A coconut’s journey

Last April we sounded the coconut-alarm. The months that followed felt like nothing less than a gigantic rollercoaster. A super interesting and informative rollercoaster, that is. Time to look back and take a look ahead on .

What this project was all about: the many coconut farmers that are living below or on the poverty line. Worldwide there are about 16 million smallholder coconut farmers. A significant part of them are living in poverty, which means they go to bed hungry and aren’t able to pay for the schooling of their kids for example. The Netherlands has a huge responsibility regarding this issue: we are the second largest importer of coconut-oil in the world. A large part of the oil we import is being exported again right away, but still we process 107 million kilos a year. Of all the products in Dutch supermarkets, 1 in 20 contains coconut. It can be found in candy, ice-cream, cookies, instant coffee and baby food.

Behind the 107 million kilos are 200.000 smallholder coconut farmers, most of them located in the Philippines. In the Philippines, about 56 percent of the coconut farmers are living below the poverty line. Together with their family, they are living off 1,90$ a day. Also: to harvest the coconuts, they need to climb palm trees that can grow to be 30 meters tall. Because the nuts of their own trees often don’t earn them enough money, many of the farmers are also working as climbers, on bigger coconut plantations. A dangerous job. An accident lurks just around the corner and can have disastrous consequences, both for the farmer and his or her family.

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Living wage
We wanted to learn more about the (extent of the) issue, so in April we were off to Indonesia – after the Philippines the most important coconut supplier of the Netherlands. On the islands of Java and Sulawesi we calculated living wage and living income for these particular regions. 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.

1,000 coconuts
In Indonesia we also met the traders, transporters and all of the 55 coconut farmers that participated in our pilot project. For this project we bought 1,000 coconuts from the farmers, which we then put on the blockchain with our partner Provenance, a British start-up that provides the tools to make supply chains more transparent. Long story short: with blockchain, every coconut got its own digital passport, that at any given time would allow you to check who the current owner of the nut was, where it had been before and who made how much of it.

For these nuts, the farmers received a fair price, 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. Using text messaging, the farmers had access to the blockchain. They all confirmed the promised price was actually paid.

Other than the farmers, the traders, transporters, us at Fairfood and eventually the consumer all had access to the blockchain. At some point, everyone in the chain had confirmed to – at one point – have been owner of the nut, and that agreed amounts had been paid. Every transaction makes up one block in the total chain of blocks – the blockchain. The fact that all blocks are connected with one another, makes it impossible to mess with the chain – for example, one party is not able to adjust the amount that the farmer confirmed had been paid.

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Transparency
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 a living wage is actually being paid.

The transparency that blockchain can provide is needed in order to make sure that the money we pay for our product is actually being divided fairly between all parties involved in getting the product to our plates. Right now, the journey of coconut, between farmer and our plate, is everything but transparent. Traders and processors are organized and informed better, which causes for dominance and for the fact that a lot of the money we pay for our coconut ends up with them.

Coconut alarm
The pilot was super successful and taught us a lot about the issues and possible solutions. Now we need to see this thing through. That’s why we sent some of the 1,000 coconuts to the bigger processors of coconut in the Netherlands – Unilever, Mars and Friesland Campina amongst others. These are the parties that eventually can make a difference by actually changing things on the demand side of the chain. We want to sit down with these companies and investigate how we can reassure more transparency in the chains and with that can ensure coconut farmers are earning a living wage.

The first meetings are planned, interesting connections were made. We are about to embark on another exciting journey. Of course we’ll keep you up to date on the progress and possible setbacks with new blogs. Keep you posted!

In the media
By the way, 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, De Volkskrant, de Leeuwarder Courant and Voor de Wereld van Morgen.