November 30, 2020

How Can Digitalisation Improve Profitability On Coffee Farms?

Digitalisation is becoming a large area of focus across the coffee sector. For producers, it means readier access to information and easier data recording, which can improve traceability, efficiency, and transparency. 

One of the biggest ways we see producers digitalise their coffee farms is through mobile applications. These offer a variety of different functions, from simple data recording through to agronomic support.

To learn more about how apps and digitalisation can improve profitability on coffee farms, I spoke to Jean Orlowski from Hala Tree Coffees and Michael Johnson from ECropOrigin. Read on to find out what they said.

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Coffee Farming Is A Business

Before we look at how technology and digitalisation can support farmers, we need to understand why they need it.

First and foremost: a coffee farm is a business. And just like with any other business, efficiency and profitability go hand-in-hand.

Jean says: “Everybody who’s participating in the supply chain is a business owner. And when you are in business, you need to make profit.”

When a farm becomes more profitable, the producer makes more money to support their family, reinvest in their farm, and boost the local economy.

How Does Digitalisation Support Farmers To Be More Profitable?

At Hala Tree, Jean grows Kona coffee. Kona coffee is the name given to arabica plants which are exclusively cultivated on the slopes of volcanoes in the districts of North and South Kona, Hawaii. 

“Let’s use Kona as an example. Usually the average production is 4,000 to 5,000lbs per acre. If, suddenly, you have a 10-acre farm producing only 2,000lbs, you can see that it’s a red flag, that there’s a problem. 

“So, that’s where we can start analysing the data and start helping the farmer increase their yield.” By increasing their yield, farmers have more coffee to sell – meaning profitability goes up.

Michael Johnson is the co-founder and COO of ECropOrigin. He says that TCCA allows producers to “consolidate everything in one place”. 

“Maybe you want to achieve rainforest certifications, maybe you need to prepare documentation for auditors and inspectors, maybe you want to go 100% organic… you can do all of that paperwork [through the app]. This smart technology allows the client to sync up the front office with their mills and warehouses in real time.”

When all of this information is centralised in one simple, easy to access place, coffee producers save more time. They can then focus on farming and making more money as a result. 

Keeping Track Of Data

Jean tells me that when a producer sets up TCCA, they enter certain pieces of data to be tracked. This starts with basic information such as the size and location of their farm, but over time expands to cover a number of different areas. “For example, if you have a large team, you want to know how much time they spend on the farm,” he says. 

“It’s also important to track everything you bring into the farm. This allows you to help your audience by communicating if you are organic, or if you’re fair trade, but it also helps you deal with the expense side.”

With TCCA, Jean says that stock, inventory, and sales are all tracked and adjusted instantaneously. “For instance, you produce something and your inventory goes up [on the app].” This allows farmers to track sales as well as their profit and loss in real time, and helps them to manage the farm more efficiently.

By keeping track of inventory, expenses, sales, and other key areas of production, producers will get a better, more comprehensive view of how their farm operates. This can then help them to identify areas where productivity could be improved, and increase profitability as a result. 

Traceability & Sustainability

Traceability and sustainability are two words that are becoming increasingly associated with the wider coffee sector. As a result, there is not only a market for traceable and transparent coffee, but specialty coffee consumers are generally willing to pay a premium for it.

However, while manually recording data about a certain lot may well be possible, it is often time-consuming, and there is no guarantee that will directly lead to a sale or a higher price for the producer in question.

By using a digital platform for data recording, producers can automate these processes and keep track of everything a buyer or consumer might want to know about a certain bean. 

Jean says: “[Using TCCA], we know who picked the coffee when it was picked, what kind of trees we use, what type of processing we use for our wet mill, how long we ferment for, what the pH is…  we have a lot of data that we record correctly at each step of those processes.” 

The same goes for sustainability; coffee that is certified as being both financially and environmentally sustainable is often more attractive to buyers, as consumers are generally willing to pay a higher market price. As well as supporting producers to record information about how their coffee is produced, Jean explains that ECropOrigin also provides its own certification program.

“You can actually produce a coffee that’s ‘certified by ECropOrigin’,” he says. “This means that we have all the underlying data; we know when the coffee was picked, when it was processed, how it was processed… every bag of ECropOrigin-certified coffee even has a QR code that you can scan.” 

QR codes have been popularised throughout the industry as a way of immediately accessing information about the producer and the origin to increase traceability and create visibility. By using a QR code, Jean says that stakeholders across the supply chain are able to “own the data” relating to a particular coffee.

Digital Coffee Marketplaces

So, you’ve improved the yield of your crop and maximised the quality for this harvest. You’ve then optimised your costs and your farm is running as efficiently as it can. What’s the next step? How do you increase profitability from there? 

Well, getting a better price for your coffee is a start. One of the options available to producers is selling their crop on an online marketplace.

To this end, Jean explains that his team developed a marketplace inside the TCCA app. He says that producers can use the traceability data recorded elsewhere in the app to showcase their coffees with a full suite of information for prospective buyers. These buyers can then purchase directly, or participate in auctions. 

Michael adds: “We’ve just started the marketplace to allow producers to buy and sell coffee.

“Then there’s the roasting application and cupping score information, and it has shipping container management functionality as well. So, if buyers really embrace the technology that we have developed, we’re confident that we could really help the farmer and the producer.”

How Do We Implement New Technologies?

However, implementing new technologies on a farm-wide basis is often easier said than done. Michael tells me that it’s important to take a “personalised approach”: one which recognises that different technologies support different farmers in different ways.

“It’s almost consulting,” he says. “In our case, it’s how we expand the marketability of the app. It’s a slow process, and it’s not really a money-maker, but we’re helping a lot of farmers.”

Jean adds that even if setting up a platform is easy, producers may not always be willing to do so. To some, the initial opportunity cost of connecting with an app or technology is lost time that could be spent otherwise directly managing the farm.

“The main challenge is that there is some setup,” he explains. “Apps cannot work by themselves. Producers need to describe their farms, they need to describe the field. That’s usually where we find actually some challenges to implement.”

Jean notes that even though they have tried to make using the process easy and quick, it can still be a barrier. Going forward, both he and Michael believe that partnering with co-operatives is the best way to implement new technologies on a wider scale.

Whether it’s through tracking inventory, logging data for improved traceability, or improving market access, digitalisation presents coffee producers with a range of new opportunities to maximise profit.

While driving wide-scale change to improve livelihoods for coffee producers is easier said than done, digitalising farms is a good first step. Using an app to streamline, centralise, and monitor different processes means the producer can spend more time focusing on growing coffee. This, in turn, will support them to improve the profitability of their farm. 

Enjoyed this? Then try How Can Your Smartphone Improve Your Coffee Experience?

Photo credits: Julio Guevara, Gisselle Guerra, Diego Najera, Alejandra M. Hernández

Perfect Daily Grind

Please note: ECropOrigin is a sponsor of Perfect Daily Grind.

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