Daily CSR
Daily CSR

Daily CSR
Daily news about corporate social responsibility, ethics and sustainability

Fairfood’s Blockchain Technology: Transforming Agri-food Industry for Smallholder Farmers


According to a study by the United Nations Food and Agriculture Organization, nearly half a billion small-scale farmers worldwide contribute to approximately one-third of the global food supply. However, many of these farmers live on less than $2 per day, barely able to provide for their own families. Consumers are increasingly concerned about fair and ethical business practices, but many companies in the agriculture and food industry find it challenging to establish brand trust and demonstrate sustainable operations, ethical treatment of farmers and food workers, and payment of a living wage.

Fairfood has responded to this issue by creating a blockchain-based technology platform named Trace, with backing from Cisco. Trace offers complete transparency throughout the food supply chain. It provides data and insights that companies can use to formulate strategies and programs for implementing ethical business practices, thereby enhancing the lives and livelihoods of small-scale farmers and food workers.

“The relationship between the buyer and the producer, to me, is the most important. It is good to have this transparency inside the cooperative; to be able to show what we are doing with the coffee, every step of the process. It helps build strong and dependable relationships with buyers,” said osé Francisco Villada (Panchito), Coffee producer and co-founder of Capucas.
Fairfood is dedicated to fostering change towards equitable and sustainable food value chains. They collaborate with agri-food companies to create innovative business models that benefit both companies and cooperatives, and facilitate fair value distribution models that result in increased incomes for smallholder farmers. At present, Fairfood connects over 300,000 individuals (farmers, workers, and their families) to domestic and international supply chains that influence their future. Their global operations extend across 17 countries and various commodities related to the cocoa, coffee, spice, horticultural, and fruit industries.

Peter van der Linde, Fairfood’s Director of Partnerships, discusses the organization’s technological evolution and how its collaboration with Cisco has enabled significant progress in digital inclusion while ensuring data privacy and security and granting smallholder farmers control over their digital information.

Technology plays a crucial role in Fairfood’s mission. It is essential to have technology that can securely trace a product from the farmer to the consumer. This end-to-end traceability is invaluable for promoting positive change in fair and ethical food sustainability, establishing brand trust through supply chain transparency, and facilitating market scaling. Engaging all stakeholders, from farmers to cooperatives, brands, retailers, and consumers, is critical for effecting real change.

Fairfood employs a partnership value chain approach to traceability, establishing data partnerships along international food corridors that benefit all parties. They place a strong emphasis on strengthening the position of farmers as a key component of sustainability strategies. Fairfood’s approach is unique in its focus on system change and its emphasis on both product traceability and publicly verifiable brand promises linked to individual products. These promises add tangible value in the commercial market and help build consumer trust. The technical infrastructure supported by the partnership with Cisco is crucial.

Cisco’s support has been instrumental in advancing Fairfood’s technology development strategy. With Cisco’s backing, Fairfood has enhanced its farmer-centric traceability solution that currently enables 46 companies to precisely track product origins and publicly share evidence supporting brand promises while improving farmers’ incomes. The partnership also facilitated the development of a data-secure NFC (Near Field Communication) card system combined with a mobile app for first buyers. This system allows the creation of financial track records for farmers and community members who lack a phone or bank account by securely digitizing proof of cash payments offline. This ensures that financial transactions can only be verified by authorized users.

In the markets where Fairfood operates, this concept empowers farmers and community members by allowing them to verify receipt of intended payments while maintaining control over their own data. It also opens up possibilities for financial inclusion for farmers without bank accounts.
“We are exploring ways in which these digital financial track records can be used for credit scoring to help secure basic loans for these farmers that were previously out of scope. It’s a massive opportunity with a lot of potential and benefit to both the unbanked farmers and financial institutions”.
Fairfood aims to enhance the livelihoods of one million people by 2025. They are making progress towards this goal through innovative business models. In 2022, Fairfood implemented its farmer-centric traceability solution with Verstegen Spices in their nutmeg supply chain from Indonesia. This new incentive structure pays farmers a premium for top-quality product and compensates them for providing digital verification of payments received. The program had two change pathways: one aimed at demonstrating the business case for fully traceable nutmeg products, and the other focused on showcasing the potential of incentives to help structurally increase payments to farmers. This case was highlighted in the report ‘Towards a New Paradigm’ commissioned by USAID (DDI) and the Gates Foundation.

The report highlights that after the initial hybrid financing model (public-private), key parties in the value chain are willing to continue to cover the running costs of the app/card system and sustain payments for both quality and data premiums. Farmer verified transaction records show that the quality and data premiums continued to result in an approximately $100 increase in income per farmer per year during the first year after implementation (March 2022 – March 2023).

However, Fairfood still faces several challenges. One of the biggest is proving the business case for fully traceable products, as opposed to relying on current sustainability labels. Some of these labels can be misleading, and many do not prove that farmers are being paid fairly. Therefore, promoting their farmer-centric traceability system and approaches is key to making real change towards sustainable and ethical food supply chains, consumer awareness, and brand trust.

Another challenge is legislation. Until recently, there was a lack of legislation around ethical and sustainable supply chains. Now, positive changes in this area across governments in several countries are helping Fairfood gain momentum in companies where sustainability was not previously a priority.

A final roadblock is the lack of data. To address this, Fairfood is partnering with cooperatives to help them digitize paper-based processes, such as enhancing their farmer lists and supporting them with means to digitize transaction records using their app and card system. As they collect data through the Trace platform, they can facilitate real change throughout the supply chain and help ensure that farmers are paid fairly for their products.