Current commodity value chain systems work in favour of large conglomerates with near limitless buying power, making it difficult for smallholder farmers and farming cooperatives to gain their fair share in market value. AgUnity is addressing this discrepancy and creating waves in the vanilla value chain in Papua New Guinea, using their technology to connect farmers directly with Australian buyers and increase their income.
In our previous blog post, we discussed our partnership project with Munul Organic Spices and a local bank, getting 500 farmers registered and using our technology over the next 12-months. While the take-up rates from the community are very promising, technology on its own will not be able to bridge the epic socioeconomic gap between buyers and sellers in our global market; we are on a mission to empower smallholder farmers, shake up the vanilla industry and shine a light on the areas and (in)/actions that are holding many sellers back.
After the launch of our project, we uncovered a number of challenges in the Drekkier District of PNG. Slow or intermittent Internet connection, ongoing communication disruptions and project flow disruptions are all having a negative impact on the quality of vanilla being produced in the region. These hurdles are the direct result of nationwide power outages, a problem caused by long-term disagreements between power companies and the government.
In addition to this, there is the issue of global vanilla pricing. Two separate articles by Le Monde and Africa Intelligence highlight that Madagascar, which produces 90% of the world's vanilla, has been subjected to government price controls that rarely work in their favor and are resulting in worsening outcomes. Initially seen as a victory by politicians, the $250 per ton minimum on vanilla has had a significant impact on sales, resulting in stockpiling issues and highlighting the time intensive process of locating new suppliers.
Managing communications around market forces is critical, and market participants cannot influence global prices. Buyers will always seek to purchase at the lowest possible cost, causing challenges for those in the vanilla industry. While the personal challenges of team members, power outages, global pricing issues, and sourcing may pose difficulties, opportunities are always present as emerging technology paves the way for easier methods for buyers to connect with sellers and sellers who are able to provide key data on the traceability and sustainability of their products.
We are thrilled to announce our partnership with a vanilla cooperative that is highly organised and incredibly dependable. But that's only the beginning of the good news! Thanks to this partnership, we've been able to incentivize farmers to ramp up their vanilla production, allowing us to increase their income by a whopping 25%! How, might you ask? By paying farmers premium prices for their high-quality vanilla, which is in incredibly high demand. And that's not all. The cooperative has been selling products not once but 2-3 times a year. Happily, this means more money in the pockets of hardworking farmers who are dedicated to producing vanilla.
As we slowly start introducing digital identities and registering farmers on our platform, farmers will be able to receive instant access to funds when their vanilla is sold. The AgUnity software development team have worked tirelessly to create a game-changing automation for transactions which streamlines the entire process. This cutting-edge technology will make farmers' lives so much easier and over time, we aim to encourage the adoption of more digital tools like this among farmers. With this slow and steady digitisation journey, multiple generations of farmers will be able to access better prices and enter new markets, increasing sales, knowledge and quality of life.
With vanilla production continually growing and impacting the economies of many communities, it's important to always consider the next steps for expansion and growth. To continue to scale and improve, our next step is to engage in discussion with the vanilla producers themselves and explore some common problems they face in their day-to-day operations. With this information, we can fine-tune production and the community can continue to thrive. With this in mind, we will continue with our regular check-in and buying activities.
By continuing to buy vanilla at consistent rates, producers have a more reliable and steadier source of income; it is for this reason that we will continue to supply the market and further establish relationships with local farmers and international buyers. As we start to establish longer relationships and increase levels of trust with farmers, further training and the deployment of our super-app and smartphones will be introduced to support the expansion and scale of the project. Continuing development through the next steps, like engaging with producers, maintaining a reliable source of product, and scaling up our operations, will truly change the trajectory of these communities for years to come.
So, are you ready for a revolution in supporting local communities and farmers in Papua New Guinea? Thanks to our innovative partnership, farmers are now receiving a fair price for their hard work and dedication, injecting much-needed funds into rural areas and buyers are able to access data to support their purchases previously not available. Our actions prove that technology and creativity can be powerful drivers of change, building a brighter future for both farmers and communities. Join us on this exciting journey, and feel good knowing that you're supporting a cause that truly matters.