Digitalization: Extracting More Than Coffee | 25, Issue 15
The concept of “digitalization” is not new to coffee.
ELISA CRISCIONE examines the digitalization in coffee and suggests a shift in the current data collection model that could help it become a tool for more equitable value distribution.
For some companies, the process of “digitalizing” began more than a decade ago, when they sought digital solutions to speed up and better monitor their internal operations. As our digital world began to grow at an exponential pace and the idea of digital transformation became unavoidable, the idea of moving from simple digitization— making anything (text, pictures, sound, etc.) processable by a computer—to digitalization— the use of technology to change a business model[1]—has increasingly attracted the attention of the coffee industry in recent years. And, for those who seek to combine the digital and human components, where data is a vehicle and technology a facilitator in responding proactively to people’s needs, digitalization offers us a chance to pursue systemic change.[2] As we’ve all become familiar with our new reality of the information economy, we are ready to talk about the opportunities of digitalizing coffee.
Everything Starts with Data
Data is the backbone of any digitalization process, a direct response to the digital evolution of our society and the escalating interest for information. In coffee, we’ve already been collecting different types of data for quite some time: from roasters who use technology to track a roasting curve to a cooperative monitoring rainfall, nearly everything we do has an opportunity to become a point of data. And this data is an important tool in communicating with others—consumers are looking for products that can inspire their trust; industry players want to make sure their coffees are seen as equitable and sustainable. While data collection may seem like an obvious response to this increased desire for transparency, collecting this kind of information comes with a price.
Coffee is a global value chain, which involves many steps and many professionals connecting through the same beans. When we translate this globality to digitalization, everything starts at origin. Data collection begins with individual producers and farmworkers, who find themselves at the first step of the value chain and play a key role in building the rest of the story. Without getting into too much discussion about what sustainability is and isn’t, there’s no doubt that there is a growing demand for ethical consumption and a good deal of consumer interest in understanding whether a product they purchase is “sustainable.”[3] Without the information coffee producers provide, (digitally) guaranteeing anything about a coffee is not possible.
In specialty coffee, our industry has often promoted a narrative that direct trade and personal relationships are what makes coffee sustainable. However, these models become difficult to track when buyers start purchasing from a growing number of diverse countries of origin. This is where so many see opportunities for coffee’s digitalization, in an attempt to make processes smoother and to better respond to market needs.
Collecting Data in Practice
Under this model of digitalization, data is collected on tablets and smartphones from cooperative representatives and field agents who visit each farm. Then, the information gets stored on different digital platforms. But where does it go after they finish collecting it? When I had the opportunity to ask this question to a handful of cooperatives, the answer was always very consistent: “We share data with all our partners: certification auditors, buyers, NGOs, etc.”
So, that’s it. Producers provide individual data points, which are then aggregated by field agents and, in a blink of an eye, shared with other industry players via a system or platform. This information includes GPS location, quality, and quantity of production, as well as compliance with voluntary sustainability standards, among other things. Everything flows towards the end of the value chain, without coming back—there is no opportunity for producers to see the sum of their data, or to utilize its implications. This data collection model guarantees industry players at the end of the chain that the coffee is complying with their needs and the needs of their customers, but it doesn’t guarantee anything to producers and cooperatives.
It is important to state that while this model of collecting data is problematic not everything about it is bad. In the current structure, digitalization allows cooperatives to ease certification auditing, to connect with other buyers, and mitigate risks caused by climate change. We also know that data generates additional value: studies show that coffee sold with identifying information (data!) can achieve a higher price premium[4] and potentially grant access to different financial services. However, producers bear enormous risks in the sector. If something doesn’t work—a request for a loan is denied or a buyer decides to go for a cheaper coffee— they still made the effort and shared the data, but are left with nothing more.
We also forget that it takes a lot of time for producers to answer all those questions and for field agents to compile the answers. Imagine a survey with at least 12 to 15 questions to collect demographic information (name, gender, date of birth, household members, etc.). Then add to that other surveys with other questions about affiliation to certification standards, traceability, cost of production. As it often takes more than one visit to collect the digital equivalent of “a full picture” of a single farm, it’s not complicated mental math to imagine the kind of investment we are asking producers to make for data collection alone. Even if a producer or cooperative achieves additional value for their coffee based on its associated data, it’s highly unlikely that the price premium covers the full cost of data collection and sharing.[5]
An Extractive Model
Though there is no doubt that digitalization can speed up activities and allow for easier access to information, services, and markets, would you do this for free? Collecting data is extremely time-consuming and, often, is a response to a top-down approach that originates from end-market actors. On top of that, once data has been shared with other players, it is oftentimes monetized further and used for marketing purposes. What about data providers (producers) whose effort and openness was paramount to make this happen in the first place? In many ways, this data collection model reinforces the deeply ingrained power dynamics which digitalization was supposed to disrupt.
Now, if we take a step back and dig into why we are digitalizing coffee, we read that technology is an opportunity to create a more equitable value chain, especially with digital implementations at origin.[6] According to Ensuring Economic Viability and Sustainability of Coffee Production, the “mainstreaming of e-commerce technologies and mobile applications may provide farmers with an opportunity to depart from otherwise unsustainable coffee business models.”[7] Nonetheless, being good allies with producers and cooperatives means moving beyond seeing them as data providers or simple beneficiaries of these solutions. As a result, data collection (and digitalization) has become this extractive process where it is considered “normal” to ask producers to feed their data into different systems and not invest back into useful reporting. Even though many systems grant producers ownership of their data, most don’t provide access to other data in the system or a comparative overview. By seeing their data in context with other producers or cooperatives, these systems could provide them with more comprehensive insight and knowledge.
What if we wanted to use technology to make the industry more equitable? Without a doubt, if implemented properly and inclusively, digitalization has the potential to narrow both economic and social divides. There are many ways in which we can better engage with producers and cooperatives with this intent—first, by making them the owners of this process. Rather than asking producers to only share the data buyers need, we could connect with them, ask them directly about their needs and the benefits they want to obtain from digitalization, and build a system that creates useful information from the data they share. We have to embed models whose goal is to translate the information back, enhancing the decision-making power at origin. The old saying “knowledge is power” still rocks in this context.
A For-Profit Tool?
Digitalization is an extremely dynamic environment. There are things that we are doing very well, but others that we can improve, including the way we collect and extract data from origin. Together, we can redefine the data collection model that we have used until now and create a strong collective shift for a more equitable and inclusive digitalization of the sector.
Producers and cooperatives will always be at the base of the digitalization process, but is there a way to use data as a tool for more equitable value distribution? It’s possible if we amend the model to include an economic component—by turning data into profit.
Paying producers for their data is not a new concept. It has been mentioned by other professionals in the coffee industry and it is an active discussion in the agri-sector, especially in the US, Canada, and Australia. In 2018, an agri-tech company in Kansas launched a digital system called Farmobile DataStoreSM exchange.[8] Farmers log in and can decide whether they want to share their data with a company of their choice; if they do, they get paid for it.
Looking at the broader picture of social media and the internet, this concept is incredibly relevant: Every single click we make feeds companies with specific information they use for marketing and advertising. If we apply this model of thought to our own data, all kinds of questions appear: How much is our data worth? How can we earn back the ownership of our privacy if we agree to sell our data in the first place? However, it also shows us that alternatives are possible. We can create systems that can be less extractive when we are fully aware of the pros and cons of data-sharing. And, while we could debate for days whether it is right or wrong to sell our personal data to tech companies, it remains an opportunity. If you’re interested to see more of this process in practice, digi.me[9] is one of those companies pushing for this new concept of data dividend.
Applying these kinds of questions to the coffee industry might help us to put things into perspective. Until now, data has always been extremely valuable to whoever owns it and knows what to do with it, but the value hasn’t been transmitted to data providers— those who share their information freely and who are mostly excluded from its direct benefits. Calculating the value of producers’ data would allow us to acknowledge the economic contribution that this information is making to the sector. Further, it will help us become more aware of the exponential digital transformation that the industry is currently experiencing.
As the majority of coffee producers struggle more and more to cover their costs of production and are often far away from earning a living income, maybe it’s time to concretize alternatives. Instead of a model focused solely on quality premiums, we could start increasing coffee producer’s share of value by also paying for data. Other sectors already see data as being highly valuable (think of the social media model!) but we have yet to truly acknowledge that a coffee’s data is just as valuable as the coffee itself. It may not solve all our issues, but it’s one way to begin shifting the power dynamics of the coffee value system and drive important change. ◇
ELISA CRISCIONE is a researcher and consultant focused on the digitalization of the coffee sector through her work at Digital Coffee Future, a virtual space for any coffee actors to discuss digitalization in coffee, and Expressing Origin, a consultancy practice focused on connecting stakeholders across the chain and leveraging innovative tech solutions for a more sustainable agri-food system.
Notes & References
[1] Scott Brennen and Daniel Kreiss, “Digitalization and Digitization,” Culture Digitally (2014). https: //culturedigitally.org/2014/09/ digitalization-and-digitization/
[2] Ortwin Renn et al, “The opportunities and risks of digitalisation for sustainable development: a systemic perspective,” GAIA – Ecological Perspectives for Science and Society (2021). DOI: 10.14512/gaia.30.1.6
[3] Potter, Christina, Anastasios Bastounis, Jamie Hartmann-Boyce, Cristina Stewart, Kerstin Frie, Kate Tudor, Filippo Bianchi, et al. “The Effects of Environmental Sustainability Labels on Selection, Purchase, and Consumption of Food and Drink Products: A Systematic Review.” Environment and Behavior, (February 2021). https://doi.org/10.1177/0013916521995473
[4] Traore, Togo M., Norberg L.W. Wilson, and Deacue Fields. “What Explains Specialty Coffee Quality Scores and Prices: A Case Study from the Cup of Excellence Program.” Journal of Agricultural and Applied Economics 50, no. 3 (2018): 349–68. doi:10.1017/aae.2018.5.
[5] There aren’t any studies that have sought to answer this specific question empirically, but general cost of production research suggests that coffee consistently sells for less than it costs to produce. As digitalization becomes the norm, this would be a rich area of study!
[6] Growing for Prosperity – Economic viability as the catalyst for a sustainable coffee sector. International Coffee Organization, 2019. Coffee Development Report (2019), London. International Coffee Organization.
[7] Sachs, J., Cordes, K.Y., Rising, J., Toledano, P., & Maennling, N. (2019). Ensuring Economic Viability and Sustainability of Coffee Production, p. 8. Columbia Center on Sustainable Investment, Columbia University
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