More Frosting or More Cake?

It’s no surprise that technology is making rapid advancements. Technology has been a topic of discussion with our clients for quite some time. To that end, a client and I were recently discussing just how different his job was today in comparison to five or ten years ago. The reason? Technology.

Can You Have Your Cake & Eat It, Too?

Today the marketplace is complex and involves many different levels and steps. Let’s take the example of a cattle feedlot. To go from being cattle standing in a feedlot to a consumable product, a lot has to happen.

The cattle at the feedlot must be transported to a meat packing plant. Next, a decision must be made about which grade of meat goes where and whether the meat packing plant has an internal marketing and distribution department or if independent brokers sell the meat. Once those logistics are coordinated, the meat is then transported to grocery stores and wholesalers to be purchased and consumed.

Put simply: if you’re looking at this process like a layered cake with frosting between each layer holding everything together and representing a “middle” person or step in the process, you end up with a big piece of cake that has more frosting than actual cake. More frosting means consumers are paying a higher price and your profits are lower.

Yes. Yes, You Can!

In our increasingly global market, we are anticipating farmers to begin marketing their commodities to consumers directly through the use of blockchain. As described by Merriam-Webster’s dictionary, blockchain is “…an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

Let’s take the same example from above, from cattle standing in a feedlot to a consumable product. Using blockchain, the number of middle people (or frosting) will shrink dramatically. To have a feedlot, or consortium of feedlots, seek out and purchase contracts in which to sell products directly would be a major disruptor to our current market structure.

Think for a moment just how powerful of a solution blockchain will be if a consortium of feedlots together provides one years’ worth of beef to your favorite fast food chain. Many layers of the cake are removed in that scenario, resulting in less frosting being necessary to hold everything together. All of a sudden, there is more cake than frosting, resulting in higher profits for you and a lower cost for consumers.

Though it may not be here yet in this capacity, blockchain is well on its way. Markets are evolving, and so must we!