Origin is a romantic word, somehow evocative beyond it’s simple definition as “the point or place where something begins, arises, or is derived.” In specialty coffee, origin conjures up images of mountainsides and mist, of canyons where bright red cherries peek out from under a jungle canopy.
And yet, the real work of coffee cultivation is more accurately reflected in a more utilitarian and pedestrian phrase: supply chain. As ambiguous as it is poetic, the word origin suggests little in the way of reality when it comes to farming. “Supply chain,” on the other hand, comes close to saying it all.
While all coffee farmers are “at origin,” not all coffee farmers occupy the same logistical geography within the supply chain. If your morning cup of coffee is the final link in that coffee supply chain, some coffee farmers are further away from that cup than others. In general, the longer the chain, the less the farmer will be paid relative to the market closer to the point of export.
Olam Direct uses technology and local leadership to remove links in the supply chain for remote smallholder coffee farmers.
Traditional Market Access vs Olam Direct
Regardless of whether or not a small coffee farmer has access to a milling operation, whether they are selling cherry or parchment, they need a buyer. Traditionally, there can be any number of Middle-buyers between the farmer and exporter. These intermediaries can come equipped with a wide variety of ethical standards, including none at all. In some countries, the least scrupulous are called “coyotes.” This is not a term of endearment. While all middle-buyers need to take their cut and make a profit, some take advantage of the fact that farmers do not know what their coffee is worth further down the chain to maximize their margin beyond what is reasonable or responsible. Even when farmers have some insight into market prices, they may not have any other options if they are in a remote location and only one buyer comes to town at the end of harvest.
Beyond this lack of transparency, these “traditional” systems lack reliability, especially in terms of when and where farmers are paid.
Olam Direct is a comprehensive reimagining of this traditional model designed to “empower producers by shortening supply chains, reducing intermediaries and fostering transparency.” The key to the program is a smart phone app that connects farmers to Olam, to daily pricing, and to record keeping, including the ability to track quality-focused agronomic inputs and their impact. Farmers can even get paid through the app.
Technology is an important part of the model, but Farmer Leaders are the heart of Olam Direct. Working on behalf of Olam, these direct trade facilitators are trusted members of the communities where they work. They gather information on farms and farmers and ensure transparency by sharing live pricing and storing transaction data.
Olam Direct not only benefits farmers, who are receiving higher prices as part of the program, it provides value to buyers who are always looking for greater transparency in their supply chain and greater specificity about farms and farmers. This increase in the value of transactions for both sellers and buyers in one of the reasons Olam Direct received the 2020 Impact Award from Innovation Leader and an International Innovation Award.
Olam Direct has also had some unexpected benefits. In response to the Impact Award, Siddharth Satpute, Group Head of Digital, for Olam said, “We are honored by this recognition. Our aim is to bring transparency and traceability to the agriculture supply chain. Many under-estimate how difficult it can be to establish direct buying relationships with farmers in very rural areas. And, equally, for farmers to connect to large exporters.
“Through our Indonesia pilot in 2017, we understood that a farmer’s’ greatest needs are: ‘How can I get a better price?’ and ‘Who can collect and pay me on time?’ Olam Direct is the resulting model, although we continue to learn and improve with every new supply chain and country’s specific circumstances. Crucially, the platform’s reach and flexibility has proved invaluable during COVID-19 as we have been able to issue health advisories and raise awareness about the virus through in-app notifications and news in the farmers’ local language.”