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Honduras' coffee industry to integrate with blockchain

2019/9/26

The agricultural startup company GrainChain, supported by the blockchain venture capital firm Medici Ventures of retail giant Overstock, is reportedly planning to integrate Honduras' coffee industry by delivering its blockchain platform to local stakeholders.

Table of Contents

According to the press release on September 24th, the company has signed several agreements aimed at integrating the entire coffee supply chain in Honduras onto its blockchain platform to track the production and trading of coffee beans through smart contract systems.

Specific Approach

Honduras has historically been a major exporter of coffee, and the CEO of GrainChain, Luis Macias, mentioned that the initiative will start by capturing 2% of Honduras' $70 million annual exports, equivalent to 10-15% of the organic fair trade market, with plans to expand coverage in the future.

Specifically, GrainChain aims to achieve three main goals:

1. Increase trust between farmers and banks 2. Improve data accuracy 3. Enhance process transparency.

For the first point, as part of the initiative, GrainChain will also provide a digital wallet for local customers, allowing remote and unbanked farmers to apply for loans. The press release notes that banks will be able to use GrainChain for loans to small and medium-sized farmers, and insurance companies will use GrainChain to automatically execute records.

The second point is self-explanatory; under the GrainChain platform, participating growers will record coffee production in real-time using a mobile app. Each stakeholder in the system can track these beans throughout the process.

Lastly, the third point is crucial. Why is transparency so important? Simply put, this transparency contrasts sharply with the typically informal "handshake" transactions as mentioned by CEO Macias. For example, farmers may agree to sell their crops at a price of $5, but due to intermediaries, their final income ends up being much lower. This, in turn, affects farmers' ability to repay bank loans, thereby impacting the overall market value and prices.

GrainChain

GrainChain's promotion in Honduras in the coffee and high-tech industries, using blockchain to penetrate the global market, is simultaneously ongoing. Its platform connects Honduran bean growers with exporters transporting to roasters around the world.

In May, according to a previous report, Starbucks announced tracking its global coffee supply chain on Microsoft's Azure blockchain, aiming to benefit consumers from plantations to coffee pots and beans, with a focus on on-site financing of coffee production using a smart contract-based ecosystem in Starbucks' app.

Francisco Fortin, representative of loan guarantor Confianza Hondura, mentioned:

This is the first solution we've seen that allows banks, insurance companies, suppliers, cooperatives, exporters, and farmers to participate. I think this will significantly increase trust between supply chain participants.

Coffee farmer Delcid from Santa Rosa de Copan is the first to use GrainChain. He said:

It sounds really complicated, but I know it's something that will be very beneficial for us.

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