ANOTHER “TRANSPARENCY” SYSTEM COCOA FARMERS AND ETHICAL CONSUMERS CAN TRUST?

An Exploratory Interview with Koa on their “Radical Transparency Block-chain Based System”

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Koa is a Swiss-Ghanaian business that focuses on creating a new revenue generation stream for cocoa farmers by processing cocoa pulp into juice, concentrate and Powder. Whereas cocoa farmers rely on cocoa pulp for cocoa bean fermentation, its excesses lead to food waste and elongation of the fermentation process. So, harvesting the excess cocoa pulp and paying the farmers for it is the best thing ever happening to cocoa farmers.

After interviewing Koa’s executives to understand their business model and its impact on the ordinary cocoa farmer, we furthered the discussion on the blockchain transparency system they have set up. Whereas cocoa pulp processing is a new sub-sector within the cocoa value chain which hasn’t faced any scandal of unequal value distribution, Koa management felt there was the need to proactively tackle transparency on value distribution before it becomes an issue. So, in this interview, we sort to learn more about what the “disruptive transparency system” was about, what influenced its development, the main stakeholders of this project, and their interests. Is this system as rosy as it's being marketed to be?

While I appreciate and applaud Koa for setting up this proactive system to demonstrate lessons learnt from the current transparency issues within the value chain, the system shouldn’t escape scrutiny. The devil is always in the details. This article will focus on the scrutiny of the Transparency system. For each element, I will offer my opinion on their answers.  At the end of the interview, I was impressed with how the team was willing to answer all the difficult questions and agreed to explore some of my pushbacks and suggestions.

·      What caused the need to develop this Radical transparency Platform?

According to the press release by Koa, their transparency system will leverage blockchain technology to store transactions between them and the farmers to ensure accountability to the farmers and their customers. Most of them buy their product due to its assumed positive sustainability impact on the cocoa farmers and their communities. They added that the overreaching reason that foregrounds the development of this system is the well-known poverty of cocoa farmers- which continues to exist despite all the interventions that have been supposedly put in place. During the interview, Koa added that their consumers wanted to trace the products' supply chain and validate whether farmers were receiving precisely what Koa promised. From a corporate standpoint, they also felt that proving their commitment and diligence in honouring their promise would be authentic if they could demonstrate by making visible openly and in real-time the economic, social, and environmental impacts their business operations are making on their partner farmers and their communities.

Finally, they alluded that being neutral and transparent in the information delivery without any human interference to consumers about how much farmers earn from their business was keen for them. So as a newbie exploring the blue ocean within the cocoa sector, their goal was to leverage technology that allows them to be neutral in the information flow, enabling them to demonstrate radical transparency that can be trusted and validated by consumers and farmers. Koa also saw the opportunity to use the transparency system to attract investors, partners and stakeholders who are ethically focused and would like to join them in making impacts that can be evidenced transparently.

They named the system “Radical” because it is the first of its kind in the cocoa sector that only a confident firm committed to being transparent will implement. They believed that leveraging technology to enhance transparency in an industry constantly bedevilled with scandalous transparency issues was radical. This was good because cocoa beans are commoditised compared to a cocoa pulp. So, while the price is publicly known through the commodities market, its predictability and stability are always tricky. Secondly, cocoa traders, chocolate manufacturers and other players interested in the “Price” of cocoa do their best to trigger the price changes in their favour through hoarding, artificial speculation, or business-biased sustainability investment in producing countries to encourage more cocoa production.

The cocoa sector, in general, is choked with many intermediaries whose financial stake reduces the net income the farmer receives from the sale of cocoa beans. In Ghana, farmers only receive what is given to them by the Government. Unlike how it’s done in Europe, Ghanaian cocoa farmers are not given any form of subsidy (neither cash nor kind) from the Government or the Ghana Cocoa board. So, Koa trading directly with the farmers and using this system to showcase how much they bought the pulp from the farmer is a big step requiring applause.

In terms of what the future holds for scaling this transparency system, they highlighted that they would continue to use it to keep their customers/consumers informed. Whereas the system is currently focused on tracing and verifying transactions relating to a cocoa pulp, they look forward to using it for the other ingredients they may introduce, including cocoa beans.

How does this system function in practice?

The digital transparency platform, according to Koa, is a Verification system that connects the mobile money platform they use to pay farmers to a blockchain. The transaction details stored on a blockchain enable it to become traceable, shareable, and immutable.

“Blockchain defined: Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Ref: IBM”

As shown in fig 1, there is a publicly accessible website, i.e.,