Using blockchain technology to support a transparent supply chain is not new, but Koa is taking it to the next step, by adding payment transparency into the service.
Koa is a Swiss-Ghanaian startup focused on products around the Cocoa fruit, capitalising on the waste and turning it into products they can sell to industry. They are already working with farmers, and have a mission to make a positive impact. Building a more visible and accountable supply chain was a natural step.
Blockchain in a nutshell
If you search for the term “blockchain” on our website, you’ll see that there’s a lot of activity around this technology. Think of blockchain as an onion, where every transaction that takes place is another layer. The more transactions, the bigger the onion. But because of the way the math works in this system, each layer (transaction) can be mathematically proven to be true. So if Alice sells Cocoa to Bob, using the technology to do it, then the platform records the transaction. If anyone later tries to alter the recorded details, there is simply no way to do that without the system recording that the chain has been violated.
If Bob paid Alice $100 for her Cocoa, and he later wants to change that number to $130, there is no way for him to do that, without invalidating the “blockchain”. A big red flag. In this way, all transactions are referred to as ‘non-repudiable’ that is to say, they are guaranteed to be a true reflection of what happened. Because there is a high awareness of what blockchain is among consumers, this is an excellent way to establish trust.
Businesses typically buy a blockchain platform from a specialist developer and then customise it for their own particular use case. This appears to be what Koa did, using seedtrace, a German company with a product that looks ready to go out of the box. Ana Selina Haberbosch, CEO at seedtrace says
We verify each transaction and store it on an open, low-emission blockchain. Together with Koa, we thereby set new standards assuring that the information is verified, cannot be manipulated and is accessible in real-time for all stakeholders.Ana Selina Haberbosch, CEO at seedtrace
The other partner involved in delivering the project is MTN mobile money, the digital payment system from Ghana’s telecommunications company
A mobile money transaction is confirmed in real-time, and recorded on a blockchain irreversibly. Consumers can see firsthand that farmers have been paid in full.
MTN’s mobile money was a transformative project in 2020, to turn the company into a digital operator. This included digitising the agricultural value chain. Not only do the farmers get paid digitally, avoiding the potential for corruption which was common with cash-based transactions, but because the records are digital, they can be added into the blockchain and made transparent to buyers who want to know how much the farmers are earning.
If this information, which is effectively guaranteed to be a true and fair account of the farmers pay, can ultimately be made visible to the consumer, then that could be a very positive message as part of an ESG programme. Consumers want to know they’re buying ethically, and this helps transform the message from a generic one about average wages, to one where you can say, this was made with products from this farm, and that family earned this much.
This is what Koa says about how they calculate this number:
How do we calculate the $ 344? Koa pays a fixed price for the pulp and we calculated how much do the farmers earn extra if they sold not only the beans but also the pulp. Here’s the calculation: One ton of beans results from 3.3 tons of bean-pulp mix (on average). 3.3 tons fill 220 buckets which Koa processes to recover the pulp. For each bucket, a farmer earns a minimum of GHS 10. Thus, for one ton of beans, a farmer earns GHS 2200 extra from the pulp. As of 9 February 2022, GHS 2200 are USD 344. Sources for prices: Fairtrade / Rainforest Alliance (and UTZ)
Instead of having a person enter information on the blockchain, it links the data from mobile money transactions. This combination allows us to verify additional farmer income, deliver full proof, and increase trust among stakeholders.Francis Appiagyei-Poku, Finance and Administration Director at Koa.
In the next two years, Koa hopes to increase their farmer base from 2,200 to over 12,000 cocoa farmers in its value chain.
Leading the way towards full transparency is Jeff Oberweis, the renowned pastry chef from Luxembourg, who sends consumers on a journey from cocoa farmers to the final product. A QR code on the packaging of the product containing Koa ingredients leads consumers to the seedtrace platform where they can see the additional farmer income.
In 2022, we want to have proof that people are paid fairly and that we work on an equal footing throughout the value chain. Koa’s integration of the blockchain guarantees total transparency and allows us to set an example to the industry.Jeff Oberweis, Luxembourg Pastry Chef and Koa customer