I recently chatted with Dave Behrends, the Founder and President of Farmer Connect. I asked him how it all started.
In 2017 I attended a coffee conference in Medellin Colombia. Professor Jeffrey Sachs, an economist from Columbia University, got up on stage and told the audience,
“Every day I go to a famous coffee shop and pay $1.95 for my medium sized black coffee, but how much of that $1.95 actually goes to farmers? The answer is five cents.”
The conference descended into chaos, with everyone arguing as to whether the coffee chain makes too much money, and why the farmers don’t make enough. But what was lost – and it was this that personally inspired me – was the second statement that Jeffrey Sachs made. He said,
“If as a consumer I was given the option to pay $2 for my coffee instead of $1.95, but I was sure that that the extra five cents would go back to the farmer, or back to the farmers’ community to either double their income or really significantly improve his livelihood, I would gladly pay that extra five cents.”
That was a light bulb moment for me. I realised that he was right. Consumers would be willing to pay a little bit more as long as they could trace that money flow back to farmers and their communities.
And has that vision now come to fruition?
Yes, it has. Farmer Connect currently offers three main components, or solutions: the first is Farmer ID, the second is an Enterprise Blockchain Solution; and the third is Thank My Farmer.
Farmer ID gives each farmer a self-sovereign digital identity that stores two types of credentials: one transactional and the other behavioural (in terms of sustainability). Having the transaction and the behaviour on the platform creates a trust score and a credit score that micro-finance institutions can use to determine the farmer’s credit worthiness.
In addition to the transactional and behavioural credentials, Farmer ID also has a link to digital wallets, bank accounts or other means of payment.
The Enterprise Blockchain Solution is the second component of the scheme. It records two types of data: prices paid at every stage along the supply chain, as well as what we call ‘the journey of the product’.
Thank My Farmer is the third component. It will allow a consumer to scan a QR code on his cup, or bag, of coffee and immediately see the journey that product has taken.
It will allow consumers to contribute to social projects in the farmer’s geography or to make a donation directly to the farmer who grew the coffee.
Do you think that consumers will use the Thank My Farmer app to tip a farmer in the same way that they would tip a barista?
I think there are consumers who will engage. The millennial and post-millennial generations may be a little bit more inclined to do so compared to older generations. Also, some countries have more of a tipping culture than others, so it could vary by geographies.
But we don’t want to limit it just to that. We’re speaking with brands who are saying that they want to give money to sustainability projects, and they want to allow their consumers to choose which project to support.
How will Farmer Connect increase farmer revenues?
Farmer Connect will enable consumers to engage in a new way with the supply chain and allow them to know that every cup they’re drinking is positively impacting the lives of the farmers who produce it. Once that happens, we believe that consumers will be willing to pay more for their coffee, and probably drink more.
This changes the game for everyone. Instead of fighting over whether the brand owner or the retailer make too much and the farmer make too little, we’re going to grow the whole pie. And as we grow that pie we will make sure that the farmers are getting a more than equitable share of it.
I believe that you are currently raising money.
Yes, we are going through a series A fundraising, looking to raise US $10 to 20 million, and we envision bringing in three to seven investors.
We’ve purposely gone out of our way to turn down Venture Capital and Private Equity money. Even if it means that we have a lower valuation we’ve put most of our focus on finding industry partners. We really believe that this should be done by the industry for the industry.
Dave, thank you for your time and explanations, and I wish you every success with the venture.
To see Dave’s latest blog on child labour click here.
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