Agriculture giants join forces to create grain tracking blockchain platform. Bunge and Cargill, the world’s largest grains and oilseeds companies, have teamed up to create the joint venture Covantis, which will use blockchain technology in the agricultural sector in Brazil.
Agribusiness giants like the French Louis Dreyfus Company (LDC), the Chinese state-owned company Cofco International and the Dutch multinational Glencore Agriculture will also join forces with Covantis. The companies that make up Covantis move around 550 million tons of grains and oilseeds every year.
The purpose of the collaboration is to consolidate the data of the sector and facilitate communication between all participants, enhancing the logistics processes in the ports, all using blockchain, among other things. It is expected that the official platform will be released next year.
Each year, companies negotiate about 500 thousand purchase and sale contracts in Brazil and the first platform tests were carried out between July and August of this year at the Port of Santos, involving 11 companies, including trading companies, originators and producers of grain. Covantis CEO Petya Sechanova said “Covantis should become the leader of operations in our sector and will be able to streamline processes, modernize and digitize them.”
According to the CEO, the choice of Brazil was due to the complexity of its market. Speaking to the Valor publication, Sechanova said the country saw “chain sales” or “string sales” taking place, in which dozens of intermediaries needed to act for the shipments to happen, even though only final buyers and senders have contact with the physical shipment.
Marcos Amorim is the director of the contracts committee of the National Association of Cereal Exporters (Anec), whose associated trading companies are actively working with Covantis. He said it’s a complicated and difficult process “Imagine that each shipment has both a purchase contract and a sales contract, that there are phytosanitary certificates attached to them and a series of other documents required by different countries. And that ships form lines and must have a certain loading rate. This greatly escalates the operation at the port and the delay at any end implies losses for the entire chain.”
The method creates a very chaotic work flow within the trading firms, which is currently handled by email , telephone and WhatsApp. Dates of arrival and departure, ship flags and volumes of cargo circulate non-stop, especially during peak seasons. However, with errors occurring on a regular basis, costs and fines are also growing.
With Covantis, all this information circulates using blockchain technology, which, according to its participants, helps the flow of information, prevents fraud and ensures the security of shared data. Sechanova also notes that the ambition of Covantis is to eventually pull together all bulk grain and oilseed shipments from its founding companies around the globe.
Argentina and the United States are the next countries in which Covantis plans to use its blockchain solution.
[image: Krishna iv]