The cocoa sector faces several sustainability challenges, not least that many smallholder farmers struggle to earn a living wage.
According to data from Wageningen University & Research, 75% of smallholder cocoa farmers in Ghana and Ivory Coast – where 70% of the world’s cocoa is produced – are earning well below the living income benchmark.
According to Swiss-Ghanaian start-up Koa, enhancing transparency in global supply chains could help turn the tide on cocoa farmer poverty.
“Over the last decades, supply chain scandals and cocoa farmer poverty have continued to rock the cocoa industry, leading to increased consumer demand and political efforts to improve transparency and accountability within the cocoa industry,” noted the start-up.
“Yet, consumers struggle to put their trust in brands and in their initiatives. While products carry certification labels, the inevitable question remains: ‘How can I be sure that farmers receive the money that they’re entitled to?’”
In response Koa, which is best known for its work in side stream upcycling – the start-up is repurposing the pulp and juice of the cocoa fruit for food and drink manufacturers – is making its payments to farmers publicly available.
Tapping blockchain for transparency
Koa has collaborated with seedtrace in Germany and MTN Group in South Africa to implement a new ‘tamper-proof’ transparency system that records payments made to cocoa smallholders.
To develop the platform, Koa leaned on Berlin-based seedtrace’s technology.
“Existing certification labels often validate transactions through non-transparent, error-prone control procedures, with farmers regularly only receiving a portion of the funds claimed to be earmarked for them,” said Koa. “To combat this, seedtrace created a system that removes the room for error and enables customers to monitor the extra income paid to farmers.”
Seedtrace verifies each transaction and stores it in an open, low emission blockchain.
“It’s a newly developed system, applied for the first time with Koa to enable consumers to access transactions in real-time,” seedtrace CEO Ana Selina Haberbosch told FoodNavigator
“What stands out in particular is that in addition to irreversibly storing the transactions on an open blockchain, we also verify every single one of them through the API with MTN. It is crucial to both consider there the data comes from and where is stored.”
Instead of having a person enter information on the blockchain, the system links the data from mobile money transactions – provided by Africa’s largest telecommunications operator MGN Group.
Traceability from ‘seed to shelf’
Together with KOA, seedtrace said its goal is to ‘turn supply chain transparency into the norm’ and enable businesses and consumers to make more sustainable choices.
“For all partners involved, the goal is to drive change across the entire industry and hence enable any company that is interested to take major steps towards credible supply chain transparency,” said seedtrace’s Haberbosch.
“Our system can be applied to businesses that pay via mobile transactions, but can also be extended to other forms of payment and supply
Providing fair payment is one of the start-up’s focus areas, the CEO stressed, but the idea is to make the final product, as a whole, traceable from ‘seed to shelf’.
A ‘breakthrough’ in cocoa
The international team hopes its initiative will set a new standard for cocoa payments.
“We’re convinced that the new system sets new transparency goals for the cocoa industry,” Anian Schreiber, managing director and co-founder at Koa told this publication.
Consumers are increasingly demanded proof of their food’s origin, we were told, and known certification labels are not up to scratch, the co-founder reiterated.
“With the new system, we can bring transparency to the next level and we can enable our direct customers to hop on board. For us, this is a breakthrough in the cocoa sector and how supply chains need to be in 2022 and in the future.”