He told us LDC sees blockchain technology as a key enabler of the industry’s digital transformation.
“This technology offers tremendous opportunities to modernize global agri-commodities trade operations, by driving significant efficiency, security, and transparency gains, ultimately creating business value for all transaction and value chain stakeholders,” Zhou commented.
Removing inefficiencies
But how can such technology improve agricultural trade, and unlock more value for all players across an agri-commodity supply chain?
“Blockchain can remove inefficiencies in a complex process, creating trust through data certification, enhancing data security, and by driving supply chain transparency and product traceability.
“In February 2021, we launched the Covantis blockchain platform with industry peers to do precisely that. This platform, created by the industry, for the industry, is fully aligned with LDC’s collaborative approach to value creation, leveraging technology to modernize cumbersome post-trade execution processes, initially with a focus on grains and oilseeds operations,” he remarked.
Task automation
What evidence is there to date that blockchain platforms can help with automation of tasks and targets and thus increase transaction speeds, and that by replacing manual processes, the technology can cut error rates?
“Post-trade execution processes represent a highly manual and costly part of the supply chain, with the industry spending significant amounts every year to move physical documents around the globe.
“Digitizing and standardizing the process would eliminate inefficiencies, save costs, decrease document processing time, reduce wait times, and increase end-to-end contracting visibility.
“In January 2018, LDC piloted the first agricultural commodity transaction through blockchain, in collaboration with business and banking partners. This pilot showed the technology’s capacity to generate efficiencies and reduce the time usually spent on manual document and data processing times. For example, the pilot saw a reduction of time spent on document management by a factor of five, and it goes without saying that the development of shared/common standards and systems multiplies efficiency gains for all participating stakeholders.”
Global relevance
When asked as to when we are likely to see a new era of digital trade flow management on a global level, Zhou said the Covantis platform itself is evolving incredibly quickly.
“As co-founders of Covantis we are seeing increasing buy-in from a wide range of industry participants to adopt it and buy in to the many benefits it has to offer. The more participants join the network and bring their business volume, the more value is generated in the ecosystem and the faster it can scale to other regions, more agri-commodities and additional functional scope.”
Zhou stressed though that technology cannot replace many aspects where people provide added value. “While transactional processes can be digitized, knowledge of the products and markets, operational capabilities and networks, and relationships with farmers and customers are what really makes the difference in getting physical products from origin to destination safely, reliably, and responsibly.”