For those paying close attention to the conversation about how blockchain could change the global food system, progress may appear to be crawling. For those just wrapping their minds around what blockchain technologies are and what they can do, the pace may seem breakneck. Somewhere in between, are the entrepreneurs looking to make the potential of blockchain-backed technologies a reality.
Emma Weston is co-founder and CEO of Full Profile, where she leads blockchain strategy and development under the AgriDigital brand, and a grain grower. (Read Weston’s explanation of how farmers can benefit from blockchain here.)
AgriDigital is a blockchain-backed supply chain management and traceability technology from Australia. AgriDigital applies blockchain to supply chain finance, automating the link between payment and physical delivery of goods at multiple points in the supply chain. The startup claims to have 1300 users and has verified A$360 million ($276m) in grower payments since 2016.
In February, the company raised A$5.5 million ($4.2m) in a Series A round of funding that will finance her company’s expansion to Canada and the US.
When it comes to blockchain and food, startups are not alone. In the last year, some major initiatives have been announced from corporates, claiming to move the blockchain of food closer to reality.
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Walmart, Nestle, Driscoll’s, Tyson Foods Unilever, IBM, Dole and several other major food companies have teamed up to explore using blockchain technology (also known as a distributed ledger system) to manage the global food supply chain. Walmart and IBM have already run two successful blockchain trials tracking Chinese pork and Mexican mangoes. Coca-Cola has attempted to use blockchain to sniff out forced labor in the sugarcane supply chain. European grocer Carrefour is reportedly using blockchain to verify standards and trace food origins in a few categories — covering honey, eggs, cheese, milk, oranges, tomatoes, salmon, and hamburgers by the end of the year. But no matter the size of the player, massive, opaque supply chains offer both challenge and opportunity.
We caught up with Weston on the sidelines of the recent World Agri-Tech Innovation Summit (where AgriDigital won an AgFunder Innovation Award). to discuss how she sells blockchain technology to different rungs in the supply chain with various levels of fluency, and where new traceability technologies should ultimately be headed.
How will you be putting your recent funding round to work?
We raised A$5.5 million from two investors — an ultra high net-worth family office in Australia and Australian VC Square Peg, and the raise has been about letting us consolidate the growth that we’ve experienced and continue to grow in Australia, and then fund market entry into the US and Canada. We’ve recently put a person in Winnipeg, Canada so that’s our first international rep and we’re employing two graduates in Canada to build out our team there. And I’ll be largely based between the US and Canada for the rest of this year as we build out the pilot and initial partnerships in Canada and through to the US. We’ll have the global platform launched by the end of this year.
How do choose what markets to enter and where to physically go within the US and Canada?
We can serve from the farmer through the consumer. We’re really only built out to export at this stage so that means supporting origination markets. We really can’t support secondary markets as yet so the US and Canada is our second origination, or primary production market that we’re going into. Canada is a market that’s really quite similar to Australia in terms of how it operates for the grains market. So we’re looking at mid-tier traders, elevators, large farmers coming on board.
In the US it’s a little different. We’re looking at focusing on niche, organic, specialty grains markets — markets that are currently underserviced from a financial perspective. Rather than just chipping away at the convention acres, we’d really like to look at where there is true under-servicing in the market and be able to provide a product that is effectively end-to-end for that market. We’re launching a supply chain financing product later this year as well. That’s going to be aimed at growers as well as the first buyer and we think that will suit the US really well.
Because we’re primarily grains-focused still, there is some sense in looking at the Midwest from an American perspective, but we’re seeing organics a bit everywhere. Because we have eventual ambitions to be not so grains-focused — in fact were bringing cotton onto our platform in only a couple of weeks in Australia, the reality is that we could be based anywhere. So, to begin with we’ll probably set up in the Bay Area on the West Coast.
Blockchain is a huge buzzword, but how do the conversations go with new customers in new markets who have no idea who you are?
For some, they just don’t care. It’s a buzzword here in this room at a conference like the World Agri-Tech Innovation Summit, but in the day-to-day markets and trading and production markets – for some of them, it doesn’t really matter. If it can’t deliver the value today, then its not something they’re interested in. So for us, we’ve got to cater to both. We’ve got to cater to sophisticated users of blockchain technology and we’ve got to cater to those who want to introduce efficiencies into their business, enable themselves to be future-proofed from a traceability or a provenance perspective, and we cater the conversation according to the type of customer.
So from a farmer’s percective, there are more and more farmers who are wanting to get further down the supply chain and they do see technologies like blockchain, once they wrap their heads around it, get further down the supply chain.
Do you find that potential customers need to understand what block chain is to understand your service?
I don’t think so necessarily. I think what they need to understand is the difference between what they may have today v. what a technology stack for a farmer might look like tomorrow. And that’s going to be a combination of technologies, both in the application space as well as in the back-end like blockchain. When we’re speaking to farmers and they’re looking at digital technologies such as IoT or drones or whatever it may be, they’re trying to work out how they are going to manage all of this data and all of these different applications, so we tend to talk about that application space and where blockchain fits in.
From a trading perspective, there are some traders and processors in particular who are very keen on having that blockchain conversation. They understand that the data is immutable. They understand that it can be used from a provenance or traceability perspective and that’s a conversation that they want to have. They also understand, to a certain degree, that smart contracts can provide automated workflow processing and back office efficiencies that they’re really excited about.
That makes each sales conversation a little bit exciting, but it does make communication a little difficult because I don’t think there is a consensus around what a farmer wants and needs or what a trader wants and needs. It depends upon size. It depends upon jurisdiction and just what particular problems they face in their business.
Do any of the recently announced corporate blockchain efforts affect your business as all?
What we watch a lot are what’s happening in the trade finance space in particular. So it’s actually quite a skinny vertical that banks and others are solving for there. But we’re very interested to see what those solutions look like. We’re also very interested to see what some of the cooperative provenance efforts look like. But a lot of those tend to be more consumer-focused then they are farmer focused, so it’s quite different from the data models that we’re building up — the single source of truth that we want to build out from farmer forward through the supply chain. So I think there are similarities and it definitely bears watching, but at the moment we’re able to keep building out what we’re doing without too much impact from some of those other initiatives. Down the track, the biggest issue is how do we make it all interoperable for all of us? If there are a number of different initiatives underway, how do we bring it all together at some point in time to get the benefit? That’s a question that hasn’t been answered by anyone.
Do you think that there is a genuine desire for top-to-bottom traceability on the part of large corporate agribusiness?
There are two things that I’ve observed. This is not necessarily what I’m getting verbatim from these players, but just what I’ve observed is that there are increasing regulatory pressures that they’re under in respect to knowing what’s happening in the supply chain — being able to articulate that back in some reporting or other. They currently don’t have adequate technical capacity to deliver that. So, there is an awareness there that things need to change. I don’t think that that awareness is always welcome for sure. But I think they know that it is inevitable and I think the other thing that many of these traders and processors know is inevitable is the rise of the conscious consumer and that wave is not going away either and that this is now converting to opportunity space for them if they choose to take it.
I think that there are many now who are seeking to be early movers or fast followers in this space, which is really encouraging. So I’m actually relatively optimistic about it. What I would hesitate about is the number of closed-permissions initiatives that we’re seeing. And some of that may just be the exploratory use of technology, which is fantastic, but what we’d like to see over time is a more open set of data that’s coming out that can be used for the value of the whole chain, not just certain key players in the chain.