A Case Study for the Use of Blockchain Technology for Philippine Coffee Growers

Published on January 31, 2019

The report will offer an overview of the Philippine coffee industry, a case study of an MSME in the Philippine coffee farming and exporting industry, and an emerging technology company attempting to bring trade transparency and efficiency to the coffee industry.

Highlights
1
In a context where “fair” and “free trade” coffee is a profitable marketing trend and the demand for specialty coffee is booming, few small scale coffee growers have access to this opportunity due to trust failures, inefficiency, and incentivization
2
The obstacles for growth identified by major stakeholders in the Philippines coffee industry are: lack of government support, poor farming practices, and a lack of training for coffee farmers – in addition to the bureaucracy associated with exporting
3
Due to a lack of available information and data – there is little accountability in the coffee exporting industry. There is often a mismatch between warehouse and received inventory, and most farmers are unaware of the value added of their product. Most profits are made by middle men and suppliers rather than small scale producers and roasters

Blockchain technology can create a digital record of the origin of a coffee crop and follow that batch through processing, export and roasting. The system is resistant to tampering and is visible to everyone in the chain. The niche market for high-grade, specialty coffee is lucrative and relies on buyers knowing exactly where the coffee is grown. Entering the specialty market can boost incomes of small-scale farmers who have not experienced the benefits of a spike in the global retail price of coffee in the past decade. Accurate information is an untapped driver of value for these farmers. Blockchain technology could help address three problems in the sector:

  • Improving data quality and transparency;
  • Increasing financial literacy for farmers; and,
  • Improving access to bank loans for MSMEs.

Conducted by Kai Chang and Scott Tupper of Yave.io and Carmel Laurino and Lacy Audry of Kalsada Coffee, this research report is one of three published for the APEC-Canada Growing Business Partnership around the theme of market access, with a focus on the Philippines and other APEC economies. 

“The breakthrough of MSMEs into the global marketplace is a challenge no single technology can resolve. It requires widespread adoption, harmonization, and infrastructure buildout to the benefit of all stakeholders in the value chain. It requires bypassing service providers in the chain who don’t add value. Getting rid of these intermediaries can be driven by vertical integration, education, and technology.”