World Grain - December 2018 - 6

FROM THE EDITOR

A revolutionary development
for grain trading

A

joint press release from the so-called
ABCDs of global agribusiness -
Archer Daniels Midland Co., Bunge
Ltd., Cargill, and Louis Dreyfus Company
- is both unusual and worthy of our attention. In a truly revolutionary development,
the four agribusiness giants, who for years
KDYH ZDJHG ¿HUFH FRPSHWLWLRQ DJDLQVW RQH
another for market share in the grain trading sector, announced on Oct. 25 that they
plan to work together to modernize global
agricultural commodity trading operations.
The companies said they are going to leYHUDJH EORFNFKDLQ WHFKQRORJ\ DQG DUWL¿FLDO
intelligence to standardize and digitize inWHUQDWLRQDO JUDLQ WUDGLQJ 7KH ¿UVW DUHD WKH
ABCDs are targeting is automating grain
and oilseed post-trade processes.
"Many aspects of agricultural trading
are highly manual and costly: paper documents, facsimiles, manual retyping of data,
and so on," the companies said. "And many
transactions still utilize hard copy transfers
of documents."
What is blockchain technology and how
can it improve the grain trading process? In
a nutshell, blockchain is a shared record of
data maintained by a network of computers, rather than a trusted third party. For the
purposes of international grain trading, it's
nothing more than a shared digital ledger. It
lists all the transactions that have taken place
on the blockchain platform. New transactions can always be added to the ledger, but
the existing shared data on the blockchain
FDQQHYHUEHWDPSHUHGZLWKRUPRGL¿HGEHcause so many versions of it exist on other
computers. Once the trade is entered on the
ledger, a commodity's seller knows he has
been paid, and the currency resides in a digital wallet. The buyer knows he now owns
the title to those goods. Sellers receive better payment security by seeing that currency
immediately has been transferred, and buyers receive better access to the supply chain.
It remains to be seen if other international
grain traders such as China-based Cofco and

6

EDITORIAL STAFF

Japan-based Mitsui will join the blockchain
movement. More than likely they will. When
the opportunity arises to implement that
time-honored business practice of cutting
out the middleman, which results in costVDYLQJV DQG EHWWHU HI¿FLHQF\ FRPSDQLHV
usually don't hesitate. Some of the biggest
companies in the world, including Microsoft, Samsung and Nestle, already are using
the technology for various purposes.
Remarkably, though, a 2017 Deloitte survey found that 39% of senior executives at
large U.S. companies that were part of a survey on blockchain technology indicated that
they had "little" or "no" knowledge of it. It
would behoove them to quickly learn how
LWZRUNVDQGKRZLWFDQEHQH¿WWKHLUUHVSHFtive companies.
Of course, nothing is perfect and one
downside to this type of technology is the
potential elimination of jobs, not just in the
agribusiness sector but in all industries. This
LVQRWKLQJQHZKRZHYHUDVWKHJUDLQÀRXU
and feed industries that our magazine covers
have been reducing labor costs in the name
RIWHFKQRORJ\IRUGHFDGHV&RPPHUFLDOÀRXU
and feed mills, for example, which used to
require dozens of workers to operate them
manually, are now highly automated and require far less manpower.
Still, blockchain technology's potential
WR KHOS FRPSDQLHV RSHUDWH PRUH HI¿FLHQWO\
whether it involves streamlining the grain
trading process or better tracking of global
supply chains, is an overall positive development
with far-reaching impact.
Blockchain
technology
is no longer a far-fetched
concept out of a science
¿FWLRQ QRYHO ,W LV D UHDOity, and it will be affecting
grain trading and other aspects of our business
in the not too distant future.
Arvin Donley
Editor

Editor-in-Chief
Morton I. Sosland
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Arvin Donley
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Fengcheng Wang
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WORLD GRAIN (ISSN 0745-8991) Volume 36, issue 12,

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World Grain - December 2018

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