In late January, grain market leader Louis Dreyfus Group and China’s Shandong Bohi Industry struck a deal using blockchain technology.
Such a deal is a breakthrough in the industry, where international deals are still mostly done by faxing documents back and forth for signatures. But a new blockchain platform called Easy Trading Connect (ETC) will modernize and digitize the agribusiness sector. It will make many stages of business relationships in the agricultural sector easier, faster and better.
The participants of the transaction note that the use of digital documents (sales contracts, letters of credit, certificates) and automatic data matching made it possible to avoid duplication of tasks and manual checks. Since the lengthy paper-based process has been replaced by a digital transaction, the time spent on processing documents and data has been reduced by a factor of five.
Other benefits include the ability to track the progress of the transaction in real time, verify data, and reduce the risk of fraud. Such transactions require close work between buyer and seller, banks and authorization authorities, which also work with the digital format of documents.
Without a blockchain platform, the whole cycle would take much longer. The fully digital transaction modeled the traditional 11-14 day process and took only 4 days.
What are the prospects and benefits of the technology for agribusiness players?
All the document confirmations that used to happen and are happening manually are now fully automated. If there is a discrepancy between the data in electronic documents and what is actually required, a notification will be sent immediately. Since the information becomes simultaneously available to everyone involved, no one can change it….
If we talk about the industry as a whole, you can always come across a lot of forgery, from fake health certificates to money fraud. Blockchain technology, in addition to reducing time and avoiding the human factor, makes it possible to calculate and fight against dishonest partners who might have planted the wrong documents, etc.
With the development of blockchain, it will be possible to check the history of your counterparties (provided they give it to you). Plus – analyze how they adhered to the terms of the contract and to what extent they complied with them. This is a potential development opportunity.