A coconut’s journey

1000 coconuts on a blockchain

In cooperation with the British start-up, Provenance, we started a (coco) nuts campaign! We bought 1.000 coconuts from the farmers in Indonesia, and then put them on blockchain. Every coconut got its own digital passport on the Ethereum blockchain. From that moment on, the coconut’s journey was completely transparent. At any given time anyone could check who currently owned the coconut, where it had been before that, and how much the farmer earned for it.

Within regular sales processes, finding out what a coconut farmer all the way in Indonesia has earned from his product is practically impossible. With blockchain, even consumers had access to all the information regarding the coconut’s journey. A completely unique process!

Een eerlijke prijs

The farmers received a fair price for these nuts, that consisted of the usual fee plus a so called Living Income Premium – the amount that, according to our calculations, is missing in order to reach a living wage.

In April 2017, Fairfood went to Java and Sulawesi in Indonesia to find out what this living wage and income looks like on those islands. A living wage means that people who work under a boss earn enough money to make decent living. A living income says something about someone who is self-employed, like a lot of the coconut farmers. After calculating the living wage and income, we were able to find out how much a farmer should earn per coconut in order to make a decent living.

Een geverifieerde prijs

55 small-scale coconut farmers were involved in this project and they were able to personally confirm that they were paid the agreed upon price for their coconuts. The confirmation process is verified with fingerprints and anonymous verification through SMS. Blockchain also made visible the fact that a number of farmers indicated that they had not received the agreed upon price, and all actors along the chain could view this information. Fairfood was then able to act on this information and ensure that the correct payment was made.

Besides the farmers also the traders, transporters, we at Fairfood and eventually the consumer all had access to the blockchain. In the end, everyone in the chain confirmed that they owned the coconut at some point and that the agreed upon amounts had been paid. Every transaction was recorded in a public blockchain, making it no longer possible to cheat – for example, a party cannot unilaterally adjust the amount that the farmer received for the nut.

Transparantie

With this pilot project we wanted to prove two things: that blockchain can be used to trace foodchains and that in this form, blockchain can guarantee that a living income has actually been paid out.

The transparency that blockchain can realise is necessary for a fairer distribution of the money that we pay as a consumer for our product here in the Netherlands. Right now, the journey of coconut, between farmer and our plate, is everything but transparent. Because most of the other actors in the chain are better organised and informed, they have much more power in the chain, resulting in most of the money we pay for our coconuts to end up in their pockets.

In de media

The pilot was super successful and taught us a lot about the issues and possible solutions. We were exceptionally pleased with all the attention we got for the farmers in the Dutch media. From a live-item at RTL live, to amazing articles in Trouw, AFG, EVMI and Voor de Wereld van Morgen

Vervolgstappen

After this successful pilot, Fairfood has continued to develop blockchain solutions in order to shed more light on the food industry and the underpayment of small-scale farmers. In the meantime, we have developed our own food traceability platform, Trace, so that we can ultimately make this technology available to as many food companies as possible.

During the coconut campaign, we sent some of the 1,000 coconuts to the larger coconut processors in the Netherlands – think Unilever, Mars and Friesland Campina. These are the parties that can ultimately make a difference by actually changing something on the demand side. We hope to sit down with these parties soon and investigate together how we can make their chains more transparent with Trace so that we can ensure that the farmers earn a living income.