Rice Exchange allows buyers of large volumes of rice - typically above 20,000 tonnes - to purchase via tender. The tender feature allows purchasing consortia, big industrials and institutional buyers to procure their rice requirements using single or global origin tenders. The tendering party can choose to advertise its tender to all users on the digital platform or to send it to a pre-approved list of counterparties. Rice Exchange also caters for tenders run as Dutch auctions in which the price decreases incrementally from the starting price at regular intervals.
Tenders account for an estimated 20% of the 43 million metric tonnes of rice transacted every year on the global market. Agribusiness, food retailers, state grain buyers and aid agencies rely on tenders to procure large volumes of rice from across the globe. Tenders are useful to secure rice supplies quickly in times of famine or natural disaster. Several Asian and Middle Eastern countries, which depend on rice for food security, buy most of their rice requirements by way of tender and provisions for such purchases are often made in the national budget.
However, the tender process is cumbersome, document-heavy and costly. Notice of a tender is published in a trade gazette and interested parties must file the required documents and post a performance bond within the stipulated time frame. Conversely a tender held on Rice Exchange can be arranged quickly and attract a wide range of suppliers with the added advantages of quality control, price discovery and an immutable audit trail.
DCX COO and co-founder, Frank Gouverne, explains the benefits of the tender function: “It offers large buyers speed, agility and cost efficiencies. The open nature of the tender mechanism means that buyers achieve price discovery adding confidence to the tender process. Once the tender is completed buyers enjoy full visibility on cargo preparation via the daily inspection reports from the first class independent inspection companies that are integrated on the platform.
Industriales del Arroz de Costa Rica (Indarroz), which accounts for 70% of Costa Rica’s rice industry, has used the Rice Exchange tender feature. Antonio Martinez Fonseca, Executive Director of Indarroz, points out the benefits of a digital tender for his organisation: “Our rice industry has an excellent opportunity to improve the way to do business with the Rice Exchange platform which marks a break with the traditional manner of doing business. In my opinion the platform will facilitate the digital management of our purchases in one place, all done in a virtual environment and I must add that the dashboard alerts are great.”
Rice Exchange was designed and built to enable rice buyers and sellers and third parties to trade rice in an efficient, cost effective and secure way. The blockchain-enabled platform allows participants to interact and settle trades through a permissioned, smart contract solution that integrates buyers, sellers and service providers. It increases trust, reduces risk and delivers cost savings to the rice industry, benefiting all actors involved in the trade of this important foodstuff.