GrainChain, a software platform which creates blockchain and internet-of-things (IoT) solutions for the agricultural industry, has signed agreements with stakeholders from every part of the coffee industry in Honduras to deliver its commerce platform. The objective is help minimise risk, improve conditions and encourage reinvestment.
“Growing coffee is such a widespread process with so many variables that it has traditionally been impossible to get people on the same page, which lowers trust across the entire supply chain,” said Francisco Fortin, general manager of Confianza SA-FGR, a major insurance provider to the agriculture industry. “With GrainChain’s blockchain platform, we can assure that all parties are able to participate in the product with much greater visibility and minimized risk through every step.”
Honduras, Grainchain and the objectives
Honduras is one of the world’s leading producers of coffee. The industry in the country has, however, existed in a state of crisis for the past several years, due to:
- falling prices
- difficulties with sustainability.
GrainChain is working with multiple groups across the coffee growing process in Honduras. The hope is that it will be possible to bring the entire coffee supply chain together on a single platform for the first time. If successful, GrainChain will unite parties across the coffee supply chain in Honduras by satisfying three primary goals:
- establishing a single blockchain-driven platform
- using this to improve the trust between farmers and banks
- opening more services for people in remote areas who were previously unbanked.
A suite of connected IoT tools will help improve accuracy throughout the entire process for all stakeholders. Improving clarity throughout the entire process protects farmers. It should also assure them that they receive quick and proper payment.
The Grainchain implementation implications
Through its suite of blockchain-based and IoT products, GrainChain aims to:
- improve efficiency
- creates transparency
- reduce human entry errors.
The GrainChain platform captures commodities’ measurements – such as quantity, quality and humidity. The data, once applied to the appropriate inventory, facilitates immediate contract settlement. Unchangeable smart contracts add improved traceability plus operational logistics. Such capabilities are relevant for both vendors and buyers.
Critically, for Honduras, GrainChain’s platform includes a digital wallet. This enables:
- remote (and unbanked) farmers to apply for loans (to bring their farms and crops up to higher standards)
- banks to direct the use of those loans so that farmers can only be apply them for the intended purposes
- mitigation and control of financial risk.
Once the GrainChain implementation is complete across the entire supply chain, it expects there will be will further benefit:
- banks will use GrainChain to manage thousands of loans to small- and medium-size farmers, including using the digital wallet for unbanked farms to obtain loan disbursements
- insurance companies will use GrainChain tools to simplify and automate underwriting of farmer loans backed by banks and the Honduras federal government
- co-ops and growers will exploit advanced traceability tools, farmer management, logistics management and farmer loan programs
- national exporters and marketplace will use GrainChain’s smart contracts for settlement, traceability, purchasing of commodities and transfer of title (ownership).
“Our platform provides guarantees and visibility through the entire process, which empowers growers and vendors while reducing risk to bankers and buyers,” said Luis Macias, CEO of GrainChain. “We believe that building agricultural industries with blockchain tools will encourage reinvestment and improve quality throughout by giving people a single platform they can trust.”
Enterprise Times: what does this mean
GrainChain’s platform combines blockchain, IoT and advanced logistics systems. As such it seeks to:
- expedite agricultural settlement payments to farmers and suppliers
- provide the immediate availability of tradable commodities to buyers.
If implemented as described the GrainChain approach will give farmers access to their commodities via mobile apps. They will be able to see their inventory in real-time which should enhance their ability to make decisions ‘in the field’.
The concept is attractive, and especially for a high value cash crop industry like coffee in Honduras. The big question to Enterprise Times is whether Honduras is small enough to make one all embracing solution work. Too often, without competition, such solutions wither on bureaucratic vines (or coffee plants). On the other hand, if can work as intended, there are plenty of other cash crop producers in developing countries that might benefit from the uncorruptability of a blockchain solution like that envisaged by Grainchild.
NB: GrainChain is a keiretsu company of Medici Ventures, the blockchain subsidiary of Overstock.com.