Yael Schwartzman DigitalICS:applications for smallholders

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Yael SchwartzmanDigitalICSapplications for
smallholders internal control and certification
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Coffee is the second most traded commodity in the
world
However, small rural producers have not seen the
benefits - Market is flooded - Vietnam
Brazil - Small lands - Limited financial
capacities - Infrastructural limitations -
Lack of enforceable production standards -
Lack of efficient marketing channels
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• Coffee producers obtain Third-Party
  certifications in order to gain a premium for
  their products, access a niche market and
  maintain environmental and social standards
• Fair Trade Improve the living condition of
  marginalized producers by creating consumer
  awareness, ensuring a dignified wage and
  promoting long-term trading relationships
• Organic ensures chemical-free sustainable
  farming practices
• Bird Friendly ensures that native shade trees
  are retained on coffee parcels, preventing sun
  damage and soil erosion and providing shelter to
  migratory birds

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Cooperatives have an Internal Control System
(ICS) in order to achieve and maintain these
certifications.

• Group Organic Certification
• Made for smallholders to afford organic
  certifications.
• Requires cooperatives to have an Internal Control
  System
• Internal inspection of 100 of the coops members
• External inspection (by third-party organic
  certifiers) of 10-20 of the coops members
• Establishes and maintains
• Quality standards
• Multiple certification requirements

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Cooperatives form Internal Control Systems (ICS)
to maintain these certifications.
Inspection
Evaluation
Report Generation

• Evaluator decides producers outcome based on
  internal inspection
• Approved
• Sanctioned
• Expelled

• Data is collected in FileMaker and reports are
  generated
• Certification Agencies
• Internal Records
• Producers Records
• Extensionists (follow up)

• Internal Inspectors
• monitor producers
• Parcels
• Equipment
• Neighboring crops
• Substances used
• Records

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Internal Control System (ICS)Challenges

• Efficiency
• Inspections, evaluations and reports are all
  generated by hand
• Inspectors carry one paper form per producer
• 6 documents per evaluation
• Verifiability
• Little evidence of in-parcel inspection and
  breaches of standards
• Quality
• Problems in standardization of inspection answers
• Errors due to illegibility of hand-writing, dirt
  and rain
• Not all the inspection data is captured on proper
  databases

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Digital ICS
Inspection
Evaluation
Report Generation

• The cooperatives staff use mobile phones to
  monitor the producers
• Parcels
• Equipment
• Neighboring crops
• Substances used
• Records

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Digital ICS
Inspection
Evaluation
Report Generation

• Evaluators use a web application to decide the
  producers outcome
• Approved
• Sanctioned
• Expelled

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Digital ICS
Inspection
Evaluation
Report Generation

• Reports are generated automatically
• Certification Agencies
• Internal Records
• Producers Records
• Extensionists (follow up)

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Digital ICS
Inspection
Evaluation
Report Generation
Evaluators use a web application
Reports are generated automatically
Internal Inspectors use mobile phones
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The Digital Internal Control System allows
internal inspectors to

1. Automate and standardize internal inspection data
   collection

Reducing by 30 the inspection time
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The Digital Internal Control System allows
internal inspectors to
2. Use audio and pictures to document and
provide visual and auditive evidence of
unacceptable farming practices, recommendations
and presence on the parcel
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The Digital Internal Control System
3. Automates data collection and report
generation, to help evaluators do their job
Reducing by 71 the evaluation time
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The Digital Internal Control System
4. Uses captured data to create parcels visual
history and market the produce
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Our partner CEPCO

• CEPCO (Oaxacan State Coffee Producers Network)
• Coffee cooperative created in 1989 to
• reduce producers transaction costs
• increase their market access and information
  access
• give technical advice and training
• deliver social, women and public policy projects
  to address poverty and marginalization in
  indigenous communities
• Largest cooperative of small-scale coffee
  producers in Mexico (2683 producers in 33
  producer groups around Oaxaca state, Mexico)

• Good altitude, high quality
• coffee
• Clients in Europe and North
• America
• Certifications OCIA Organic,
• Naturland Organic, Certimex,
• FLO Fair Trade

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DigitalICS Status

• 2007
• Pilot DigitalICS inspection and evaluation for
  two producer communities at CEPCO
• 2008
• Inspection and Evaluation of 2600 productores en
  32 comunidades
• Reduced inspection time by 30
• Reduced evaluation time by 71
• Reduced internal control costs by 80
  (preliminar)
• 2009
• Fully Implement DigitalICS at CEPCO and at any
  other interested organization.
• Pilot project for a delivery processing system at
  CEPCO

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Other applications

• Agriculture
• Delivery processing
• Organization
• Commercialization
• Microfinances
• Credit Applications
• Socioeconomic forms

• Human Rights
• Documentation of human rights violations

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Need

• 90 of the 400,000 coffee producers in Mexico own
  less than 2 hectares of land.
• In 2001 coffee prices dropped drastically
• Coffee pickers with malnourished children had to
  beg for food and farmers had to abandon their
  land or switch to growing drug crops (Economist
  2001)
• Many coffee farmers lost their lives attempting
  to migrate illegally into the U.S. in search for
  work (Dow Jones Newswire 2001)
• Certified markets are promising
• Since 2000, TransFair USA has channeled 75
  million in additional income to smallholders.
• However, coffee farmers have found these premiums
  insufficient to seek development (Culture and
  Agriculture 2008)
• The USDAs National Organic Program almost
  discontinued group organic certification in 2006,
  when they found a soy producer using pesticides
  going undetected by his groups internal control
  (NOSB-USDA 2007)