Today, the blockchain initiative founded by global agribusiness firms Archer Daniels Midland (ADM), Bunge, Cargill and Louis Dreyfus officially launched under the banner of Covantis. The project aims to replace legacy post-trade processes with blockchain, AI and other solutions.
Geneva-based Stefano Rettore will head the Covantis initiative in the interim until a governance model is in place, and a CEO is appointed. Rettore is an agribusiness veteran who previously served as the president of ADM’s origination business and as the company’s chief risk officer. Before that, he spent more than 14 years at Fortune 100 farm supply firm CHS.
“Covantis offers a path to improve agricultural trade, unlocking significant value for all players across the supply chain. By working collaboratively with the industry, we have an opportunity to build a more effective, more efficient digital future for global trade,” said Rettore.
The current post-trade processes are repetitive, manual, costly and time-consuming. Covantis aims to make the contract execution process more efficient, accurate and transparent.
Using blockchain and allied technologies, Covantis aims to automate 60% of execution tasks and targets increasing transaction speeds by up to 70%. By replacing manual processes, the initiative wants to cut error rates by 80% and reduce the amount of data re-keying by 90%.
The platform, which is also named Covantis, is looking at a 2020 launch. It was revealed that the solution would be built on Quorum, the enterprise blockchain version of Ethereum developed by JP Morgan. Quorum also underpins the oil post-trade platform VAKT and commodities trade finance solution komgo.
We asked about the blockchain technology selection. Our question was motivated in part by knowledge that Cargill is working on Hyperledger Grid, but it’s still relatively young. A spokesperson responded via email: “We have reviewed a number of blockchain technologies and blockchain architectures. Each brings different strengths and weaknesses and we expect the technology to continue to evolve over the coming months.”
The spokesperson continued: “As a result, the design of our overall architecture will be as blockchain agnostic as possible and enable us to evolve the platform as the technology evolves. In addition, blockchain will not be the only technology within the architecture, as one of our key architecture principles is to ensure that we balance the overall technology risk to a level where we feel confident that we can build and maintain a platform that meets the security, privacy, up-time and other related requirements of our customers.”
In previous announcements, the group said the initial target sectors are grain and oilseeds, where Covantis will use automation to cut costs and reduce documentation time. It will soon launch a pilot focusing on managing bulk transport of soybeans from Brazil to China.
The long-term goal is to digitize the execution process for international agri bulk commodities, from contract management to vessel finalization. This should potentially reduce trade execution times, and Covantis says it could speed up the documentation process by 7 to 10 days.
In terms of structure, the group is currently a consortium, but it aims to incorporate in the second half of 2020, subject to regulatory approvals.
|Company||2017 Revenue||2018 People|
|Glencore Agriculture||$12.6 billion||13,000|
This article was updated with the addition of the spokesperson quote and plans for incorporation.