Louis Dreyfus, a giant in the agricultural sector with revenue of some $55 billion, and the China based Shandong Bohi Industry Co, have successfully completed a full agricultural commodity transaction using a blockchain platform. Louis Dreyfus said in a statement:
“For the first time ever in the agricultural commodities sector, this trade included a full set of digitalised documents (sales contract, letter of credit, certificates) and automatic data-matching, thus avoiding task duplication and manual checks.
The transaction, which mirrored the paper-based process, demonstrated significant efficiency improvements for all participants in the chain.
Time spent on processing documents and data has been reduced fivefold. Other benefits include the ability to monitor the operation’s progress in real time, data verification, reduced risk of fraud, and a shorter cash cycle.”
The oldest industry still largely operates on fax machines, sending documents back and forth to finalize international deals. But now, a new blockchain platform called Easy Trading Connect (ETC) might upgrade and digitize the sector.
The participants won’t reveal what blockchain exactly the platform is based on, whether it is Ethereum, Hyperledger, or something else. Nor is it clear how the process worked at a technical level, but they are hailing it as a great success, with immense savings achieved.
“One thing is clear: the digital revolution is transforming the commodities sector,” Gonzalo Ramírez Martiarena, Chief Executive Officer of Louis Dreyfus Company, said before adding:
“Distributed ledger technologies have been evolving rapidly, bringing more efficiency and security to our transactions, and immense expected benefits for our customers and everyone along the supply chain as a result.
The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level.”
The participants claim the entire cycle was greatly reduced, with Anthony van Vliet, ING’s global head of Trade & Commodity Finance, stating: “The fully digitalised transaction simulated the traditional 11-14 day process and took only four days to complete.”
This builds on a previous real crude oil cargo shipment trade test on the platform last year, which was sold three times on its way to China. All involved, including traders, banks, inspectors and agents, performed their role in the transaction on the platform. ING said at the time:
“The experiment showed that the average time for a bank to complete their role in the transaction went from about three hours to just 25 minutes. For traders, efficiency went up 33 percent, with user experience evaluations far higher than expected.”
The blockchain platform was used to execute a soybean shipment transaction from the United States to China, covering the full complexity of the operation. Louis Dreyfus says:
“The transaction involved user participation on the blockchain-based platform by teams from Louis Dreyfus Company as the seller and Bohi as the buyer, with banks issuing and confirming the letter of credit.
Russell Marine Group and Blue Water Shipping also participated in the process, issuing all required certificates. The U.S. Department of Agriculture (USDA) provided valuable insights on how to include phyto-sanitary certificates in the process.”
Suggesting considerable co-ordination through the blockchain at an international level, with its success indicating digitization might be coming to the oldest sector.