Binkabi Commodity Monday #3 | View online in your own language

komgo Commo

Commodity Monday, 24 September

SGS co-launches komgo, a new blockchain-based platform for commodity trade finance

As co-investor and sole TIC (Testing, Inspection and Certification) representative, SGS announces the launch of komgo SA, a new Geneva-based company, grouping 15 shareholders in the commodities sector.

komgo SA will launch a new blockchain-based platform before the end of the year that will transform commodity trade finance by enhancing efficiency and strengthening security. This platform will provide trusted digital ledgers to limit operational risks of fraud, counterfeiting or human error. With all data available on the same platform, komgo will reduce time spent on processing documents and data, which will in turn speed up the transaction process.

With this type of investment, SGS continues to stretch the boundaries of TIC industry innovation, confirming its leadership position. SGS is expanding its experience in pioneering technologies to continue to offer advanced services to clients across numerous industries.

15 partners have invested into komgo, including ABN Amro, BNP Paribas, Citibank, Crédit Agricole CIB, Gunvor, ING, Koch, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Societe Generale. It will be managed and operated as an independent entity.

Blockchain: Finding real benefits beyond the hype

Business transactions in agriculture have been transformed by the digitisation of the value chain. The first big impact came with barcodes, which made it possible to track items through a value chain. Then came handheld mobile data collection devices, more affordable sensors to track conditions, followed by the internet to transform links with consumers.

Mobile phones now take over many of these roles. Barcodes have been replaced with RFID and QR codes. Despite this progress, there are still many challenges relating to the traceability of products and transparency in supply chain management. Database systems managing transaction records were managed in isolation, not open to all the other stakeholders in the chain; they were open to fraud, and transactions were difficult to secure.

One technology apparently has the potential to provide answers to a number of issues in agriculture, from farmer IDs to smart contracts, from traceability and improving certification, digital payments, insurance, consumer feedback and improved logistics. It is the blockchain.

This is a good overview of blockchain’s potential use in Africa’s smallholder agriculture.

The Blockchain: Opportunities and challenges for agriculture

The blockchain is being heralded as a new approach to data storage and transmission that has great potential for agriculture, both for agribusiness and consumers. It is undoubtedly attractive, combining cryptography to guarantee the integrity and permanence of data, a peer-to-peer architecture that avoids centralising intermediaries, and principles of collective governance where each player can access transactions and guarantee their legitimacy. As such, the blockchain promises increased trust, transparency and fluidity of transactions within multi-stakeholder system

How to integrate smallholder farmers into supply chain

“Commodity exchanges are also a reliable marketplace for smallholder farmers offering predictable demand and price. They work a contract basis such as spot prices, forward prices, future contracts as well as options on future contracts. These contracts offer farmers stability and consistency of prices for their produce — in particular, future contracts which protect farmers against drops in prices. Many African countries have tried their hand at commodity exchanges since the South African Future Exchange led the way in the 1990s. While some have been successful, others not, their capacity to provide reliability to smallholder farmers should not go amiss.”

Black Pepper in Vietnam

Vietnam has rocketed to a dominant position in the world of black pepper in a relatively short period of time after liberalizing trade relations in 1986. That rapid development stands out in the long and dramatic history of the global spice trade. Such a quick mobilization of resources stands as a testament to the pent-up ambition of the Vietnamese people after eleven years of isolation.

After a colorful history spanning centuries, international trade in spices maintains total revenues estimated at $6 billion in 2017. Information flow remains heavily restricted, however. Interested parties collect data and conduct their analyses in secret. The results remain shrouded in mystery to all those not on the inside. But satellites scan the entire earth’s surface. By combining multiple sources of publicly available data, Gro Intelligence was able to make useful inferences on some formerly shadowy subjects, like the black pepper market.