The world’s largest grain and oilseed companies, US giants Bunge and Cargill, have joined forces to form a Covantis joint venture that will use blockchain technology in Brazil’s agricultural sector.
This unique project involves the exchange of information between all members of Covantis, including the participation of other agribusiness giants such as the French company Louis Dreyfus (LDC), the Chinese state company Cofco International and the Dutch multinational company Glencore Agriculture.
Together, the companies that make up Covantis transport around 550 million tonnes of grain and oilseeds annually.
The aim of the partnership is to standardize industry data, facilitate interaction between all participants and improve logistics operations in ports, including the use of blockchain. The official platform is expected to be launched next year.
Companies enter into 500,000 purchase and sale contracts in Brazil each year, and the first platform trials were conducted in the port of Santos between July and August this year, involving 11 companies, including traders, builders and grain producers. Covantis CEO Petya Sechanova said:
“Covantis must become a process leader in our sector and be able to streamline, modernize and digitize operations.”
According to the CEO, Brazil was chosen because of the complexity of the market. In an interview with Valor, Sechanova said that “chain sales” or “chain sales” are observed in the country, since dozens of intermediaries are required to deliver, even if only buyers and final senders are in contact with physical shipments.
Marcus Amorim is the director of the contract committee of the National Association of Grain Exporters (Anec), whose affiliated trading companies are active with Covantis. According to him, this is a complex and difficult process:
Imagine that each shipment has a sales and purchase agreement and a sales agreement, and phytosanitary certificates and a number of other documents required in different countries are attached to them. The ships form lines and must have a certain cargo speed. This leads to massive escalation of the process in the port and delays at each end, which means waste for the entire chain. ”
In commercial companies, this process creates a somewhat convoluted workflow that is currently managed via email, phone and WhatsApp. Arrival and departure times, flags and cargo volumes are constantly changing, especially in high seasons. But because mistakes happen daily, costs and penalties increase.
But with Covantis, all this information is sold using blockchain technology, which participants believe helps information flow, prevents fraud and keeps shared data secure.
Sechanova also says that Covantis’ ambition is to gradually consolidate all grain and oilseed supplies in large quantities from the founders around the world.
The next two countries where Covantis plans to use its blockchain solution are Argentina and the United States.