Global Grain Geneva: ABCDs dig deeper on blockchain and trust
Leading grains companies urge co-operation and collaborationThis article is powered by The Public Ledger
Agriculture’s so-called ABCDs - ADM, Bunge, Cargill and Louis Dreyfus – are actively listening to market feedback during development of their blockchain-backed shipping transactions platform, representatives told an audience at Global Grains Geneva.
At the end of October, the companies announced an initiative to collaboratively build an open platform to increase the efficiency of handling post-trade operations in dry bulk shipping. The current paper-based system is labour intensive and has long processing times, taking at best three to four days to produce shipping documents, and over 30 days in some situations, said Cargill trade execution leader Petya Sechanova.
Development of the platform started with identifying common pain-points in the process, and working out how best to tackle them.
“We didn’t come together to make a blockchain project, we came together to fix a serious industry-wide problem and see how technology could address it,” said Guy-Laurent Arpino, chief information officer, Louis Dreyfus Company.
The platform will use distributed ledger technology to simplify a complex process with many stakeholders into an “orchestrated ecosystem,” giving improvements in time and cost efficiency and increasing competitiveness. The aim is to have a platform that creates a new industry standard, is open to all and customer-focused.
While there are further opportunities in grain trading for blockchain technologies, including trade finance, the ABCD’s project does not have any objective to cover such transactions. Instead, banks are already developing their own platforms and instruments to cover trade finance.
“Our challenge is to connect our platform with those platforms,” said Vincent Minna, chief financial officer MENA region & Geneva trading desks, Bunge.
Questions over ownership and funding of the platform are still in the air, but the focus is currently on liaising with the market.
“We need to understand where for this industry is the right balance between security and privacy. Clearly nobody’s going to want to give the big four all of their data; we’re aware of that,” said Mark Hankins, senior IT architect, ADM. “With distributed ledger technology, cyber security and cryptography, there are ways technically to solve some of those issues. We need to come up with the right answer; the only way to do that is to engage with you guys and understand what the real challenge is ahead and how best to beat it,” he told the audience.
“We don’t think the technology will be the biggest part of this. Trust, getting people to work together, building trust will be the real challenge,” he added.
Concerns were raised on a lack of unity in contract clauses between the ABCDs, and that standardising those may be of greater importance than installing new technology.
The panel responded that simplification needs to be at the heart of the project, else complexity will increase costs and decrease efficiency. That simplification will come from co-operation and collaboration, said Hankins.