Wheat growing in Australia is a problem that costs hundreds of millions of dollars each year for growers. To reduce the number of insolvencies or problems with payments that growers often face, one company is attempting to solve this issue with the blockchain.
Australian-based AgriDigital, the integrated, cloud-based platform that seamlessly manages contracts, deliveries, invoices, payments, and inventory – which is led by Australian startup Full Profile – concluded its pilot where it was connected to a private Ethereum blockchain computer network earlier this month. According to the Australian Financial Review, this saw the world’s first live settlement of a physical commodity on the blockchain.
The report highlights how David Whillock, a wheat grower in , Whillock Pastoral, near Geurie, NSW, delivered 23 metric tonnes to Dubbo-based Fletcher International Exports. With the use of the blockchain, however, it provided Whillock with the confidence to help maintain his cash flow and his business.
According to the Victorian Farmers Federation Grains Group, it believes that $50 million was lost in 2014 by grain growers with grain trade insolvencies being the main issue.
Emma Weston, co-founder of Full Profile, is reported as saying that ensuring grain is transferred from a grower to a consumer is currently too complex. This then poses heightened risks and costs such as slow payments.
What Did the Pilot Show?
In addition to removing the counterparty risk, the technology for the AgriDigital platform can also be used to provide grain buyers with financing options.
Weston said that the blockchain can inform the seller about whether the buyer can pay, giving them the confidence they need to know that they will be paid on time.
With this new technology, we can remove counterparty risk so that buyers and sellers can operate in confidence as they did in the past.
As 2016 comes to a close, the past year has seen many achievements involving blockchain.
The banking industry is one sector that has been experimenting with blockchain. Only recently the French central bank undertook an interbank blockchain experiment, while blockchain is being used to fight cybercrime, and the energy industry is also tapping into the technology.
Not surprisingly, with 2017 just around the corner and with high competition involving the agriculture sector, the technology could provide the ideal answer to solving a current issue for many growers.
It remains to be seen how effective the technology will be, but given its impact in so many other sectors it appears that it will provide the same answers for agriculture too.
Featured image from Shutterstock.