A lot of our customers are large successful companies who use Frequentz technology to make their supply chains even more transparent and efficient. But some of our customers exist to help the smallest of the small growers in their battle to simply survive. The Ethiopian Commodity Exchange is one such customer.
There are about 20 million small farms in this East Africa country of 100 million, 80 percent of whom live on farms. Like poor rural farmers around the world, Ethiopian coffee growers have for years been forced to sell their crops to middlemen at whatever price the middlemen were willing to pay. Under this arrangement, the middlemen reaped massive profits while the farmers were caught in an unending cycle of poverty. The Ethiopian Commodity Exchange (ECX) was formed in 2008 to change these market dynamics.
Working with IBM, Wavetec and Frequentz, the Ethiopian government created the ECX to act a central marketplace that connects small-scale farmers to major international commodities buyers. The goal is to provide all parties with guaranteed quality, delivery and payment for their goods. By also working individually with coffee farmers and processors, ECX has also helped boost the volume and quality of Ethiopian exports and increase the national economy.
Meeting Upscale Market Demands
Increasingly sophisticated coffee drinkers around the world want to know more about the coffees they purchase. To meet that demand, coffee buyers are willing to pay premium prices for high-quality, environmentally friendly, and origin-specific beans. But buyers have to be able to prove this. ECX uses the supply chain information it gathers using Frequentz’s IRIS tracking platform. Through good labeling practices, buyers have access to information they can use to tell consumers the true story of each bag of coffee they buy: how and where it was grown, processed and shipped.
Improving the End Product Itself
ECX also uses the coffee supply chain data to maximize farmer success. Through data analysis, it can see the quality of coffee from each region. If it sees that one farm is producing a lower yield or lower-quality coffee, it can send in ECX experts to educate that farmer. If it sees that a processing station located near very fertile land is consistently producing low-grade quality, ECX experts can work with them too.
The detailed information ECX is able to capture across the supply chain helps farmers make better decisions about what kinds of coffee to grow. ECX can also see how long a shipment of coffee is spending at each stage in the production process. If it detects bottlenecks in the supply chain, ECX can help open them up.
Pushing Counterfeit Crops out of the Picture
In the past, criminals would sometimes hijack shipments of top-grade coffee beans and replace them with inferior beans. This would harm the reputation of the farmers, processors, shippers and buyers—and even of the entire country. ECX now uses tags on all bags of coffee, along with photos of each driver, driver’s license and vehicle to prevent counterfeit coffee from entering the supply chain.
Escaping the Cycle of Poverty
The primary goal of ECX’s full-traceability initiative is to help Ethiopia’s poor, rural farmers escape the cycle of poverty that their reliance on dishonest middleman has forced them into. We’re proud that our IRIS platform is currently being used to track more than five million bags of Ethiopian coffee. ECX plans to expand the program to support five million farmers.
Being able to provide traceability makes Ethiopian coffee more appealing to consumers, and makes it easier for coffee buyers to obtain Fairtrade or organic certification. This, in turn, raises the prices the farmers are able to get for their crops. ECX is also planning to extend the solution to deliver the same kinds of benefits to farmers growing other Ethiopian commodities such as sesame and haricot beans. To the country as a whole, it means more exports and more income. But to those individual farmers struggling to survive, it means food on the table and greater peace of mind.
About Charlie Sweat
Charlie Sweat serves as CEO, Chairman & Founder of Frequentz, the leader in global traceability solutions. He is an alumnus of the Stanford University School of Business (SEP) and a former Alumni Board of Directors. Prior to Frequentz, Mr. Sweat served as CEO of Earthbound Farm. During his 15-year tenure with Earthbound Farm, Mr. Sweat was able to grow its business from $10 million to over $540 million in revenues. Early in 2014, he led and completed its sale to WhiteWave Foods, Inc. on behalf of its shareholders, including private equity firm Kainos Capital, for approximately $600 million. Mr. Sweat has been recognized as a Regional Winner and National Finalist in the 2011 Ernest and Young Entrepreneur of the Year Awards. On top of his current role at Frequentz, he is a board member of two privately held companies, as well as Global Green USA, a non-profit organization.