This week GrainChain, maker of a software platform that helps track and manage agricultural commodities, launched a platform designed to help optimize the coffee supply chain in Honduras while putting more money in the pockets of farmers.
GrainChain tracks the coffee-making process from every possible step and angle. Farmers go to their local coffee cooperative to sign up to the platform and download the app (according to GrainChain CEO Luis Macias, who spoke to me over the phone this week, almost all farmers have access to smartphones).
After that they’re in the GrainChain ecosystem. Farmers can use the app to track their purchases of seeds, equipment, and more at local vendors, and also use it as a sort of digital wallet to procure short-term financing from local banks.
From there, GrainChain tracks the entire growing process. It sends out auditors into the farmer’s fields to make sure they’re growing everything with the necessary practices (i.e. no pesticides if they’re growing organic beans). When the beans are ready, they’re sent to a GrainChain-partnered warehouse where sensors sort the beans by quality and then track them as they’re dried and prepared for shipment at a local cooperative (also partnered with GrainChain). Once the sale is made the app automatically subtracts any loans from the farmer and pays it back to the banks. The rest goes instantly into the farmer’s pocket.
Previously, all of these touchpoints and verifications would be monitored individually and communicated piecemeal. That led to miscommunications and delayed shipments — which, in turn, delayed payments to farmers.
GrainChain, however, hopes to streamline the very fragmented coffee supply chain. The platform cuts down on middlemen and administrative legwork while tracking all transactions and verifications in one place. It can also unite bankers, insurers, coffee cooperatives, exporters and farmers all onto a single unified system and facilitate communication between the various players.
For the farmer, that translates to more access to funds from banks and quicker payments for their beans. For the purchaser, it’s a way to guarantee they’re actually getting organic or fair trade beans. Macas didn’t get into this, but it also seems like a smart marketing angle on the consumer end. Since they can track the journey of each batch of beans, coffee brands could leverage the transparency to add a personal touch to their beans — and charge the consumer more for them.
GrainChain is based in McAllen, Texas and last year raised a $2.5 million venture round. They began offering tracking services in 2013 and launched their first fully blockchain-enabled product in 2018. Their platforms are currently in use in the U.S. and Mexico, and the Honduran platform already has quite a few participants. According to Macias, about 160,000 coffee sacks headed out of the Honduras region over the next year will be powered by GrainChain’s software (that’s about 2 percent of the market). The platform is free for farmers to use but costs a fee for the insurer, the bank, the exporter and the cooperative
Blockchain has been heralded as a magic bullet to solve everything from E. Coli outbreaks to inaccurate seafood labeling to wine fraud. In the coffee world specifically, Starbucks has begun experimenting with the technology to trace coffee beans’ journey from “bean to cup” so consumers can see exactly where their cup of joe was grown.
But GrainChain is one of the first instances I’ve seen that uses blockchain to actually help the farmers themselves. And with the struggles of declining coffee prices and climate change, coffee farmers need all the help they can get.