions. From an economic perspective, Fantine enables farmers to at least double or triple their income and hence permits a decent work and economic growth for growers. In terms of environmental sustainability, farmers are able to reinvest part of their earnings in sustainable production processes and preservation of local ecosystems, which in turn results into better coffee that can be sold at higher prices, thus creating even higher profits for farmers and hence closing the loop of this positive virtuous cycle, with the growers at its epicenter.

We are directly impacting at least five United Nations Sustainable Development Goals, namely: 1, 8, 10, 12, 15. The impact on local communities is huge: a sustainable coffee industry that is able to pay farmers fair prices motivates younger generations to stay engaged in coffee production, which in turn translates into less rural migration into cities. This also contributes to restore the social weave of rural areas and to create more stable livelihoods.

Together with market access, the lack of product and market information are among the biggest challenges smallholder coffee growers are facing today. Hence, providing connectivity, access to digital infrastructure and digital literacy skills are not enough for small producers to thrive in the digital economy. Indeed, it is market access, next to lack of product and lack of market information, the biggest challenge that smallholder coffee farmers face today. Providing open and inclusive trade opportunities for all, and especially for smallholders, is paramount to ensure prosperity reach the billions people of rural communities who are currently living in extreme difficulty.

Fantine is piloting first in Colombia, where more than 500,000 farmers rely on coffee production as their livelihood. The need for this solution is critically important for Colombia in particular,where coffee is often the only viable crop option for rural people to escape the entrapments of illegal crop markets and guerilla groups.

All the transactions occurring on our platform are recorded on the blockchain ledger, which can be accessed by any party involved in the value chain. Using a permissioned blockchain enables us to decide who can access this data, and what data goes into the ledger. Limiting the types of information that is recorded reduces the risk to data privacy and makes the system more readily acceptable to our supply chain partners. Therefore, transactions are visible only to the relevant parties involved, but most importantly they can be communicated to end-consumers as a sign of ethically sourced coffee through simple QR-codes.

This is not a logo or a marketing claim, this is real information supported by verifiable data. This is a fundamental change in the way coffee trading is done. Transparent trading is the most important step towards an equitable income for producers. Another benefit we get by using blockchain is end-to-end traceability. Cross-border trade currently relies heavily on manual processes and physical documents that are prone to error. Going fully digital permits to be more efficient, reducing costs, identifying bottlenecks and inefficiencies in the supply chain, and easing regulatory validation. This is particularly important in turbulent times such as those we live in today.

Finally, COVID19 has made direct trade more challenging, as traveling to origin has become more difficult; on the other hand, COVID19 has also triggered a new set of regulations and standards for supply chains, demanding trading companies be more transparent.

We are serving 3000 smallholder farmers in Colombia at the moment, we want to reach 30'000 farmers in the next year, and 3 millions in five years.

We believe that impact is at least as important as revenue, that's why two metrics that we consider relevant in our business are: the number of coffee growers served by our platform and the a. We designed Fantine specifically for creating an inclusive trade for smallholder coffee farmers, so the former measures our ability to being inclusive and reach smallholders. Differently to our competition, we don't want to partner only with large-scale intensive coffee production cooperatives. Due to the detailed care coffee requires, smallholders have the highest potential to produce great coffee, when trained correctly. The latter measures our ability to become a long-term and trustworthy partner for our customers. We have many other metrics that we use to track our business, such as unit economics, but also metrics on impact and sustainability.

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The founding team has the right combination of technical and business skills needed to succeed. Fantine is succeeding because of its formidable founding team, its skills and motivation, and its knowledge and contacts in the industry.

Fantine is committed to building diverse and gender-equal teams, where no one is under-represented because there is no actual majority. This includes encouraging female candidates and immigrants, among others, to apply for open positions. Additionally, among the more than 3000 registered farmers on the platform are under-represented minorities and vulnerable and discriminated communities, such as indigenous communities, former guerrilla combatants and female heads of household who lost their loved ones during the decades-long Colombian civil war between rebel groups and paramilitaries.

This initiative will allow us to connect with international leaders and like-minded social impact-driven entrepreneurs and receive feedback from world-class experts, which will in turn enable us to scale up my impact. We can contribute to this program in many ways, especially by discussing and sharing ideas with our peers, and contribute towards creating a more inclusive economy and in turn stronger communities. We'd love to join the powerful MIT Solve network and in turn receive access to funding, mentorships and other perks.

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Together with market access, the lack of product and market information are among the biggest challenges smallholder farmers are facing today. Providing market access to farmers and helping them access global supply chains is paramount to ensure prosperity can indeed reach the billions of people in rural communities who face extreme difficulties. Digital inclusion and digital literacy are necessary but not sufficient to provide true economic opportunity for smallholder coffee growers living in extreme difficulty.

We will use the HP Prize for Advancing Digital Equity to develop and implement our training program that provides directly applicable knowledge and education to coffee growers. The objective of our training program is to improve the yield and the efficiency of smallholders' coffee production. We use Machine Learning to tailor the training to each farmer specifically, and provide her with insights and personalized recommendations that help her to produce better coffee. The impact on local communities is huge: a sustainable coffee industry that is able to pay farmers fair prices motivates younger generations to stay engaged in coffee production, which in turn translates into less rural migration into cities. This also contributes to restore the social weave of rural areas and to create more stable livelihoods.

With the HP Prize for Advancing Digital Equity, we also plan to reach even more farmers in Colombia and bring our solution to washing stations in Africa and Central America.

The coffee industry is one of the most unjust chains: less than 10% of the value produced by the industry remains in producing countries. Furthermore, the "gender gap" in the coffee industry is among the biggest in the agricultural sector. More than 5 millions of women farmers in the world depend on coffee for their livelihood; 70% of the overall labor in coffee production is provided by women, up to 90% in field work and 80% in harvesting activities.

In Colombia, women own 25% less land than men; on average, they receive less years of schooling, and are more likely to be unemployed. After the Peace agreement with FARC guerillas, hundreds of women have gathered and joined forces to form cooperatives, and chose coffee production as their livelihood instead of illegal crops. In Rwanda, the genocide plunged the 80% of the population (mainly women) under the poverty line. Women had to play the role that men used to play before genocide, earning a living to fulfill their family needs. Women have been the key players in the reconstruction and development of the country, and they've also been the champions of Rwanda's reconciliation.

We promote coffee coming from women headed farms because gender inequality is one of the most tangible and threatening problems in the coffee industry. We support women by helping improve the quality of their coffee and the sustainability of their farms, which in turn results into higher farmers' profits, thus closing the loop of this positive virtuous cycle.

Fantine is a blockchain-enabled marketplace that allows farmers to transact directly with roasters and buyers, as well as to set prices for their coffee beans based on their real production costs. At Fantine, we use Machine Learning to provide farmers with insights and personalized recommendations that help them produce better coffee, and we also use it to generate a new pricing index that is fair, open, and auditable through the data stored in the blockchain ledger. This empowers growers to break free from the top-down speculative pricing of traditional commodities markets by connecting them directly with roasters and buyers, as well as removes some of the import/export middlemen who create unnecessary costs and market complexities without adding real value to the consumer.

We want to use the AI for Humanity Prize to reach even more farmers in Colombia, and collect more data points in Central America and Africa, and further refine and validate our model with new regions and countries.

Considering the fact that some coffee growers do not even have a bank account, in the beginning we must remain flexible in terms of ways to handle payments with farmers. The GSR Prize will help us develop a digital wallet built on blockchain that will enable unbanked farmers to access credits at low interest loans. Additionally, roasters will be able to support the farmers and cooperatives who produce their favorite coffee by financing them and pre-ordering their coffee in advance.

We also want to use the GSR Prize to struck new partnerships with financial institutions and young fintechs, in order to support roasters in the financing of their order of coffee, and provide roasters with short term loans through the guarantee of an order placed on our platform. The GSR Prize will be instrumental in boosting up our development efforts, and in creating the relevant training to educate farmers on its use.

The success of the El Zonte experiment (El Salvador's Bitcoin Beach) in training and educating local communities (including elderly people) on Bitcoin usage, demonstrates that it's possible to implement advanced technologies in rural areas by providing them with the relevant training.