ING, Societe Generale and ABN Amro in conjunction with Louis Dreyfus Company (LDC) and Shandong Bohi Industry Co., Ltd (Bohi), have successfully completed the first full agricultural commodity transaction using a blockchain platform.
The trade included a full set of digitalised documents (sales contract, letter of credit, certificates) and automatic data-matching. Time spent on processing documents and data has been reduced fivefold, said a statement. Other benefits include the ability to monitor the operation's progress in real time, data verification, reduced risk of fraud, shorter cash cycle and so on.
The Easy Trading Connect (ETC) platform was designed to digitalise and standardise commodity transactions. It was first validated with an oil cargo transaction in February 2017, with the subsequent launch in November 2017 of an energy consortium aiming to offer 'blockchain-based' services to the energy sector. The same principle was then applied to develop a blockchain-based platform tailored to agricultural commodities trading, in collaboration with the various participants in such transactions. This new, adapted ETC platform accommodates the agricultural sector's complex documentation chain flows, covering not only the financing aspects, but also the full set of relevant documents pertaining to a transaction, such as the signing and processing of the sales contract at the start.
In this test, the enhanced platform was used to execute a soybean shipment transaction from the United States to China. Louis Dreyfus Company was the seller and Bohi the buyer, with banks issuing and confirming the letter of credit. Russell Marine Group and Blue Water Shipping also participated in the process, issuing all required certificates. The U.S. Department of Agriculture (USDA) provided valuable insights on how to include phyto-sanitary certificates in the process.
"One thing is clear: the digital revolution is transforming the commodities sector," said Gonzalo Ramírez Martiarena, Chief Executive Officer of Louis Dreyfus Company. "Distributed ledger technologies have been evolving rapidly, bringing more efficiency and security to our transactions, and immense expected benefits for our customers and everyone along the supply chain as a result. The next step is to harness the potential for further development through the adoption of common standards, and welcome a truly new era of digital trade flow management on a global level."