Recent digital transaction hints at future of ag trade

One positive development to come out of the COVID-19 disaster is the long overdue digitization of agricultural trade, say a number of people involved in the supply chain.

Cargill and Agrocorp recently announced that they used a blockchain platform to complete a US$12 million wheat shipment from North America to Indonesia.

The companies issued a joint press release saying the trade took five days to settle compared to the traditional process that can take up to a month.

“We see this transaction as the latest example of how working together and using technology to solve challenges can improve trade, as well as traceability, food safety, nutrition and more,” said Jennifer Davidson, Cargill’s trade execution lead.

Mahim Sharma, head of shipping and logistics at Glencore Agriculture India, said all of the major grain companies are quickly embracing digital trading platforms in the wake of COVID-19.

“That’s the only silver lining I see in this entire situation we are in,” he said during a recent webinar organized by the Global Pulse Confederation.

One of India’s major container ports has recently switched to electronic deliver orders. Sharma said that is a welcome development because other grain transactions in India rely on courier services delivering documents to the bank and courier services are not operating in the country.

Stephen Paul, vice-president of supply chain logistics at Canada’s Ray-Mont Logistics, said the global pandemic has definitely highlighted the need to accelerate electronic options for documentation and blockchain is at the forefront of that revolution.

Peter Wilson, president of Wilson International Trade, said in addition to the digitization of trade there is an emerging spirit of co-operation across the entire supply chain.

In the past, customers used to “drag their feet” getting amendments to letters of credit or responding to shipper queries.

“We are seeing the customers just engage a little more constructively with exporters to have things flow more readily,” he said.

Sharma agreed that sellers and buyers are finding middle ground on what can be contentious issues like payment terms, documentation and how to discharge cargo in the absence of bills of lading.

“It has brought both sides of the trade together to find a solution, which ultimately keeps trade alive in these times,” he said.

Paul said there is way more communication and collaboration with clients than there was in the pre-COVID days.

“We have probably learned more about our customers and how they interact with their buyers overseas in the last month than we have in the last couple of years, just because we’re asking more questions,” he said.

Chris Oliver, nautical director at the International Chamber of Shipping, an association that represents 80 percent of the world’s ship owners, agreed with his colleagues that there is the tiniest inkling of a kumbaya vibe surfacing in the highly competitive grain trade industry.

“We’ve seen far greater collaboration and less working in silos than we’ve seen historically in the industry,” he said.

About the author

explore

Stories from our other publications