A news release published on the 25th of October reveals plans for agricultural businesses, Archer Daniels Midland (ADM), Bunge Limited, Cargill incorporated and Louis Dreyfus Company (LDC) to utilize blockchain technology and digitize global agricultural shipping transactions.
Blockchain technology refers to a decentralized digital ledger in which data and processes can be recorded. These four companies will initially focus on implementing blockchain technology to automate grain and oilseed post-trade execution processes. These are a high-cost part of the supply process and it is expected that an automated system will help greatly reduce expenses as well as lead to shorter document processing times and thus shorter wait times.
In the long term, these companies are planning to replace paper processes such as contracts, invoices, and payments with a digital system. This type of system would allow for far greater efficiency. Transactions with paper documents, copies and Manuel re-entry of information would be a thing of the past. This would lead to improved security, transparency and efficiency.
The nature of blockchain systems also enables greater security and transparency. It would not be possible to forge documents or steal data, as it would all be on a decentralized digital ledger. Customers would be able to view transactions and their purchases on this system with ease.
This is not the first time some of these companies have interacted with blockchain. Ian McIntosh, the CEO of LDC, claims in the press release that his firm had completed the “first agricultural commodity transaction through blockchain, which showed the technology’s capacity to generate efficiencies and reduce the time usually spent on manual document and data processing.”
Other global businesses have also begun implementing blockchain technology into their operations. The Japanese conglomerate, Sony, is putting a blockchain based digital rights management system in place and the Abu Dhabi Ports subsidiary, Maqta Gateway, has launched a pilot test of a blockchain based trading system.
If these cases are anything to go by, the agricultural trade will experience great gain from implementing the digital technology.
It has not yet been disclosed when the new system will be put into effect.