GrainChain, a software platform that develops blockchain and IoT tools for the ag industry, raised $5 million from Overstock.com’s blockchain accelerator, Medici Ventures. This follows its initial investment of $2.5 million in the Texas-based startup in December 2018.
The value of blockchain in food supply chains and agriculture is estimated to be $60.8 million in 2018. It’s expected to skyrocket by over 700% to reach $429.7 million by 2023.
“GrainChain has quietly become one of the most successful blockchain-meets-agriculture platforms on the market by allowing more and more farmers to receive fair value and prompt payment for their crops, while also selling to a larger pool of buyers,” said Overstock CEO and Medici Ventures president Jonathan Johnson in a press release announcing the funding. “GrainChain’s work in reducing the time and spoilage associated with agricultural transactions, while also driving down frictional costs for both farmers and buyers is a shining example of Medici Ventures’ mission to democratize capital, eliminate middlemen, and re-humanize commerce through the use of blockchain technology.”
GrainChain’s platform aims to provide faster payments and to allow immediate availability of tradeable commodities between buyers and farmers. Blockchain helps reduce fraud and corruption by providing a way to track and certify deals. This also has the added benefit of streamlining and modernizing transactional procedures in the commodities supply chain.
The new funding will be used to help GrainChain continue product development and expansion to meet market demands in more countries, according to startup co-founder and CEO Luis Macias. The company has been focusing on the Honduran coffee industry, attempting to link up its disjointed components through blockchain technology. It’s signed deals throughout the supply chain from farmer to exporter to mitigate risks, confusion, and profit-draining inefficiency. It also links farmers with banks and hopes to launch banking in rural coffee-producing areas.
Founded in 2014, Medici aims to accelerate the adoption of blockchain-driven technologies to change the way that transactions occur. The firm’s keiretsu (a Japanese term referring to a set of companies with interlocking business relationships and shareholdings) of companies have introduced blockchain in a variety of markets including land governance, money and banking, capital markets, supply chain, and voting. It’s hoping to also raise public awareness and understanding about the use cases for and value of blockchain technology through public engagement and policymaker outreach.
A number of other entities are seeing blockchain as a promising panacea for supply chain woes. In 2018, Walmart made a big blockchain push through a partnership with IBM that led to a new food safety system, IBM Food Trust, for the supplier’s green leafy vegetable supply chain. By placing the supply chain on the blockchain, Walmart hopes to better identify critical control points and to identify outbreaks more quickly and precisely when they do occur. Alibaba and Bayer also teamed up to create a blockchain-based ag tracking system.
Most blockchain startups in the food and ag space are focusing on food safety and traceability oriented applications. Ripe.io scored $2.4 million from Maersk in 2018 for its self-dubbed “digital bridge” between farmers, distributors, processors, grocers, and other supply chain participants to record food’s journey. Wholechain is doing something similar in the seafood supply chain.
As blockchain matures, we will likely see the technology find new applications in other spaces beyond food supply chain monitoring. Farmobile recently secured a patent for new blockchain technology is using to help farmers keep tabs on their data while Wyoming has created a blockchain-based program to help farmers who raise sustainable beef capture premiums for their products.
Despite all the bullishness, some are skeptical of blockchain’s promise. A pair of commodities veterans recently launched the Global Commodity Technology Association in response to what they called the lunacy of blockchain and the common sentiment that it can save the world.