January 28, 2021

Wake Up!... Your Morning Coffee Is At Risk

January 25, 2021 | Iliana De Lara | The INC. Framework

Can you imagine a world where your cup of coffee is $25 USD? Most families would no longer gather around the table to share stories while sipping a delicious cappuccino, business deals would no longer be closed around a cup of coffee, and we might as well forget about the phrase “let’s meet for coffee.”

Well, the idea is not as far-fetched as it may seem. There is a perception that coffee comes from large corporations, and that is not the case. 80% of the coffee you drink comes from small farms run by families, and for decades, coffee growers have been exploited.

As of today, farmers are paid somewhere around 6¢ per coffee drink. The next generation has absolutely no interest in a crop that keeps them in poverty, and they are leaving the farms in search of a better future. The average age of a coffee farmer in Colombia is 57 years old; there is no next generation right now.

It is time that we, as consumers, do something to help the people involved in this generational craft make a decent living on what has been their culture and their heritage for so long.

And that is where iFinca comes in. iFinca is building a more ethical supply chain between producers and consumers. It is a digital platform that uses blockchain technology to track and verify every step of the supply chain, from when the farmers sell their coffee to when you purchase it. Bridging the information gap and providing real data on how much a farmer was paid so that you can buy a coffee from a company whose values align with yours.

“The problem before our technology was developed was that there was no scalable way to get what they call the farm gate price,” said Alexander Barrett, founder and CEO of iFinca. In simple terms, the farm gate price is the amount the farmer receives upon delivery for his crop.

“There were people in the specialty coffee industry that dealt directly with 10-20 farmers, they knew what the farm gate price was, but they still weren’t revealing it because it was so bad.”

Barrett, an architect and urban planner from northern California, was pretty much burned out between a full-time job and grad school. So, he decided to take a one year sabbatical in Medellin, Colombia. His idea was to learn a second language, study emerging markets, read some books, and slow down.

Fincas in Colombia have been part of Spanish culture for centuries, and the term traditionally refers to a rural or agricultural estate. Three weeks after arriving in what would become his new home, Barrett visited his first one.

While talking to coffee farmers, he realized that producers were not treated fairly and thought, “Why can’t we build a mobile app that connects these guys as equal stakeholders?” A year later, that idea turned into a global company, operating in 8 exporting countries and many more to come.

“iFinca came through a friend who is an exporter,” said Santiago Muñoz, 33 years old. “She told me ‘I think this platform is very important, it is very innovative, they are shortening the gap between the producer and the final consumer’,” said the owner of Finca La Perla in the department of Antioquia, Colombia.

To better understand how iFinca helps the farmers, we need to know how the coffee price is set. The C-Market is the coffee commodities market; this is where the global coffee price is determined daily on international exchanges. This means that a coffee farmer anywhere can deliver his coffee to a purchasing point and receive at least the C-Market price of the day.

Historically, the C-Market has been below the cost of production. In Colombia, the production cost of a small coffee farm can be somewhere around 1.30 USD per pound. Last year the C-Market was at 92 cents per pound; right now, it should be about 1.20. This is the price that most farmers got paid before iFinca’s technology. It’s a losing proposition, and it is usually considered a poverty crop.

With this technology, farmers can get their actual worth. A fair price is agreed from the beginning between the exporter, the importer, and the farmer. Once it’s set, nobody can change it to benefit them later. That’s what blockchain does; it protects data. You don’t need to know who the other person in the supply chain is because you can trust the information cannot be changed.

“So, because we directly connect the farmer, we can validate through them, the exporter, and the importer what they actually got paid,” said Barrett.

Typically, participating farmers are paid in two parts: the C-Market price upfront, and a higher price will come later, usually from the exporter.

Today, the iFinca app is the only one in the coffee industry that provides both traceability and transparency at a scalable level. Traceability is the capability to go back to the farmer, and amongst other things, lets you know what the farm gate price was.

“What interested me the most about iFinca, is that they make sure each producer’s story is known,” said Muñoz, whose family has been in the coffee industry for eight decades. “It is a platform that humanizes our work. They want the coffee grower to receive what is fair.”

“Every decision is in the best interest of the farmer,” said Barrett, “Not iFinca, not the importer, not the exporter… the farmer.”

Each participating coffee shop receives a unique “Meet the Farmer” verification stamp and a free page in the app. From this page, you can see the farmers involved in the exact cup of coffee you are drinking, as well as photos and the history of the farm. The app allows customers to post messages to the farmer, and in many cases, the farmers answer back.

“If you are looking for a normal coffee, I do not sell normal coffee. I sell coffee that has a past. I sell a coffee with an entire year’s work. I am selling a culture, an inheritance, a legacy … that is what you are having in a cup of coffee from my farm. The work of 80 years; the work of my great-grandfather, my grandfather, my father, and now mine,” said Muñoz.

The iFinca app puts the power in the people’s hands. Consumers need to demand more transparency and traceability. “Go to your favorite coffee shop and say ‘I want to know who the farmer is and how he is being treated financially. And I want to independently verify it,’” said Barrett. “Demand more. You couldn’t do this five years ago, but now you can.”

“We need to bring awareness. At the end of the day, it is the consumer who gets to vote with his dollar.”

As a consumer you can download the app and look for a participating coffee shop near you. If you don’t find any (let’s keep in mind it’s a brand new company) you can recommend a coffee shop with the app. When you hit submit a QR code comes up on your phone and the barista can scan it, it will give them all the information they need about iFinca. Let them know that as a consumer this is what you want.

“You are looking at paying 5 cents more per coffee drink for our technology and almost doubling the farmers pay,” said Barrett.

“We’ve done studies, and people have said they’d paid up to 50 cents more for the technology and to know that the farmer is being treated fairly,” he added. “The market is there, people are willing to pay a little bit extra, as long as they know it is actually getting back to the farmer.”

“It changes their lives; they go from losing money, to making money.”

“I really am very enthusiastic about what iFinca can offer us. Trust me when I say I am in it for the long haul because they gave us the opportunity for people around the world to get to know us. They are interested in our well-being and in making coffee profitable for us,” said Muñoz.

“We want to be able to reach all global small coffee growers, approximately 23 million in the whole world,” said Barrett. “And we want to move in as soon as we can into other soft commodities like cacao so that we can make a difference in more people’s lives.”