The latest news from senior reporter James Eyers at the Australian Financial Review shows state of the art technology based for wheat farmers around AgriDigital’s technological innovation.
AgriDigital the cloud based transaction platform
Rain and low temperatures in the NSW delayed this year’s wheat harvest. With Australia on the brink of an “agtech” revolution, almost 5 per cent of national grain production, around 1.5 million metric tonnes, has been processed in recent months using new software AgriDigital. The platform allows grain growers, buyers and handlers to manage contracts, deliveries, invoices, payments and inventory all in one place on the cloud.
While the evolution of distributed ledgers is still in an early phase, the coming years will see the formation of commercial consortia seeking to “reduce transactions and book-keeping costs, streamlining business operations and enable new business plans.
For example, BHP Billiton said in September it will use blockchain in its supply chain to record the movements of well-bore rock and fluid samples, allowing it to work more seamlessly with vendors. The Australian Securities Exchange will decide in 2017 whether it moves the Australian equity market’s clearing and settlement systems to a distributed ledger, which would reduce administration costs for its member brokers by eradicating vast swathes of back-office reconciliation work.
The Victorian Farmers Federation Grains Group estimates $50 million was lost by grain growers in the state in 2014 due to grain trade insolvencies. It’s a problem that costs hundreds of millions of dollars a year nationally when losses in other states are combined with the multiplier effect of lost farmer spending in rural communities.
Victorian farmers lost $50 million in 2014 when grain buyers defaulted on purchases.
The AgriDigital pilot, which concluded on December 8, used a private version of the Ethereum blockchain which was customised from the source code to increase transactional speed. The grain purchase and settlement agreements were designed as “smart contracts” which executed automatically. The pilot allowed AgriDigital to test scalability and the ability of the technology to handle high volumes of commodity processing and settlements.
“Blockchain can tell the seller about the buyer’s capacity to pay, allowing them to deliver the grain comfortable in knowledge they will be paid,” says Weston, a former lawyer at the Australian Wheat Board who is now based in the Sydney fintech hub Stone & Chalk.
Operating in confidence
Emma Weston says distributed ledgers can “democratise access to finance” by creating rich data and security.
Many growers will remember the days of AWB and government guarantees, she says. “With this new technology, we can remove counterparty risk so that buyers and sellers can operate in confidence as they did in the past.
“In the new world, finance travels with the asset, and the asset is security for the finance.”
“We are trying to focus on the new types of collaboration and new business opportunities,” she says. “In the past, it has been about the technology and trailing transactions in isolation in a proof of concept. Now we need to move on and think about new ways of working together and entirely new business models.”
Not surprisingly, the world is paying attention on the emergence of Australian agtech. Full Profile, which won Westpac’s Blockchain Hackathon this year, also presented to 2000 delegates at FinovateFall in New York in September. In 2017, it plans to export its AgriDigital technology to Canada.
“Agriculture has been characterised by high levels of competition and there are many entrenched players across the supply chain, including the financing of the supply chain,” she says.
“We want to democratise the access to finance and bring more liquidity to the global supply chain.”