Eight thousand miles apart, Shane Reilly and Killian Stokes came across the same problem.
In Peru, Reilly learnt how coffee farmers were being exploited by the “big-coffee” multinationals that dominate the industry. In Ethiopia, Stokes stumbled on the same issue.
“Coffee farmers were living in real poverty. But at the same time, you could only get Nescafé instant anywhere you went. All the good stuff was being exported,” says Reilly.
Farmers didn’t seem to be benefiting all that much. “We both realised how unfair the coffee industry is,” says Reilly.
According to a 2001 paper, “The Latte Revolution” by Stefano Ponte, the percentage of the income generated along the coffee chain that was retained by producers shrank from the 1970s to the 1990s.
Back in Dublin, Reilly met Stokes at the UCD Innovation Academy. They decided to set up a social enterprise to supply top-quality coffee in Ireland, while transforming the lives of workers along the way.
“Coffee production is notoriously complex and involves countless middlemen, each taking a piece of the pie along the way. Coffee farmers and producing economies are always at the short end of the stick,” says Reilly.
Now Reilly and Stokes have teamed up with the Dutch company Moyee Coffee and set up as the distributor of the FairChain coffee in Ireland, and next door in the United Kingdom.
Early next year, they plan to launch an app to let customers in Ireland trace their coffee right back to the farmer who produced it, through the roasters, washers and transport workers, to follow it through the stages it was sold. And to track where the money went on the way.
The Coffee Squeeze
Despite an explosion in interest in ethical sourcing, most of the coffee market is still controlled by big companies, says Reilly.
“They are not going to change,” he says. “In the last 30 years, they have squeezed more of the profits out of developing countries, even though the cost of coffee has gone up (for the consumer).”
Moyee currently pays 20 percent above market rate to its farmers in the Oromia region near Jimma, in Ethiopia, says Reilly.
“A big part of the problem is that an Ethiopian coffee farmer makes about €400 a year, making them some of the poorest people in the world,” says Reilly. In neighbouring Kenya, they make about €1,000 a year, which he says is equivalent to a living wage.
In the last 25 years, the seven major multinationals that control the coffee industry have removed production and packaging operations almost entirely from the coffee-producing countries, which has had a detrimental impact on those economies, says the Moyee impact report from 2015.
“The price of a cappuccino has exploded in the last few years, but coffee producers have seen none of that extra value,” says the report. “They’re earning less now than ever before.”
Moyee currently do more than half of their roasting in Addis Ababa in Ethiopia, and they plan to increase that to 67 percent by 2020 and 100 percent eventually, says Reilly.
By roasting in the country of origin, the company can share the end value of the coffee across the entire chain, says Reilly. “This is what sets FairChain apart from every business model in the coffee industry today.”
Following the Route
And if you don’t believe him, you’ll soon be able to check yourself.
From early next year, all Moyee’s coffee will be fully blockchain-traceable from the washing station in Ethiopia to its retail and office customers in Europe, says Reilly.
In other words, the company is using technology to create a network where everyone has access to information and to the supply chain but can’t alter it.
“Blockchain introduces a whole new layer of transparency to this process, making it easier than ever to make sure farmers are paid living wages,” he said.
“For the coffee industry, the person buying it at the very end of the line can see who the farmer was, what they were paid, what the roasters were paid, what the transport company was paid,” says Reilly.
Reilly thinks that this approach is better than that of organisations such as Fairtrade: “I think consumers are demanding that kind of transparency.”
Daniel Jones, who developed the blockchain technology called Bext360, says that he has also invented a machine to check the quality of coffee cherries, count them, immediately calculate the price for the farmer, and then pay him or her digitally.
Then, using existing technology like GPS, the route of the coffee can be traced, and Moyee will allow customers to see where bits of the price the customer pays for the coffee are broken off by people at each stage in the process.
The technology could even allow the consumer to tip the farmer, says Jones.
Jones says he is delighted to be partnering with Moyee. But he has also been approached by big coffee producers like Nestlé – a sign that interest in traceability is becoming more mainstream and “people will pay more to know where their food comes from”, he says.
FairChain versus Fairtrade
FairChain is different from Fairtrade.
It aims to offer a fair deal to workers at each step of the process in the chain of production, says Reilly. So it includes the people who wash the coffee, the roasters and the transport workers, not just the farmers.
In Ethiopia, farmers produce a premium coffee product but because it is normally roasted and packaged elsewhere, their economy doesn’t benefit as much as it could.
“All of the value comes from roasting and packaging and branding,” Reilly says. By setting up a roasting operation in Addis Ababa, Moyee is adding value to the Ethiopian economy and creating more sustainable jobs.
If farmers are selling enough coffee at Fairtrade prices, they should be able to make a living income says Peter Gaynor, executive director at Fairtrade Ireland. Mind you some farms are so small that they will never be sustainable, he says.
Fairtrade sets a minimum price per pound for coffee and adds a small premium which isn’t paid directly to the farmer, but is used for social infrastructure for the community. They pay an additional top-up if the coffee is organic, he says.
Being able to trace products back to the farm is not new, says Gaynor. But he thinks Moyee are doing something extra by producing the goods in the developing country.
“The novel piece is the value-added piece,” he says. “Anything that adds value is a good thing.”
Gaynor agrees with what Moyee are doing, but he says consumers should be wary of a general trend among some businesses towards direct buying of coffee from farmers.
“If the principles are honoured and people have a long-term relationship directly with farmers then great,” he says.
But research has shown that in some instances they are buying very high-quality products, so the farmer would command a higher price anyway. “It is not always evident what price benefit there is for farmers from direct trade,” he says.
Moyee coffees are not available in Dublin cafes yet, but they sell packs of coffee through some 20 independent retailers, including Listons in Camden Street, The Hopsack in Rathmines, Dublin Food Co-op in Newmarket and Smallchanges in Drumcondra.
On Monday in Costa Coffee in Smithfield, Sharon Devine does not seem interested.
“It’s not for me, because I’m mostly concerned about strength and taste,” she says, a cup of coffee with no milk in front of her. “I really hate weak tea or coffee.” Scanning barcodes would be too time-consuming for her to bother, she said.
Over in Third Space, Aine O’Meara says that having transparency as to where the coffee in her cappuccino comes from sounds “brilliant. […] I’d definitely scan it to see where it’s coming from.”
But she wouldn’t be willing to pay more for a traceable coffee. “The price of a cup of coffee in Dublin is already astronomical.”
[CORRECTION: This article was updated on 30 November at 13.16. Due to an editing error, an earlier version misnamed Bext360 developer Daniel Jones, as David. Apologies.]