How to use blockchain to ramp up your global supply chain
Tue 3 Mar 2020 | James Orme
Killian Stokes is disrupting the coffee industry’s global business model with Fairchain. Marianne Lehnis investigates.
Killian Stokes drinks drip filter black coffee. He’s a university lecturer and co-founder of Moyee Coffee Ireland, a Greentech coffee company with big ambitions – to disrupt the industry’s global business model.
True to his Irish roots, on a night out, you’ll find him catching up with friends in a pub – the Old Spot in Dublin is one of his favourites.
He follows two main rules in life: “I think life is a gift, so you should relish it. You should suck the marrow out of life. You should cook and travel and swim and go skipping and running and play the guitar and absolutely enjoy your life. That’s your job – to be happy.
“The second rule is to make the place better. You’ve got to figure out what your purpose is, or how you as an individual have a specific role to make the place better for humans and the planet. Once you figure those two things out, circumstances allowing, you can have a great life.”
After a decade spent as a corporate fundraiser, Killian decided to pivot into Greentech in a eureka moment as he was hiking through coffee fields in an extinct volcano in Mount Elgon, Uganda.
“I experienced very, very poor people who were growing incredible coffee at altitude in organic conditions, pristine forest, in a beautiful part of the world. Their children were skinny and malnourished, the older people had health ailments.
“We journeyed through coffee fields and came out onto this tarmac road, there was a factory on the side of the mountain with a big Irish Aid logo on the front.
“It was a processing plant where farmers would bring in coffee as green beans to be shipped off to the West and roasted by big multinational companies. There was a billboard outside the factory, they were proudly announcing the days’ price, they were paying local farmers 30 cents per kilo of coffee. So the farmers were earning 1-2% of what you and I might pay in a supermarket for that quality coffee.
“As somebody who was there raising charity money for poor farmers, that was my moment of, why am I doing this? Why are we handing people parcels of charity when we should simply pay them a fair living income and let them put their kids into school and feed themselves?”
With over 400 billion cups of coffee consumed every year, coffee is the world’s most sought-after beverage. But the industry is largely controlled by conglomerates and systemic incongruencies in supply chain value distribution keeps coffee farmers desperately poor. Meanwhile, unsustainable farming practices are ravaging the land, clearing forests and depleting the soil.
“I was angry, I saw that this was Ireland’s contribution, paying into this trap.
“I decided to move into ethical trade. I didn’t quite know what it was, but I started to read and learn. A couple of years later, I met my co-founder in Ireland. We both had this ambition to create an ethical coffee company.”
Killian launched a fledgeling coffee subscription service called Beantribe, but rather than reinvent the wheel, he eventually joined forces with Moyee Coffee – the world’s first ‘Fairchain’ coffee brand.
The start-up, which launched in Holland in 2015, is redistributing the share of value on the supply chain; cutting out middlemen to put more profits into the hands of poor farmers. Blockchain is used to track coffee transactions and transport from the farmers’ fields in Ethiopia to the supermarkets – bringing an unprecedented level of transparency to an industry that typically underpays and oversells.
“We joined their family of social entrepreneurs help them grow into Ireland and the UK. There are more coming on in Spain and France to grow the brand into new markets.”
What do you hope to achieve with Moyee Coffee?
Moyee Coffee has three ambitions.
- To give farmers a living income by increasing their income from about $400 a year to $1,050 per year. That involves training farmers to improve the quantity and quality they produce from their small plots and helping them gain a footing on more steps within the value chain.
- Moyee Coffee is grown in forests, not fields, to preserve the land, promote biodiversity, rejuvenate the local environment, and offset CO2 emission from coffee production. In 2020, we have plans to replant 1 million trees on 800 hectares of depleted land which will become a new coffee growing forest. Coffee is a major cause of environmental destruction, we think it should be a force for good.
- We want to disrupt the industry and change the global business model by processing and roasting coffee in the coffee belt. This will put more of the value, jobs, and income from coffee back into the coffee belt.
How did you make it past the launch phase?
Every day is a school day. The first couple of years were tough financially. When we first set up Moyee Coffee Ireland, we had to have a couple of part-time jobs to pay the bills. I remember meeting one coffee businessman who was a multi-millionaire and he was telling us, you need to give everything else up and focus on this 100%. We weren’t in a position to do that. I had a mortgage to pay.
I’m not saying you need to start with money, because I think if we’d had more money, we would have just burnt our way through it. The lessons would have been more expensive. Of course, we’re going to make mistakes and spend money on things that don’t work, but let’s keep those mistakes as low cost as possible.
Where does blockchain come into the picture?
We can tell our ambitions as a story, but how do you ensure consumers trust and believe that?
We looked at certification…Rainforest Alliance, FairTrade, all these great certifications. But a lot of them have limitations and there are costs involved. If we look at technology, there’s more we can all do: we can connect with consumers and digitise every transaction on the value chain – the journey and the full process. And before you purchase coffee, you can pull out your phone, zap a QR code, and you’ll be able to see how much the farmer got paid for the bag of coffee in your hand.
Blockchain is like a lie detector. When you’re paying the farmers and recording the payment digitally on the blockchain, it’s locked in for all to see and none to change. That’s 100% transparency. We’ve launched an internal sustainability audit of our supply chain and we aim to share data for every stage of our value chain using blockchain. We can take our customers on the journey with us, and the strength of that is really powerful. It gives all stakeholders a level of credibility.
What are the challenges of tracking the supply chain with blockchain?
You’ve got the first mile of the supply chain and last mile. The first mile is where the farmers are. This has its challenges. You’re in the mountains of Ethiopia with poor farmers who don’t have much education or own a smartphone, and the connectivity isn’t great. But they’re very open to learning to work with mobile phones and being paid digitally. We offer to pay them 10% more for digital payment, it’s a pretty strong incentive, so I can see us digitising the first mile.
At the other end, in a London supermarket, the consumers all have mobile phones in their back pockets. They’ve got 4 and 5G, but they’ve got so much noise going on in their life. They have the technology but they don’t have the culture in terms of, why are they going to use our blockchain or app? That challenge is down to motivation. It’s down to brand aspiration. You need to tap into what is important to them and you need to move them, inspire them, and story tell.
Do you have tips for selling an ethical trade brand?
In the 21st century, your supply chain is your brand. Whatever happens in your supply chain, right down to the fisherman, the fish, the ocean – the environment the product comes from – is a part of your brand offer. In this day and age, you can’t claim ignorance to what you’re doing to the environment.
Blockchain can enable companies to move way beyond smoke and mirrors or greenwashing and get real numbers – the data. With blockchain, we can show all stakeholders where the carbon was added and where the money was paid out. It can even enable the consumer to give back a piece of their purchase price, and tip the farmers. That’s empowering the consumer to help shift the business model, change things economically.
We hope that with QR codes and mobile phones when you tap the bag of coffee, we can share stories and videos to show you how our coffee grows in a forest. What’s the return on your consumer actions and how can we articulate your impact the best we can? I’m a big believer that as we focus on getting that narration and story right, that will bring us a bigger tribe.
What advice would you give other greentechpreneurs?
Be ok with a bit of chaos
You will always have one project that’s probably unfinished. You can’t be a perfectionist as an entrepreneur. It’s like you’re in a kitchen learning how to spin plates, you’ve got 5 or 6 sticks in front of you. Maybe 4 of those sticks are spinning fine, but on the ground around me are lots of broken plates and there’s this one here that keeps breaking. You’re making a process out of chaos, you spend a lot of time in a room with these spinning plates.
Recharge your batteries
We’re not going to reach the top of Everest this year, it might take ten years to get there, but I’m ok with that because I don’t want to kill myself in the process or burn out. As things get bigger and better, I don’t necessarily want to earn a huge salary. I’d rather get to a point where I’m working four days a week and zinging it, but then having three days where I’m taking the dog hiking, or having nice long brunches with friends. To be able to give it 110%, you need to be able to recharge your batteries.
If Killian could teleport himself into his future, he’d like to see Moyee Coffee become a European coffee brand and the FairChain model expand into other supply chains:
“I’m also looking with some friends to start-up an initiative to reforest Ireland: buy land and plant oak and other native Irish trees and maybe build multiple parks and give them to society. I’d use them to create habitats and forests and fill them with trails for running and biking and walking.
“In five years, I’d like to find myself living on the edges of some of that land.”
At Blockchain Technology World, 11 – 12 March, Marianne Lehnis is taking part in a panel discussing how blockchain is disrupting supply chains. Registration Free. Subscribe to her newsletter, The Green Techpreneur, for more greentech insights.
Written by James Orme Tue 3 Mar 2020