Blockchain technology to increase transparency in coffee industry

22.03.2019

Can we use the technology driving Bitcoin and other cryptocurrencies to create a more sustainable and transparent coffee industry? This is the subject of Project Manager Asger Strange Olesen’s study, which is backed by COWIfonden and will be carried out in cooperation with the University of Copenhagen, among others. The perspective is nothing less than disruption of the raw material world trade. 

Danes are the third largest coffee consumers in the world. On average, we drink four cups a day. At the same time, the selection of blends, roasts and grinds is greater than ever before, and consumer interest in sustainability is increasing.

But can we really trust labels like “fair trade” and “organic”?

“Not enough. Actually, the information on the bag is rarely useful. It’s a jungle, really,” says Asger Strange Olesen, Project Manager with COWI.

“The coffee world trade is controlled by four or five companies and there is very little transparency in the chain of transactions that precedes the cup of coffee in your hand. Half of the beans in your bag of sustainable coffee may be harvested under poor circumstances by struggling farmers in areas with a high risk of illegal felling of rainforests,” says Asger Strange Olesen.

Less power to the intermediary

In short, blockchain is a system for sharing and exchanging information in value chains that cannot be copied or manipulated. Each user has a unique code, which allows an unlimited number of users to work in the same chain without deleting the contribution of others.

Backed by COWIfonden and in cooperation with, e.g., the University of Copenhagen, Asger Strange will look into how blockchain can be used to secure higher transparency in bio-based value chains. The project will also focus on physical authenticity, i.e. coherence between the information flow and the physical flow of coffee.

“Imagine that each link in the coffee bean’s journey – what we call the value chain – is registered and documented without the possibility of manipulation along the way. Any customer or procurement manager in Danish supermarkets could use their smartphone to scan the bag of beans and see where the beans were grown, who picked them and how they got to Denmark,” says Asger Strange Olesen.

A long way from dream to reality

Higher transparency will allow buyers to directly pay coffee farmers instead of numerous intermediaries. Sustainable production is also expected to increase since blockchain guarantees that when the bag says “organic”, the beans inside are organic.

Similar tests are being carried out on everything from healthcare data to the global tuna trade. However, the technology still has to produce a persuasive success story that can pave the way for others. One of the challenges is that competitors are reluctant to share confidential information.

“Blockchain is like the Internet 20 years ago. It’s unsure what we can really use it for. If the premise is true for the coffee industry, it will open a wealth of exciting opportunities in other bio-based value chains such as maize, cocoa and other raw materials. I believe companies will climb on the bandwagon when the political and consumer pressure makes it evident that it is the only way forward,” he says.