How To Deliver Supply Chain Transparency And Equity In Farming
Throughout the pandemic, sustainability and quality are back in focus for many brands, since consumers are paying attention to these issues and are willing to pay for a better product. David Davies took time to discuss how AgUnity is helping by providing transparency to the supply chain.
What is AgUnity working on?
AgUnity takes simple phones and makes them relevant and useful for the very smallest farmers in the world. Functionally, these phones are no different from the phone that you or anyone else has in their pockets. AgUnity’s phones focus on the needs of the farmers — communication with the people they’re selling their commodities to. Without proper communications here, crops can go to waste due to miscommunications on pickup.
The other big thing we do is give people a pathway out of a pure cash economy by providing immutable receipts backed up by blockchain. Without AgUnity, this is particularly disadvantageous for women. Women tend to run the family farm and look after the kids. The problem arises when women go to the market to sell their harvest and come back to the village with cash. Everybody in her village knows she’s doing it, and in a lot of developing societies, they have kind of a shared effort person theory that if someone else has got cash, you’ve got a right to ask for some. And it’s hard for them to refuse. Additionally, there’s also the risk of being robbed.
AgUnity’s phones also serve as data collection devices when there is no connectivity. Phones can store transactions for weeks or months if necessary until that farmer gets connected. We have created both sides of an encrypted transaction.
How are you differentiating AgUnity from competition in the sector?
Many other technologies in this space are just a little bit too complicated or require bank accounts for transactions — both pieces are unfriendly for uneducated farmers, and creates another problem. When farmers can’t use these systems, this creates more of a differentiation in wealth, resulting in pushing the disadvantaged farmers further down the food chain. We’re different from the competition by focusing on making a solution that works for absolutely everyone — including the lowest income farmers with the least education.
How is AgUnity thinking about sustainability?
AgUnity is tackling sustainability in the supply chain. Our biggest market is commodity buyers, like Fair Trade International. Their big problem is that their consumers that want to know that they are buying ethical coffee. Currently, Fair Trade takes months to get reports from a group of farmers into their annual report, which no one reads.
We are streamlining this process by providing a QR code that customers can scan to see the farmers that grew that coffee, what Fair Trade (or other organizations) has been doing to help that community, and what those farmers got paid for it.
From the supply side, when customers scan the QR code, we are integrating a way for customers to provide a tip to the farmer. For context, the average cost of coffee is $2.80 a cup, the farmer gets roughly 2% of the $2. 30 years ago, the farmer used to get 10–15%. Over those 30 years, the price of coffee at the source has barely changed because the buyers have incredible power over the supply chains, and the farmers are small and can’t do anything. Big companies set a price and if the sellers selling mostly to these companies, then whatever price the company sets is what price the coffee will sell for. Companies have been extremely good at not giving the farmers anymore, even though the middlemen, the brands, the roasters, and the retailers are making four to five times more now. This applies across many commodities, and it’s one of the things keeping the developing world impoverished — they just don’t have bargaining power.
By providing a way to tip the farmers, it gives consumers the power to say, “I care about my farm.” For companies integrating these capabilities, they get great consumer data on who cares about where the products came from. As a result, farmers have the potential of their income doubling. AgUnity is thinking about the supply chain of sustainability.
What does the future look like?
Once you bootstrap a token, and you’ve got a facility for people in developed markets to interact with the developing markets, the sky’s the limit to what you can do in that scenario — you can buy stuff directly off the developing farms, you can lend money, and you can get paid back with the digital token. We’re trying to create a new vision for how people buying things from a developing country can directly interact with those merchants. Small amounts of income and support can fundamentally change their lives. I genuinely believe if we can show that to the developing world, consumers will support the developing world farmers, and that can lift millions of people out of poverty.
Big companies in many different sectors are announcing they want to bring transparency to their supply chains. The great thing is that this concept can be used for different goods, from fishing to mining.
During the pandemic, many impact brands grew massively. David mentioned that he knew several coffee companies that had 300–400% increases in sales, as consumers started buying online. When consumers switched to purchasing online, they had the time and capability to dig into the brands and the impact/sustainability piece. Quality and mission are resonating more with consumers, and right now we’re seeing almost an increase in demand for quality, provable, ethically sourced products. As bigger organizations start making changes, other companies will follow and consumers will start to expect that all companies are acting ethically and looking after their supply chains.
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