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Let's talk about traceability....help us solve this problem

November 19, 2009
Category: in Skill-Building: Sourcing

In case our coffee wasn't enough to get your brain moving in the morning, here's a traceability teaser to wake up your brain. We are also here to enlist YOU to help us solve this on-mountain problem related to traceability of coffee when it is sold in parchment form. After reading, please submit your ideas in the Comments section of this blog post.

This scenario is based on a real situation observed just last week in the greater Mbale region of Uganda.
First, allow me to introduce the two sides of the traceability argument.

You are a farmer. You pick your coffee berries and have two options. One, you can carry your cherries to the nearest washing station, where you will be paid per kilogram on the spot. Alternatively, you can pulp the coffee, wash and dry it to "parchment" stage at home, store the parchment in your bedroom until the price is high or until you need the money, at which point you can call a local buyer to come by and pick up your parchment. While pulping, washing and drying requires more work, at least this way you don't have to carry the berries all the way to the washing station (these berries weigh 5 times as much as the dried parchment, which can be picked up at your house). Plus, holding onto the parchment acts as a bank; you can cash-in whenever you feel like it.

You are a coffee exporter. You can buy coffee in the cherry, allowing you to grade quality at the point of purchase (red = good, green = bad), wash and dry consistently for consistent quality. However, the buying season is limited; if you don't buy parchment as well then you will fail to meet the tonnage you require to fill your customers' containers.

THE SCENARIO:

In an effort to increase the quality of coffee purchased, an exporter invests in a community washing station. Drawing from a model which has seen success around the world, the importer turns operation of the washing station over to the farmer community, who can then control their crop one step further up the supply-chain, from cherry to dried quality parchment.

However, out of habit, each individual farmer begins using the washing station to pulp his coffee into parchment, and then takes the parchment home to store until he needs the money or until the price for coffee rises. The farmers say that they'll bring the parchment back to the washing station when they are ready to sell, but in the meantime they are using the pulper and washer for free.

The exporter, on the other hand, is concerned that the parchment which is brought back to them at a later date is different than the coffee which is pulped and washed in a high quality manner at the washing station. For the exporter to pay premiums for premium coffees, they need to know that the parchment they purchase has been processed well. However, from looking at the parchment there is usually no way to know that the farmers are not selling the parchment processed here (high quality due to washing station precision) to different exporters or middle men on the mountain at a premium, only to bring lower quality parchment back to the washing station to sell at equal (or higher) prices AND receive the "second payment" bonus that the washing station owner has in its contract with the farmers.

The natural conclusion for the importer was to take back control of the washing station, buy only red cherries and not allow farmers to bring in any parchment.

Is there any way to alleviate the concerns of the importer while keeping the washing station under control of the farmers, who often want to sell parchment?

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Tagged in: Origin Traceability