Agricultural giants Louis Dreyfus Company (LDC) and Shandong Bohi Industry Co., Ltd (Bohi), in collaboration with major banks ING, Societe Generale and ABN Amro, have completed the first full agricultural commodity transaction using blockchain technology.
The trade used a blockchain-based platform which was developed by applying the same principle behind the Easy Trading Connect (ETC) – a platform designed to digitalise and standardise commodity transactions. The new ETC platform, tailored to agricultural commodities trading, accommodates the agricultural sector’s complex and rigorous documentation chain flows, covering the financing aspects as well as the full set of relevant documents pertaining to a transaction.
The platform was used for executing a soybean shipment transaction from the U.S. to China. The transaction involved user participation on the blockchain-based platform by teams from Louis Dreyfus Company as the seller and Bohi as the buyer, with banks issuing and confirming the letter of credit. Russell Marine Group and Blue Water Shipping issed all required certificates. The U.S. Department of Agriculture (USDA) provided valuable insights on how to include phyto-sanitary certificates in the process.
According to the official release, the trade demonstrated significant efficiency improvements for all participants in the chain. The blockchain-based platform helped in avoiding task duplication and manual checks, while reducing the time spent on processing documents. Other benefits include the ability to monitor the operation's progress in real time, data verification, reduced risk of fraud, and a shorter cash cycle.
"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."
