Agricultural supply chains are inflexible and inefficient, says Agridigital CEO Emma Weston.
“Despite farmers being key players, they are often given the least say. Agriculture missed out on the benefits of the first wave of the internet due to a lack of connectivity and technical skills. Blockchain has been coined the ‘second coming’ of the internet, and we want to ensure agri-supply chains do not miss out again,” says CEO and co-founder of the Australian platform Agridigital, Emma Weston.
She emphasises that agricultural supply chains are very complex. “There’s a real lack of transparency and trust between supply chain participants. As a founding team we looked to blockchain to create ‘digital trust’ in supply chains.”
The AgriDigital platform is a cloud-based, multi-participant commodity management platform. All players across the agricultural supply chain – farmers, buyers, storage operators, and in time, even consumers – can operate and interact on the platform for the transaction of their commodities.
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Agridigital uses blockchain technologies. In December 2016, the company completed the world’s first sale of a physical agri-commodity on a blockchain between a farmer and a buyer. Australian farmer David Whillock sold a truck load of wheat to Fletcher International Exports in Dubbo, New South Wales.
Through pilots, Agridigital has shown the ability to eliminate counterparty risk by running commodity transactions on a blockchain. The aim is to allow the supply chain to operate with more confidence. Farmers are assured they continue to own their commodity right up until the moment they are paid.
“Solving the problem of matching delivery to payment is enormous for removing counterparty risk along supply chains”, explains Weston.
Blockchain technology can also make financing more readily available, by embedding trust into the system, as well as providing immediacy, live position and market-to-market reporting for financiers to access.
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Blockchain technology helps to record critical information about the farming, production and transport of agri-commodities. Weston: “Attaching this data to the digital asset, we are able to move this securely between participants along the supply chain. With the power to trace commodities and create data-rich digital assets, we can address the growing problems of food fraud and security across global agri-supply chains.”
Farmers are notified via SMS or e-mail when an event occurs; e.g. their crop has been delivered on site to a buyer, or payment of an invoice has been made. With all data stored in the cloud, AgriDigital helps to minimise paperwork and double handling, as well as centralising critical information for the farmer.
AgriDigital wil expand its offering over the next 12 months with the ability to capture inventory stored on farm. In 2020 Agridigital wil launch a blockchain enabled new AgriDigital platform. “There will be further benefits to farmers, and the other participants across the agri-supply chain”, says Weston. “The results of our recent blockchain pilot projects demonstrate these further.”
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AgriDigital and CBH Group, Australia’s largest exporter of grain, conducted a pilot to test the application of blockchain in the Australian grain industry at CBH’s owned subsidiary, Blue Lake Milling, an oats processor in Bordertown, South Australia.
There were several scenarios. In one the grower delivery was received at site using the AgriDigital platform, where information around the quantity and quality of the oats was recorded. This data was pushed through various integrations, generating a digital title token on the blockchain held in the grower’s digital wallet. This token was held and flagged for payment in 7 days.
A week later, settlement occurred. Payment was made to the grower at the same time as title transferred from the grower to the buyer. The payment on the blockchain layer was made using a second token, minted by AgriDigital and known as ‘Agricoin’, which was pegged 1:1 with the Australian dollar.
Smart contracts, agreements codified for execution on a digital distributed platform, were used to auto-execute payment on the blockchain layer which was parallel processed using traditional banking methods.
Agridigital also teamed up with Rabobank to conduct a proof of concept that successfully demonstrated a purchase and sale of commodities on a blockchain in a lab environment. The platform succesfully facilitated a purchase and sale transaction.
Currently, there is no cost for farmers to use AgriDigital. There will be a subscription based version of the platform launched for farmers within the next 12 months. Subscription fees will be based around annual throughput.
Agridigital currently has 36 customers and over 3,220 active users on the AgriDigital platform. It has transacted 6.27 million tonnes of grain through the platform at a value of $ 1,224 million Australian dollar and has transacted over 70,000 cotton bales since its introduction to the platform in 2018.
Agridigital has started in Australia with grain. “But this is just the beginning”, says Weston. “We continue to develop our presence in the Australian grains and cotton industries and receive enquiries daily from potential customers around the world including North America, South America, Europe, Africa and Asia.”
Agridigital will expand into the Canadian and American grain industry in mid to late 2019, with the opening of a North American office in Chicago scheduled for June 2019. The platform plans to expand to Europe in 2020/2021.
@Agri_Digital is going global – allowing Australian farmers to connect to the #global #supply #chain! Backed by @PSInnovate, we will open a Chicago office this year. Check out our exciting story here: https://t.co/bzuUYnRm5i
— AgriDigital (@Agri_Digital) 12 April 2019