In the two years since GrainChain launched its distributed ledger-based transaction platform for bulk dry goods, the company has brokered thousands of contracts on everything from corn, sorghum, wheat and soybeans to even sand from its headquarters in McAllen, Texas.
Now the company is expanding its services to Mexico, partnering with the government of Tamaulipas to help farmers and grain elevators with commodity management and settlement.
Integrating with existing grain elevator equipment, GrainChain will deploy its sensors and software to automate the certification of inventory, invoice settlement and reporting to buyers and sellers, according to a statement from the company.
Although the company’s blockchain adoption is new, GrainChain began developing its technology six years ago as an inventory supply chain management toolkit for farmers.
The company’s founder and chief executive Luis Macias had sold his previous software business Verge Data to an insurance company in 2005 and took some time off before wading back into the software development business in McAllen.
In 2012, Macias says he was approached by Hi Star Grain about developing software to manage the sales process for bulk dry goods.
The company spent the next five years working on the technology.
Before a commodity is ever shipped, GrainChain sets up a contract between a buyer and a farmer for their supply, negotiated through GrainChain’s digital portal. That contract is submitted to the chain along with an agreed upon payment that’s held in escrow until delivery.
In the field and at the silo, GrainChain’s system consists of a logistics toolkit to monitor and track harvests coming out of the fields and through individual silos. The goods are certified for quality assurance using the company’s sensor technology, and that certification is recorded onto a HyperLedger-based blockchain.
Once the shipment is verified, payment is released to the farmer in the form of a dollar-backed GrainPay stablecoin that allows instant settlement of the transaction. The asset-backed token is burned once the contract is filled and the tokens are converted into whatever fiat currency was agreed upon in the initial contract.
GrainChain makes its money by charging a commission on every transaction that moves through its platform.
The company raised $2.5 million from Medici Ventures — the investment arm of Overstock — back in October and is now expanding into international markets.
“We’re giving the farmer the ability to work with a higher-risk customer because they’re getting guaranteed payment,” says Macias. “Sometimes, they can’t go past the normal broker they go through.”
Currently the company has 14 commodities including: corn, soybeans, sesame seeds, sunflower seeds, sorghum, coffee, cocoa and sand.
“We have the ability to do any dry commodity that has the ability to be graded,” says Macias. “What we really found is that when there’s a contract that’s built and it’s slow-pay or no-pay or arbitration that comes through on the contract, it’s devastating to the farmer. This gives them the security to take on what would otherwise be riskier customers.”