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Ag trading giants' blockchain trading project set for launch next year

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The cutting edge crop trading system being developed by the leading agricultural traders, using blockchain and artificial intelligence, is scheduled for launch next year, after trial on brazil-China export trade.

 

The agribusinesses behind the project, which were on Thursday revealed now to include Glencore Agriculture too, said that it was now heading towards execution of the venture, which is aimed at streamlining execution of physical deals, and cutting the toll of bureaucracy.

 

The scheme’s backers – which initially comprised Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus, the ABCD of global ag trading houses, and joined in December by China’s Cofco – are planning for a launch of the platform “in the second half of 2020”, subject to regulatory approval.

 

Trial run

This would follow a pilot scheme, “that will cover international bulk shipments of soybeans from Brazil to China”, a route that has attracted particular attention since China’s trade war with the US since July 2018 forced it to raise its reliance on alternative origins.

 

China’s imports from Brazil hit a record last year, far outpacing those from the US, although have shown year-on-year declines since May, as China’s feed market has felt in earnest the impact of the dent to the country’s pig herd from African swine fever.

 

Chinese soybean imports from Brazil for the first seven months of 2019 totalled 33.72m tonnes, a dip of 2.4% year on year.

 

Still, purchases from the US, at 6.81m tonnes, were down 58%.

 

‘Potential to revolutionise’

News of the trial came as Glencore Agri joined the programme’s backers, saying it had been “interested in the initiative from the very early days”.

 

“The digital platform this group intends to develop… has the potential to revolutionise our industry, making contract execution processes more efficient, more accurate and more transparent,” said David Mattiske, the Glencore Agriculture chief executive.

 

“The benefits will be felt by companies of all sizes along the post-trade value chain.”

 

Beauty parade

The statement added that the now-six-strong group of trading houses was “finalising the selection” of technology providers to deliver on the “newest technologies” which will be involved in delivering the initiative.

 

It has also held talks with a “broad range of industry stakeholders”, ranging from shippers to trade associations to regulatory authorities, over the scheme.

 

“By collaborating on critical issues such as security and data privacy, technology choices, business model… the group is ensuring that the new platform will meet the needs of the entire industry.”

 

Blockchain ideas

The scheme will use new technologies such as blockchain and artificial intelligence “to create digital solutions” for automating execution of grain and oilseed trades, “reducing costs needed to move agricultural and food products around the globe”.

 

Blockchain is being seen too by many agriculture groups as a way of enhancing traceability of foods, allowing tracking of ingredients from producer to customer.

 

Earlier this week a tie-up between the World Wide Fund for Nature and Boston Consulting Group raised $4m for the OpenSC platform, aimed at auditing foods on grounds of sustainability, and then tracking them through the supply chain.

 

OpenSC in July revealed a tie-up with Nestle, which has for two years been piloting blockchain as a way of boosting the transparency in the sourcing of its products.

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