Blockchain and smart tech mitigate food supply chain challenges during pandemic

15 Apr 2020 --- While the ongoing COVID-19 pandemic spurs a cataclysm of supply chain challenges, the global crisis is also pushing businesses toward previously unexplored digital solutions. Key agri-food suppliers Cargill and Agrocorp have teamed up with Rabobank to pilot blockchain for faster cross-continental commodity trading in five days, initially focusing on wheat. The concept of blockchain as a tool to combat coronavirus-related challenges is coming to the fore through this new partnership.

Touted as one of the most promising sectors for blockchain, cross-border commodity trading allows for real-time monitoring by multiple parties, dispenses with data concerns and simplifies the exchange of documents in a digital, secure and decentralized manner. It could also be a key way to continue operations within the global constraints of the pandemic.

Meanwhile, Bunge has unveiled new smartphone technology for truck drivers to schedule grain freight in Brazil with ease. FoodIngredientsFirst speaks with agri-tech expert and CEO of AgTech Insight, Aaron Magenheim to further examine how this next wave of innovation is expected to take hold.

Click to EnlargeThe blockchain-powered trading platform created a shared, immutable record of the transaction – “a single source of truth for all parties.”Blockchain commodity collaboration
Cargill and Agrocorp, in partnership with Rabobank and other logistics partners, completed the cross-continent commodity trade transaction of wheat, valued at US$12 million, from North America to Indonesia, Southeast Asia, on a blockchain platform provided by Singapore-based dltledgers. The transaction is said to demonstrate the power of partnerships to ensure the global agriculture supply chain delivers food to where it is needed during these uncertain times.

The blockchain platform provides a repeatable framework for end-to-end digital trade executions, digitizing the document and trade execution process. The trade took just five days to settle, whereas traditional trading processes can take up to a month. The platform created a shared, immutable record of the transaction – “a single source of truth for all parties.”

“Food safety and traceability are other major opportunities for blockchain. Also, adding data from in-the-field to support a product’s sustainability claims or its exact origin by pulling in date, time and location or major growing activities and harvest details into the chain are areas of opportunity. As consumers continue to get closer to the producer, providing some visibility into key metrics will become increasingly important,” Magenheim at AgTech Insight tells FoodIngredientsFirst.

“Smart contracts and payments, traceability, data standardization, sustainability and streamlining the demands of our food system are the main applications for the tech we are concentrating on today, but choose an area to start and scale from there – don’t try to implement all of them at once,” he advises.

“What’s interesting here is that each transaction can include multiple unconnected counterparties, represent tens of millions of dollars, and involve the registration of hundreds of different data points into the platform,” says Brian Behlendorf, Executive Director of the Hyperledger Consortium, which runs the open-source platform on which the dltledgers blockchain is based. “The numbers are truly impressive, but what’s more remarkable is that this is not a proof-of-concept, but real production use.”

Click to Enlarge“Blockchain is a very important tool, yet it’s still just one tool in your toolshed. It will only work when you give it the right job combined with the right strategy, people, funding, and resources,” maintains Magenheim.Gradual adoption throughout industry
Looking ahead, Magenheim believes that blockchain will play an intricate role in every part of our lives including the agri-food space. “However, thus far, blockchain adoption throughout the industry has been extremely slow. We have seen a few proof of concepts over the years showing how much the technology can help, but realistic implementation within a business is a completely different challenge. 

The most prominent underlying challenge faced by blockchain at the moment has to do with the way it is adopted by all its users. “Blockchain requires data standardization across not only individual businesses, but across all parties involved and this is where success typically fades away,” notes Magenheim.

“It is great to see more real, positive tests completed and I hope this initial pilot project between Cargill, Rabobank, Agrocorp and others is taken seriously and next they form a team to focus on building out a realistic implementation strategy for blockchain coupled with other much-needed technologies,” he remarks.

“These all require a cultural modernization shift along with digitalization. Blockchain is a very important tool, yet it’s still just one tool in your toolshed. It will only work when you give it the right job combined with the right strategy, people, funding, and resources,” he maintains.

Among the early movers in this space, Cargill previously partnered with other large scale suppliers Archer Daniels Midland Company (ADM), Bunge Limited and Louis Dreyfus Company in 2018 to investigate ways to standardize and digitize global agricultural shipping transactions for the benefit of the entire industry. Last year, the company’s oils business leveraged digitalization to bring “real-time data of global commodities to customers’ fingertips” through the launch of MiApp, an app solution available in North America.

Other prominent industry heavyweights have jumped aboard the blockchain bandwagon. Last week, in line with its launch of select editions of Zoégas whole beans and roast and ground coffee in Sweden, Nestlé expanded the use of the IBM Food Trust blockchain technology platform to this brand.

Click to EnlargeBunge has announced the launch of Vector, a technological solution that allows freight scheduling via mobile phone.Smartphone-powered freight scheduling in line with social distancing
In other tech space developments, Bunge has announced the launch of Vector, a technological solution that allows freight scheduling via mobile phone. The tool gathers information about Bunge’s cargo available for handling: pick-up and drop-off locations, timeline for pick-up and delivery, as well as the quantity per ton. 

Drivers registered in the app can select a freight and schedule the load in a few seconds, without the need to personally attend one of the company’s branches to withdraw the load order, which becomes digital and confirmed at the time of choice by the driver truck.

The goal with this innovation is to optimize the time of Bunge’s transportation partners, allowing them to spend less downtime and more time on the road. The company’s logistics operation in Brazil involves 320,000 truck drivers at its base that carry more than 25 million metric tons of grain per year. In total, the amount of freight for the transportation of goods can reach around R$3.5 billion (US$677.8 million) annually. “The dimensions of Bunge’s operation mean that Vector starts already as a giant player in this market,” says the company’s Logistics Director, Makoto Yokoo. The executive projects that 50,000 drivers will be using the platform by the end of the first year of operation of the app.

In gradual implementation since January, Vector has recorded more than 23,000 downloads and 18,000 profile registrations. The tool is already responsible for handling about 45 percent of the total cargo handled by Bunge by road. The app is now available throughout Brazil, with versions for the Android and iOS operating systems.

“The current pandemic may be the necessary catalyst to force the industry into standardization and collaboration – if it takes the right approach. The technology is ready and proven, now it’s just a matter of time before it becomes the standard,” concludes Magenheim.

By Benjamin Ferrer

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