Almacena Platform discusses its sustainable and transparent approach to connecting the global coffee supply chain.
Almacena Platform believes the best thing about coffee isn’t the smell, the taste, or the caffeine, it’s the ability to bring people together.
In the business-to-business agricultural marketplace, Almacena Platform connects coffee producers with buyers directly and efficiently.
“Almacena Platform aims to add more transparency and traceability in the supply chain process and eliminate a few of the middlemen in the trade,” says Almacena Platform’s CEO Dimo Yanchev.
Yanchev says although Africa has the longest tradition of growing coffee, local farmers are some of the least competitive, as most farms are small and family owned. He says passing the craft through generations contributes to further fragmentation of the land, while the inability to invest and improve farming practices results in very low yields for coffee farms.
“In certain years, when coffee prices are lower, farmers are unable to cover the cost of production. Since farms lack scale and are often located in remote mountainous areas, they rely on aggregators, traders or cooperatives to process and sell their produce, leading to too many intermediaries present in the value chain,” Yanchev says.
“It is striking that nothing has changed in hundreds of years. The value kept by the farmers who actually do the hard work in the fields is too little. One of the reasons is the lack of affordable finance alternatives to the local agriculture business and therefore the pressure to sell the production and export raw commodities as soon as possible.”
Yanchev says the income of African coffee producers is a direct reflection of the international prices which are very volatile. Growers and small traders typically have no means to sell directly to buyers or reach final consumer markets.
“On the one hand, producers are obliged to sell locally at low prices, have no visibility at the end market, and lack the expertise to export directly. The buyers, on the other hand, pay too much to middlemen, have no access to the origin market, and lack transparency and traceability in the supply,” he says.
Almacena Platform offers a new ‘Trading as a Service’ model to challenge and disrupt this paradigm and empower African coffee producers to unlock their potential. The platform aims to increase farmers’ income and create new brands.
The ‘Trading as a Service’ model allows participants to discover counterparts and determine prices online on the Almacena marketplace. All elements required for the trade fulfilment are made available via integrated services on the Almacena Dashboard, including finance, logistics, insurance, and warehousing in Africa and Europe.
“An estimated 30 per cent of the value [reaching the farmers’ cooperatives] is lost to middlemen, whereas Almacena Platform charges a fee of one to five per cent depending on the services provided, allowing a better price for both sellers and buyers. By using devices like NFC tags, Bluetooth-enabled scales, thermal printers and more, it creates digital IDs of the coffees, immutable data records of the producers, and the provenance and route of the coffees in full transparency to all supply chain players. It uses data records to build farmers’ IDs to unlock microloans and enable financial inclusion in rural Africa,” says Yanchev.
Almacena Platform shortens the supply chain to create efficiencies for both sides on the commodity trade. It brings producers out of anonymity and facilitates relationships. It creates higher income, promotes sustainable practices, and rewards a gender balanced approach to business, with the goal to impact 800,000 smallholders across East Africa by 2025.
Currently, Almacena Platform has more than 160 cooperatives with over 300,000 farmers that supply 12 per cent of the African coffee supply registered on its platform. It facilitates sales to 11 European countries, and Yanchev says it is just the beginning.
“We’re now present in five countries in East Africa, including Ethiopia, Uganda, Rwanda, Burundi, and Democratic Republic of the Congo (DRC). We provide not only the physical real- world services, but also digital tools that help our clients, the producers, to become more efficient,” says Yanchev.
One of those digital tools is the Almacena Origin application, a mobile application that allows producers at origin to digitalise their operations from cherry purchases to green coffee lots.
“The collected data will allow end buyers to have full traceability to the single farmer who contributed to the production of the coffee beans. As a producer you will be able to add the basic details for your farmers and enrich them with additional information about their household and farm, creating a digital record of the farmer and insights about the farmers and overall business performance,” Yanchev says.
The platform now has almost 15,000 African coffee grower profiles in DRC, Rwanda, and Burundi and will be expanding coverage with the addition of more East African cooperatives.
“The coffee purchased from the farmer on a daily basis is recorded in the system with the relevant quantity, quality and the amount paid to
the farmer. Then the purchased coffee will be combined in batches and lots with specific quality, taste, and flavours to be exported and sold to the end buyers. All the information is digitised by Almacena Origin and the coffee trade can be managed in the Almacena Dashboard,” says Yanchev.
Although technology plays an important part in the company’s business model, Almacena Platform’s Head of Impact, Arthur Karuletwa, says there is a common misconception among consumers that technology and innovation is inoperable in remote areas.
“There’s a lack of understanding about how the supply chain works and how far these products come from. Because of issues with internet connection in isolated areas, people assume technology is not useful there. We have a solution for that, with Bluetooth devices like thermal printers that operate independently without the need for a direct Wi-Fi connection,” Karuletwa says.
Karuletwa says Almacena Platform is working to debunk this notion by proving that it is possible to operate technologically in East Africa.
“We’ve added thousands of farmers to the platform who are now exchanging commodity via mobile phones and are accustomed this efficient process,” he says.
Karuletwa adds that it is important for Almacena Platform to provide farmers with this technology and the opportunity to develop.
“We love the industry and want to help farmers grow their business and become successful. There’s also a real risk of specialty coffee quantities reducing thanks to climate change. We are on a mission to create some upward economic mobility to make the business worthwhile for the farmers. At the end of the day, sustainability means nothing if there’s no upward social mobility,” he says.
CEO Yanchev believes this digital solution allows for a practical way of managing data, completing payments, and connecting devices in a seamless way.
“With such a versatile and user-friendly experience, one could say this is the future of transactions and communication in a world that is ever more connected,” he says.
By making responsible sourcing possible, Almacena Platform hopes to create a fairer and more efficient supply for agricultural products that empowers rural African communities to overcome existing structural barriers and connect to buyers.
“Our vision is that agriculture in general and coffee production in particular can provide farmers in origin countries with opportunities to live and develop in their communities,” Yanchev says.
For more information, visit www.almacenaplatform.com
This article was first published in the March/April 2023 edition of Global Coffee Report. To read the research paper, click HERE.