Today four of the biggest global agribusinesses companies announced they plan to work together to digitize their global shipping transactions using blockchain and AI. They are also seeking broader industry participation. The companies are Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus. Cargill is by far the largest of the group.
It’s interesting to know how talks like this get started. Earlier this year ADM and Bunge had merger discussions, but those ended without a deal.
In the case of Cargill and Louis Dreyfus, both have been involved in high profile blockchain pilots with banks. Cargill was involved in the Voltron letter of credit pilot, and Louis Dreyfus Company (LDC) as part of the ING Easy Trading Connect commodity trade finance project which has since morphed into komgo.
Ian McIntosh, LDC’s CEO, said, “In January this year, LDC 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. By working with the industry to adopt standardized data and processes, we can truly harness the full potential of emerging technologies to improve global trade.”
The initial phase will focus on automating the post-trade execution of grain and oilseed transactions. This area was chosen because it’s a paper intensive area which wastes time and money. The aim is to process documents faster and achieve improved contracting visibility.
Longer term they aim to tackle other paper-based processes including contracts, invoices, and payments. Benefits include better quality documents and communication with customers and greater supply chain visibility. Standardization will help to drive efficiencies and also allow better integration with other platforms such as trade finance. Improved efficiency and transparency will mean the companies can better serve their customers, by for example enabling them to see the status of shipments.
All four companies are large and spread around the globe. The number of employees and countries for each are:
Archer Daniel Midlands: 31,000 employees and 170 countries
Bunge: 32,000 employees and 40 countries
Cargill: 155,000 employees and 70 countries
LDC: 17,000 employees and 100 countries