Budweiser-owner AB InBev (BUD) has developed a system using blockchain to help small farmers prove that they are suppliers of the drinks giant — allowing them to open up bank accounts and develop a line of credit.
After deciding that AB InBev should use local suppliers instead of importing large quantities of barley and malt to countries in Africa, the company realised that, in some cases, farms were so small that they did not have the necessary paperwork to prove their income.
“Even when their yield triples or quadruples, they continue to be very small,” said Carlos Brito, the CEO of AB InBev, at the World Economic Forum on Tuesday.
“We need the middlemen to consolidate this cargo to send to our breweries by the truckload. And this middleman was not necessarily passing the money we were paying to him or her to [the farmer].”
In partnership with BanQu, AB InBev has developed a distributed ledger system using blockchain to increase transparency in the supply chain.
Because the ledger uses blockchain, banks are able to verify and trust the ledgers.
“And now this farmer, who was never bankable — because she couldn’t prove income of any source, had no reports, or material or paperwork — now in a flip phone, she has in the blockchain proof that she is a supplier to AB InBev, a global company.”
“And now’s she bankable. Now she can open a bank account. And now she can maybe have a line of credit to develop the business.”
“So a lot of these things mushroomed from this idea of ‘we’re local – we need to do what’s good for the local guys,” he said.
“This is the idea of consumption also benefiting stakeholders and communities.”
AB InBev moved to a more locally oriented business by asking governments for tax breaks, signalling that it would invest in communities, local suppliers, and encourage subsistence farmers to move to commercial farming.
“They become commercial farmers and everybody wins. Consumers are safer and we create more formal jobs. The government collects taxes.”
“Instead of sending the money to Europe, or Australia, or Canada buying barley or malt, we keep the money there.”
The BanQu product has been implemented with thousands of farmers across countries such as Uganda and India.