3 - Prime Consultancy - STO Proposal - Final

Prime Consultancy Int’l Limited
Preliminary Business Assessment | STO
All rights reserved by Prime Consultancy Int’l Limited

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Table of Contents
A. Executive Summary 2
B. Tokenization of Assets 2
i. Background 2
ii. What is asset tokenization? 3
iii. How exactly does asset tokenization work? 3
iv. Benefits of assets tokenization 4
v. How does it look from a software development perspective? 4
vi. Why is real-world asset tokenization a game-changer? 5
vii. Case Studies 6
C. Research Reports & Analysis 6
i. Agriculture Trend 6
Global 6
Malaysia 7
Palm Oil Market 8
Pepper Market 8
Coconut Market 9
ii. Blockchain Application in Agriculture 11
Supporting small-scale farmers 11
Food Safety and Integrity 11
Benefits and Challenges 12
D. Core Business Concept 14
i. Preliminary Business & Revenue Model 14
ii. Group Shareholding Structure 15
E. Preliminary Assessment 16
i. Case Studies 17
F. Appendix 1 18
i. Illustration of the applicable areas of Blockchain in Agriculture 18
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All Rights Reserved by Prime Consultancy Int’l Ltd
A. Executive Summary
With the ever changing business environment, rapid development of technology has opened up vast
opportunities and possibilities to change the way we think, work, interact, strategize, plan and execute.
Traditional business owners who are willing to take the calculated risk of venturing into unchartered
waters will be rewarded handsomely. Here, with Prime Consultancy Int’l Limited and partners, will be
providing you a comprehensive overview on why and how to utilize Blockchain Technology in the
Agriculture Industry.
First, we will provide an overview on the background of Blockchain, digital tokens and digital assets, its
current development and future trends.
Then, we will present a summary of research on the Agriculture Industry. Then we will take note of some
of the important areas which Blockchain Technology will have the biggest impact on the industry.
From the research, we may draft a concept business, revenue model, supported with a strong corporate
structure to support the business. Preliminary assessment will be done and a conclusion will be drawn
based on the above supporting information.
B. Tokenization of Assets
i. Background
“Change before you have to”, — so says one of the most influential business executives of the world Jack
Welch, and it couldn’t be more true. In our constantly-changing world the ability to change, and to change
quickly, is more important than ever. Nowadays, when our life becomes more and more digital, and data
can be stolen or damaged, protection of personal information is the most challenging aspect for
businesses. In order to provide the highest level of security for clients, companies have to change — and
here comes tokenization.
The first thing we have to discuss is what, exactly, tokenization is. Broadly speaking, tokenization is the
process of converting some form of asset into a token that can be moved, recorded, or stored on a
blockchain system. That sounds more complex than it is. To put it simply, tokenization converts the value
stored in some object – a physical object, like a painting, or an intangible object, like a carbon credit – into
a token that can be manipulated along a blockchain system.
Bitcoin could be said to represent the tokenization of electrical use and computing power into a medium
of exchange, for instance. This is a bit of an abstract example, but it gives us a base from which to work.
The main takeaway for our purposes is that a blockchain is a system or platform, and its structure permits
the trading of items that don’t really lend themselves to easy trading. Moreover, it’s got numerous
advantages over so-called traditional paper markets, particularly in terms of speed, security, and
accountability.
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Blockchain’s ability to tokenize assets is pretty much limitless, but it’s possible to group these assets into
three broad categories. We’re going to look at them in order of innovation, or the blockchain’s ability to
change the way traditional asset transfers are handled.
Massive investment opportunities are the benefits typically reserved for the few. Decentralized
blockchain network can change that. Just like bitcoin is significantly changing the financial landscape, a
blockchain asset tokenization can make investing in real world assets far more convenient and efficient.
With this method, tangible assets can be divided into small units increasing their liquidity and enabling
more market participants to join.
ii. What is asset tokenization?
Asset tokenization stirred up interest on how to move real world assets into a blockchain. How does it
work? Blockchain tokens can represent participation rights in form of decentralized protocols and this
way allows investors of all sizes to purchase shares in given resources.
As you see, the idea behind asset tokenization is quite simple: it allows to convert the rights to assets with
economic value into a digital token. Such tokens can be stored and managed on a blockchain network.
Tokenization can have tremendous effects on trading and investment, promising greater transparency,
liquidity, data integrity and exchange potential.
By tokenizing assets, you can start trading them in a cryptocurrency fashion and managing their value
exchange under contract written on blockchain.
iii. How exactly does asset tokenization work?
Asset tokenization can be described as a natural progression of investable funds. To picture this, I will use
a commercial real estate context as an example.
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Let’s assume that you’re a merchant in real estate sector. One of your properties has a value of $250,000.
With asset tokenization you can represent its value in terms of tokens. Let’s say that 1 token = $25. That
means each token represents 0.01 % shares of your asset.
To tokenize an asset you have to evaluate it and conduct an audit of your property, and this may involve
a series of steps. When the asset is evaluated, tokens are available for the investors. If someone wants to
diversify their investment portfolio by adding your real estate property, they can easily do it by purchasing
your tokens on a blockchain network.
The arrival of new players to the real estate market will increase the supply, and consequently, should
cause the prices to go higher, due to the larger amount of market players and capital available. If the
property becomes more expensive, the value represented in tokenized assets will certainly increase, and
the owners of tokens will be able to sell them higher (or in some cases receive the dividend) — increasing
their return on investment.
iv. Benefits of assets tokenization
Blockchain distributed ledger has attributes that could be very appealing to the investors. Assets
tokenized on blockchain are:
 Immutable — once an investor buys tokens, nobody can “erase” the ownership.

 Accessible — tokens can be accessed from any place in a world, 24/7, via e.g. a smartphone app.
 Divisible — tokens hold a promise of greater liquidity which increases the expected value from
trade and eliminates the need for minimum investments.
 Cost-effective — tokens eliminate the middlemen, which often limit investment accessibility by
e.g. restricting investments to accredited investors only, demanding high fees and requiring an
access to stock-trading accounts.
 Transparent — tokens eliminate asymmetry of information present during the transfer of
ownerships.
v. How does it look from a software development perspective?
Asset tokenization on blockchain requires distributed ledger infrastructure to be developed. This is not
much different than a “classic” blockchain system. You will still need:
 a protocol that consists of a chain of smart contracts for the payment and transfer of legal rights
to an asset,
 wallets to store your tokens,
 and a trading platform to trigger the whole mechanism.
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However, there are a few differences with types of tokens used in this particular use case. In a classic
crypto scenario, a token describes a specific type of cryptocurrency that exists on a blockchain. In real
world asset tokenization there is a need for slightly different tokens:
Utility tokens
A Utility token gives a user an access to a product or a service. They are rather used just to operate inside
a closed blockchain ecosystem, and are not designed as investments.
Security tokens
A Security token represents actual ownership of an asset. It can be used as an economic unit for operations
run on a blockchain and investors can expect to profit from them.
vi. Why is real-world asset tokenization a game-changer?
The ability to represent the ownership of real world assets on a blockchain can disrupt the way we manage
assets. At the moment, big value investments like real estate properties, gold, famous paintings or other
fine art pieces are reserved for the few. With new models of rising capital, secured by blockchain
technology, there would be:
 no territorial barriers: an investor from any place in the world, let’s say from Stockholm, can invest
into a building on the other side of the world, let’s say in China, without leaving their country,
with the security, speed and ease of transfer offered by blockchain network.
 no middlemen: trade can be conducted without third-party brokers that often slow down the
process, making it inefficient and expensive.
 lower investment risk: the investment portfolio can become more diverse due to the possibility
of owning parts of several assets.
 improved liquidity of tangible assets: blockchain tokens enable to introduce fractional ownership.
Globalization of capital coming from asset tokenization can significantly increase the demand and ease
down the market entry, leading to diversification and growth in the market.
For now, the legal status of this concept is difficult. The technology evolves quickly, but the regulatory
frame is far behind. Additionally, there are challenges such as:
 improvement of security infrastructure and safety regulations,

 identification of incentives to trigger more market participants and more transactions to increase
market depth,
 development of legal enforceability of property rights system,
 development of tax regulations.
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However, there are countries that already have prepared legal frameworks fitted into the new blockchain
market models. For example, Switzerland and Malta are on the frontier of blockchain adoption, including
tokenization applications. Real world assets are such a large investment area that it is rather a matter of
time before asset tokenization on blockchain proves pivotal.
vii. Case Studies
Blockchain platforms that “tokenize” tangible assets are already present on the market and their tokens
were issued:
 Bankex — “Bankex provides the universal solution which can transform different asset classes to
a digital system/field/economy/area providing it with liquidity, flexibility, and safety for asset
owners and investors like never before”
 Maecenas — “Maecenas is a new online marketplace promises to give art lovers the chance to
buy shares in famous paintings.[The Telegraph]”
 LaToken — “LATOKEN’s mission is to make capital markets and trading available 24/7 T+0, with a
broader range of asset classes. We aim to facilitate capital reallocation into promising businesses,
which will foster job creation with higher productivity.”
Blockchain asset tokenization creates a new category of crypto financial products and is changing the
traditional concept of ownership. There are many assets that can be moved to blockchain: stocks, real
estate properties, gold, even fine art. The main point is to tokenize very expensive assets that only a few
can afford at the moment. You can be a merchant, or you can be a trader who is willing to diversify their
assets portfolio and be subjected to little less investment risk.
C. Research Reports & Analysis
i. Agriculture Trend
Global
The increasing demand for food production, and rising population and shortage of agricultural lands are
key driving factors for the smart farming market. Furthermore, growing implementation of advanced
technologies in farming for maximum profitability and production, availability of low-cost cloud services,
increasing need for remote monitoring services, increasing focus on farm efficiency and productivity,
reduction in cost of sensors, rising governments’ support towards smart farming, government’s support
to adopt modern agricultural techniques and rising adoption of big data & IoT in smart farming are some
of the factors boosting the market growth. However, high initial capital investment, Lack of
Standardization and increasing level of e-waste are expected to hamper the market growth.
Smart Farming represents the application of modern Information and Communication Technologies (ICT)
and IoT solutions into farming to increase the efficiency of agricultural operations. Smart farming entails
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the obtaining of real time data of soil, air, and crops. Smart farming aims at increasing the quality and
quantity of agricultural production while protecting the environment.
Hardware offerings segment dominated the global market with largest share owing to its extensive usage
in smart farming to reduce input and augment output productivity of crop yields. The hardware offerings
include automation and control systems, and sensing and monitoring systems. Automation and control
systems such as Global Positioning System (GPS) receivers, guidance and steering devices, and Variable
Rate Technology (VRT) devices form a major part of the smart farming market. However, software
offerings segment is expected to grow with a high CAGR during the forecast period 2017 to 2026. Fish
farming applications are projected to grow at the highest CAGR during the forecast period due to
implementation of smart technologies.
North America accounted for the largest share in global smart farming market. The dominance of this
region is due to government initiatives and regulations, presence of established market players and
implementation of modern technologies. Asia Pacific is expected to witness high growth during the
forecast period due to rising awareness among farmers and growing government support in developing
countries such as China and India.
Malaysia
Steady global demand for palm oil and improved weather conditions ending last year’s drought should
help Malaysia’s agriculture sector recover from a decline in 2016, boosting returns for growers and
processors and helping to ease inflation.
In its annual report issued in late March, the Bank Negara Malaysia (BNM) – the country’s central bank –
forecast the agriculture sector to expand by 4% this year, contributing 0.3 percentage points to GDP
growth.
“On the supply side, all economic sectors are projected to register positive growth in 2017,” the BNM
report said. “The agriculture sector is expected to rebound as yields recover from the El Niño weather
phenomenon.”
Warmer than usual seasonal temperatures related to El Niño saw production decline 5.1% last year,
following a 1.2% decrease in 2015. This contributed to a decline in GDP growth, which hit 4.2% in 2016,
down from 5% the year before, according to the Department of Statistics Malaysia (DOSM).
Agriculture currently makes up 8.1% of GDP, down from 11.5% in 2011. While the latter figure does reflect
higher commodity prices at the time, the decline in the sector’s contribution has continued for decades
as Malaysia’s economy has shifted towards manufacturing and services.
Nonetheless, agriculture remains a key facet of the country’s macroeconomic profile, with an improved
performance from the industry this year likely to support growth in downstream industries such as food
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and edible oil processing. This should help to bring about the BNM’s GDP growth forecast of between 4.3%
and 4.8% this year.
Palm oil market
According to the latest official data from 2015, palm oil made up 46.9% of agriculture’s contribution to
GDP, followed by “other” (17.7%), livestock (10.7%), fishing (10.7%), rubber (7.2%) and forestry and
logging (6.9%).
As the economy relies heavily on the crop, the impact of last year’s dry spell continues to be felt, with
Malaysian traders importing above average quantities of palm oil and related products from Indonesia for
processing.
Inbound shipments in the year to April were estimated to be up to 50% higher than the 40,000-50,000
tonnes usually imported each month, but these levels are expected to return to normal later in the year,
local media reported at the end of March.
Analysts forecast the palm oil segment to continue improving through to the end of the year, in terms of
both yields and productivity, driving up output to 19.85m tonnes, a 13% increase on 2016.
Higher yields, combined with increased imports, should push prices down to around RM2500 ($577) per
tonne later in 2017, well below their four-year high of RM3000 ($692) per tonne recorded in January.
Pepper Market
The transformation of the pepper industry has seen many smallholders in Sarawak expanding their farms
and boosting their family incomes. The catalyst for them to cultivate these plants is undoubtedly the
strong domestic and global white and black pepper prices, which have soared to historical highs since the
upswing in 2009.
New farms, including commercial estates, have sprouted up not only in Sarawak but also Peninsular
Malaysia states such as Johor, as investors are lured into the commercial ventures in anticipation of the
lucrative returns from this golden crop. More replanting activities are going on and some farmers have
shifted to pepper planting from cocoa while others were reported to have opted out of tapping rubber
because of the collapse of the rubber price.
Sarawak’s two large pepper estates in central Sarawak, which have 22,000 vines in total currently, are
expected to double their holdings by December 2016. In recent years, landowners and investors in Kedah,
Perak and Malacca have ventured into pepper planting. Sabah is a traditional pepper producer, albeit in
small volume.
Sarawak remains Malaysia’s key pepper producing state, contributing more than 95% of the country’s
output. There are currently between 18,000 and 20,000 pepper farm families in Sarawak, with 68,000 to
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70,000 people involved in pepper cultivation, according to Malaysian Pepper Board (MPB) figures. Pepper
farm land covers a total of 16,000ha.
“More than 1,000 smallholders are now planting more than 2,000 pepper vines per hectare. There are
some who have increased their holdings to 5,000 vines each,” said Datuk Grunsin Ayom, retired MPB
director-general.
According to him, a family with 1,000 matured vines could earn a net income of RM100,000 per harvest
of black pepper at current price (gross income of RM140,000). The same family could earn more if it
produces the higher-priced white pepper.
Kuching Grade 1 black pepper currently trades around RM48,500 per tonne while black pepper RM28,000
per tonne, off from their historical peaks of RM50,000 and RM30,000 per tonne respectively months ago.
In 2009, the white and black pepper fetched around RM12,000 and RM6,500 per tonne respectively.
Unlike oil palm plantations which rely heavily on foreign workers, the pepper industry employs few
migrants. Grunsin cited the success of Malaysia in capturing a sizeable international market via direct
sales of the spice to dozens of consuming countries instead of going through Singapore as one example.
“Back in the 1980s, more than 80% of Malaysian pepper was exported overseas via Singapore. The
situation reversed in mid-1990 via licensing conditions and promotional efforts when over 80% of our
pepper was shipped direct to the terminal markets (now over 30 countries),” he told Metro Sarawak.
In the past five years, Malaysia earned about RM1.7bil in foreign exchange in the export of pepper berries,
crushed pepper or pepper powder and sterilised pepper. He said years of promotional and marketing
activities had significantly boosted domestic pepper consumption, which jumped to about 9,000 tonnes
a year now from merely 500 tonnes. He attributed the surge to the growing usage of pepper as an
ingredient in food processing and manufacturing as well as the government’s efforts to make Malaysia a
halal hub.
Describing the medium term outlook for the pepper market as still “very bullish”, he said based on the
International Pepper Community (IPC) 2016 forecast, global consumption for the year is about 463,000
tonnes against production of 414,000 tonnes, resulting in a shortfall of 49,000 tonnes. Furthermore, only
312,000 tonnes by the producing countries are expected to be made available for export. In 2015, global
consumption was estimated at 439,282 tonnes against production of 407,158 tonnes.
Malaysia, the world’s fifth producer among IPC members, recorded an output of some 28,000 tonnes last
year against Vietnam (world’s No 1 producer and exporter, estimated at 130,000 tonnes). Other top
producers are Indonesia (71,500 tonnes), Indonesia (65,000 tonnes) and Brazil (41,500 tonnes). Among
non-IPC producers, China’s estimated output last year was 29,000 tonnes and newcomer Cambodia had
11,000 tonnes. China’s production was unable to meet its domestic consumption and it has been
importing mainly from Vietnam to make up the local demand.
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Coconut Market
Malaysia remains as one of the top 10 coconut producing countries in the world and coconut is the 4 th
important industrial crop in Malaysia after oil palm, rubber and rice. Malaysia has progressively increased
production of coconut for both local and international markets from 550,140 (2010) to 624,727 MT (2013).
The production however, showed a decreasing trend from 2014 until 2016 at an estimated value of
530,000 MT.
Based on current production and increasing demand from both traditional and newly emerging industries,
the productions still insufficient to accommodate the needs of the industry. It is estimated that 110,000
MT more coconuts are needed to meet the demand. One of the main constraints is declining acreage of
cultivation area for coconuts from 105,658 hectares (2010) to 80,360 hectares (2016). This is because the
coconut growers’ interest has shifted to another more competitive industrial commodity such as palm oil.
As a consequence, Malaysia needs to import coconuts from neighboring countries valued at RM63 million
(2014). Therefore, to increase the competitiveness of our local coconut industry, the productivity level
needs to be improved. This would lead to increase income and generate interest of coconut.
Presently, there is an urgent need to revive the coconut industry even though coconut may not be the
number one tree crop in Malaysia. However, the description of the coconut as a ‘tree of life’ cannot be
disputed due to its many different uses. Malaysia has to make an effort to give the coconut industry a new
breath of life because for several decades, this industry has been taken out of the limelight due to an
effective campaign and propaganda which discredits the beneficial effects of the coconut products,
especially coconut oil. For a long time, the public has been made to believe that the coconut oil causes
many human health problems.
As a result, the coconut industry became non-competitive and demand for coconut oil significantly
declined. We have to work hard to liberate the coconut oil from the false image bestowed on it by
marketers of rival edible oils. Currently, one of the main products of the coconut industry is the virgin
coconut oil or VCO which has been accepted in the global market. Based on 1, 500 scientific studies, VCO
has been proven as a ‘super natural functional food’. Virgin coconut oil contains 92% saturated fat, but
64% of this fat comprises of medium chain fatty acids (MCFA) which are beneficial to human health. The
MCFA are the special elements in the VCO which can be easily broken and used as energy and will not clog
the arteries or any other parts of the body. On the other hand, almost all vegetable oils such as soybean,
corn and sun flower seed do not contain this special element. In addition, VCO has also been proven
through scientific studies, to eliminate various kinds of bacteria, viruses, fungi and protozoa which cause
human diseases.
Coconut research and development has been conducted at MARDI for more than three decades. Despite
the various efforts being done in research, the coconut industry is still facing problems in competitiveness
and does not progress as expected. Therefore, stronger efforts from respective organizations are needed
in order to make this industry grow again and become more competitive locally and globally. For the last
10 years, MARDI has put an extra effort on research to develop new technologies to value-add the
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coconut-based products. Until recently, MARDI successfully commercialized three coconut-based

products, i.e. VCO, activated virgin coconut oil (AVCO) and coconut water vinegar.
MARDI has also established a few proofs of concepts (POCs) for coconut-based products that are needed
for upscaling at the industry level. MARDI believes that continuous R&D, especially on value-added and
high-value products from coconuts such as VCO and other health products, must be enhanced for the
industry to prosper. Expansion of new export markets for these products must also be looked into as local
market is too small to stay competitive. Besides planting technologies and new markets, priority should
also be given to technology transfer and product quality. Malaysia should grab this opportunity to develop
high quality VCO-based products because we have the capabilities and the technologies to do it. There is
a large potential market for VCO-based products as food, cosmeceuticals, nutraceuticals and
pharmaceuticals. It is very important for Malaysia to take advantage of these high-value products and by
doing so, we could strongly revive the overall coconut industry in the country.
ii. Blockchain Application in Agriculture
In December 2016, the company AgriDigital successfully executed the world’s first sale of 23.46 tons of
grain on a blockchain. Since then, over 1,300 users have been involved in the sale of more than 1.6 million
tons of grain over the cloud-based system, involving US$360 million in grower payments.
The success of AgriDigital has served as an inspiration for the potential use of this technology in the
agricultural supply chain. Agriculture and the food supply chain are closely linked, since agricultural
products are used as inputs in multi-actor distributed food supply chains. Indeed, the global food chain is
complex, bringing together farmers, warehousing, shipping companies, distributors and grocers.
Not only is the system inefficient, it is also imprecise. When you buy a vegetable at your local grocery
store, the brand listed on the sticker may have no idea which farm the vegetable came from. The initiatives
where blockchain technology could be used to solve real-life practical problems fall into two categories:
supporting small-scale farmers, and food safety and integrity.
Supporting small-scale farmers
Supporting small-scale farmers and small cooperatives is currently by far the best way to improve
efficiency in developing countries. There are several initiatives pursuing this path, three of which stand
out in particular. AgriLedger describes itself as ‘a Mobile App that records and transacts incorruptible truth
using blockchain technology’. It uses distributed cryptoledger and mobile apps to create a circle of trust
for small farmer cooperatives in Africa.
The American organization, FarmShare focuses on creating new forms of property ownership, community
cooperation, and locally self-sufficient economies. It aims to use the blockchain to ‘tokenize shares,
incentivize volunteers, optimize resource sharing and minimize food waste’. OlivaCoin is a platform for
the trade of olive oil. With its own cryptocurrency and traceability system, it aims to support olive oil
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producers by reducing overall financial costs, increasing transparency and giving them easier access to
global markets.
Food safety and integrity
Food safety is about handling, preparing and storing food in ways that prevent food-borne illnesses. Food
integrity refers to the fairness and authenticity of food in food value chains both at the physical level and
the digital level. The digital level should provide reliable and trustworthy information on the origin and
provenance of food products at the physical level. Food safety and integrity can be enhanced through
higher traceability. Using the blockchain, food companies can quickly trace outbreaks back to specific
sources, which could mitigate food fraud.
There is an impressive list of companies that have started to use the blockchain to safeguard food safety
and integrity. Cargill uses it to let shoppers trace their turkeys from the store to the farm that raised them.
Walmart, Kroger and other companies have partnered with IBM to integrate blockchain technology into
their supply chains. Coca-Cola has employed it to identify cases of forced labour in the sugarcane supply
chain. Carrefour is using blockchain to verify standards and trace food origins.
Other examples include Downstream beer, which calls itself the world’s first blockchain beer. It uses
blockchain technology to reveal production information. ‘Paddock to plate’ is a project designed to track
beef and protect Australia’s reputation for quality production, using BeefLedger as a payment platform.
JD.com traces the production and delivery of beef raised in Inner Mongolia. GoGo Chicken is tracking
chickens with an ankle bracelet, putting the information collected online. The Grass Roots Farmers’
Cooperative uses blockchain to trace how animals are raised. Intel has released a demonstration case
study showing how Hyperledger Sawtooth, a platform for managing blockchains, could facilitate seafood
supply chain traceability.
In January 2018, the World Wildlife Foundation announced the Blockchain Supply Chain Traceability
Project to crack down on illegal tuna fishing. Ripe.io harnesses quality food data to create the Blockchain
of Food. Consumers can use BreadTrail to inform themselves of a product’s origin. Finally, the ‘blockchain
for agrifood’ project has developed a proof of concept application targeting table grapes from South Africa.
Benefits and challenges
Blockchain technology offers many benefits, providing a secure way to perform transactions among
untrusted parties. To improve traceability in value chains, a decentralized ledger helps to connect inputs,
suppliers, producers and buyers. In particular, blockchain is suitable for the developing world, where it
can support small farmers by providing them with finance and insurance and facilitate transactions.
Although small farmers supply 80% of food in developing countries, they rarely have access to insurance,
banking or basic financial services.
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There are various barriers and challenges for the wider adoption of blockchain technology. A case study
in the Netherlands revealed that small and medium-sized businesses are too small or lack the expertise
to invest in the blockchain by themselves. Current uncertainties are preventing individual parties from
developing a convincing business case. With respect to education, there is a lack of awareness about the
blockchain, and training platforms are non-existent.
Moreover, an important barrier is regulation. The current experience of cryptocurrencies indicates that
they are vulnerable to speculators and massive price fluctuations. So without some form of regulation,
cryptocurrency is not a trusted means yet for use in food supply chains as a comprehensive solution. And
there is still a lack of consensus among policymakers and technical experts on how to use blockchain
technology and carry out transactions based on cryptocurrency.
In the meantime, it is hopeful that blockchain technology is being used by so many projects and initiatives.
Together they aim to establish a proven and trusted environment to build a transparent food supply chain,
integrating key stakeholders into the supply chain. Of course, as with any relatively new technology, there
are still many issues and challenges that need to be solved. Blockchain technology must become simpler
to understand and use. A number of start-ups have been working in this space, such as 1000 EcoFarms,
which developed an entire platform to make it easier for farmers to use the blockchain.
We also need to address various issues on the public research agendas, while governments should invest
more in research and innovation to develop evidence for the added value of the technology and design a
clear regulatory framework for blockchain implementations. The near future will show if and how these
challenges can be addressed by governmental and private efforts, in order to establish blockchain
technology as a secure, reliable and transparent way to ensure food safety and integrity.
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D. Core Business Concept
i. Preliminary Business & Revenue Model
Assets Investors
Agriculture Land 4
Authorize the use of Land

1 via VIE (Variable Interest
Invests into Dividends
Entity) Agreement
Invests into Labuan Credit Token License

Operating Entities
(STO)
Utilize Funds to invest,
2
operate and generate 3
1
income back to investors
Salient features of the above model are as follows:
1. The land owners will authorize the operating company to plant, grow and harvest on the land.
The terms and conditions of this arrangements are to be incorporated into the Variable Interest
Entity (VIE) agreement. This agreement allows the value of the land to be incorporated into the
total value of the Token Offering.
2. The operating entities, to be operated by qualified and experienced management team will
continue to do what they do best – to plant, grow, harvest and sell the crops to generate income.
The proposed crops to be planted will be pepper and coconut. (Supported by the above research
paper)
3. In order to offer the tokens in a regulated environment, the operators chose to apply for a Credit
Token License with the Labuan Financial Services Authority, where they allow the issuance of
Tokens under their purview.
4. The investors/token holders who participated in the token offering will hold a certain percentage
of the income and assets of the whole business. The investors may receive dividends or held on
the tokens to sell it at the market when the token is listed in the exchange at a later stage, in
accordance to the Offering Document1.
1
Important Notes:
 The Offering Document should incorporate the following important features:

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o Utilization of Funds
o Risks of Participation
o Market Research
ii. Group Shareholding Structure
Shareholders
Labuan Credit Token License

(STO)
Owns 100%
Marketing &
Land Holding Entity Operating Entity
Trading Entity
Pepper Coconut Other Crops
To operate effectively and introducing risk management into the structure, the proceeds from Token
Offering will be directed to 3 companies, wholly owned subsidiary of the STO vehicle. Each of their role
shall be as follows:
1. Land Holding Entity

a. Sole purpose of holding the agriculture land
b. In charge of all Land matters
c. To sign VIE agreements with Land Owners
d. May acquire more land for future expansion
2. Operating Company
a. To plant, grow and harvest crops for sale
b. R&D to increase yield
3. Marketing & Trading Company
a. To sell the crops for revenue
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E. Preliminary Assessment
Important assumptions:
1. Blockchain technology will be implemented throughout the whole business process to enhance and make
the process more efficient and transparent.
2. The overall financial projection is positive.
3. The land banks are sufficient for the business to be viable
4. A deeper analysis, research, and financial modelling to be perform in the next phase.
From our observation, Agriculture have some big problem to solve:
 Disconnection between supplier and retailer

 Limited financing resources
 Lack in Transparency in food production and distribution
 Costly middlemen
With 40% of the global work force in the industry, agriculture is one of the leading job providers worldwide.
For most countries, it is huge, important, industrialized, but complex. Due to its importance, it is a highly
regulated as with high government intervention.
There are a few areas that blockchain technology can make a difference, from our point of view:
1. Improve the transparency in the supply chain
The modern consumers are demanding for cleaner and healthier food. That is why organic food are
getting more and more popular and more and more expensive. The current verification and labeling
system is complex, costly and easy to manipulate. Information that reach the consumers may not be
100% accurate. Thus, consumers are willing to pay a premium for the extra and accurate information.
Basically, the blockchain technology are introducing trust and visibility into the flow of goods.
Blockchain can provide the certification and regulations for clean food if implemented correctly. The
open ledger system will trace the product origin with immutable provenance data from Farm to Table,
without the consumer having to worry about the authenticity of the food they are consuming. On the
other hand, every party involved in the supply chain can verify easily what product they are receiving
and where are they planted.
Sample case studies is the collaboration between Walmart and IBM to trace the origin of the pork
that are sold in Walmart.
2. Seamless payment across the supply chain
In most cases, farmers often must wait weeks or months to be paid after delivering harvest. With the
implementation of smart contract in the chain, payments can be received immediately once the other
party receive and accepts the goods. This also adds transparency, trust and decrease default risk that
often faced by farmers.
16 | P a g e
3. Introduction of Smart Farm
Smart farm is a new concept of sustainable agriculture. It allows farmers to capture data in real time
in combination of IoT. Smart contracts can be implemented into Smart Farms as well. Various data
can be collected, analyzed and improve the efficiency of production, such as follows:
 Weather forecast, rain detection and alert

 Crop growth, harvesting and expected yields
These data enable the operator to improve its yield and direct income.
i. Case Studies
Provenance – this UK based firm is using blockchain technology to improve the traceability of food
and provide proof of origin. They traced the source of a Tuna fish. How did they do it?
Step 1: Fishermen registers data to blockchain
- The fishermen send simple SMS messages to register their catch, thus issuing a new asset on the
blockchain with each SMS.
- The blockchain assets are transferred from fisherman to supplier along with the catch, in both
physical transactions and in the digital register on the blockchain.
- The identities of the fishermen are saved forever in the list of previous owners held on the
blockchain.
Step 2: Linking blockchain with existing systems for a single source of truth
- More than a simple identifier, fetching the data stored on the blockchain allows any entity to
access details about that particular item
- To ensure trust in a system, there should be a single source of trust for each piece of information
1. Accepting raw materials – The record held on the blockchain are accessible to the item as a
QR code, RFID tag, or using any other hardware technology
2. Registering items – When raw materials turned into new products, the corresponding assets
need to to be updated and transformed accordingly
3. Accepting items – Just as inputs were transferred on the blockchain when physically
arranging at the factory, outputs are transferred to the next actor in the chain when leaving
the facility.
Step 3: Consumer Experience
- Records stored in the blockchain are made accessible to consumers where products are sold or
served.
A more detailed business plan and roadmap will be needed to implement this project successfully. Thus,
we are in the view that this is a feasible project.
17 | P a g e
F. Appendix 1
Sample illustration of Blockchain Technology Application on Agriculture and Farming Processes:
18 | P a g e
i. 3 Main Areas in Agriculture Blockchain Application

a. Smart Farming
b. Food Supply Chain Traceability and Improvement to Efficiency
c. Prediction and Control of Weather Crisis
d. Agriculture Finance
19 | P a g e
Current Global Food Supply Chain
a. Smart Farming
Step 1: IoT devices generating data
The population across the globe is expected to touch 9.6 billion by 2050 and therefore, to feed the
increasing population, the farming industry is adopting IoT devices and sensors. In IoT-enabled smart
farming, a system is built for keeping an eye on the crop field using sensors (temperature, pH, soil moisture,
humidity, light).
IoT sensors and devices generate data which can help farmers make well-informed decisions related to
the growth of the crops. The information gathered from the IoT devices first need to be structured before
getting saved on the data storage.
Step 2: Cleaning and Enrichment of the collected data
Before saving the collected data on the blockchain, there is a need to ensure that it is structured and
understandable. Data Enrichment is done to add more value to improve the quality of the captured
information. The following two steps ensure that the data is cleaned before it gets stored on the
distributed storage platform:
- Adding Meta Information

Information related to timestamp, demography, and type should be added to the data for making
it more structured.
- Making data ready for compliance

Saving data on the blockchain does not mean that it should not be compliant. Instead, it makes
compliance enforcement more seamless.
20 | P a g e
Meeting compliance ensures that the personally identifiable information associated with the data
collected from IoT devices is protected and follows security measures. Once the data is enriched, it is put
into the machine learning-ready format.
Step 3: Making the data more insightful with machine learning algorithms
Machine Learning is applied to the data generated from the sensors to provide useful insights. Predictive
models can drive several high-value use-cases including:
- Crop Quality Recommendations

- Crop Identification
- Crop Yield Prediction
- Automated crop growth factor
- Crop Demand Prediction
From the information captured through machine learning algorithms, farmers and other stakeholders will
be able to make improvements in the irrigation system from time to time. The insightful data should be
stored on the blockchain to enable agriculture market participants such as growers, innovators, producers,
service providers and retailers to access it transparently.
Step 4: Data gets saved on the blockchain
The high-value data gathered by applying machine learning gets stored in IPFS (Interplanetary File System),
a distributed storage platform having addresses hashed and stored on the blockchain. Unlike the existing
method to store essential information in the centralized server which has a risk of single point of failure,
the data is distributed across every node in the network preventing a central authority to control the
system.
The information captured in the blockchain will trigger smart contracts to process rules defined within
them. Smart contracts facilitate the exchange of data stored on the blockchain within the specific
stakeholders in the system. Since information will be visible to every agriculture market participant, it will
become seamless for them to bring efficiency in crop or food production.
b. Food Supply Chain Traceability and Improvement to Efficiency
Food Supply Chain tracking is critical to exploring the source from where the food has originated or grown.
It is essential to ensure that the supplied eatables are safe to eat.
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But when it comes to the way the food supply chain is managed currently, it becomes challenging for the
food producers and retailers to confirm the provenance of the products. While facing the constant threat
from adulteration, food frauds cost UK families upto £1.17 billion per year.
With the emergence of the blockchain, it has become possible to bring trust and transparency in the food
supply chain ecosystem, ensuring food safety for everyone. Read further to discover how. Here is an in-
depth explanation of how the food supply chain blockchain can reduce food frauds:
Step 1: IoT sensors generating data or Farmers storing data
As discussed in the above use-case, smart farming allows sensors to generate crucial information related
to the crops sown in the fields. If the farmer is not using technology-driven methods, then they can simply
store the essential information such as crop quality, type of seed and weather conditions under which the
crops were sown using their mobile application. The data captured either by using IoT sensors or manually
by farmers is saved in the distributed storage platform, i.e., IPFS with addresses stored in the blockchain.
Step 2: Distribution of grown-up crops to the food processing companies
Once the crops are grown up, the food processing companies start bidding on the bidding platform. The
crops can be transported to the refineries via IoT-enabled vehicles, capturing temperature conditions
under which the items are kept and delivered. After the bid is validated through smart contracts, the crops
undergo processing and companies store information captured at every step of the process on the
blockchain.
The information gathered from refineries can help wholesalers or retailers to confirm if the delivered food
is of good quality or not.Storing data on the blockchain can also ensure if the compliance has been met at
every step of the food supply chain.
Step 3: Supply of Processed Food to Wholesalers and Retailers
After the food items or crops are processed, wholesalers and retailers can bid for the products they want
through the bidding platform. Similar to the transportation of crops to the refineries, the food items are
also distributed to wholesalers and retailers in IoT-enabled vehicles. Blockchain offers traceability in the
supply chain, helping food companies conducting food recalls or investigations quickly and seamlessly.
Step 4: Consumers can backtrace the supply chain
From farm origination details to transportation details, batch numbers, food processing and factory data,
expiration details, storage temperature and other details digitally linked to the food items within the
blockchain, consumers can explore everything by back tracing the supply chain. The food supply chain
22 | P a g e
based on the blockchain can help different stakeholders to access information related to the food’s quality
at every stage. As blockchain brings transparency in the food supply chain ecosystem, it will be easier to
figure out when and how food has been contaminated.
Let’s have a look at the architecture for real-time bidding platform built on the blockchain which will
enable all stakeholders to bid for the crops and processed food items.
The architecture comprises the systems required to set bidding parameters, create campaigns, serve ads,
place the bids, analyze the success of the campaign and store the results. The application for campaign
management including features like dashboards and reporting are hosted on Google App Engine. The
campaign information uploaded by the different users of the system is stored in the blockchain ledger.
When any of the stakeholder’s access content on the web using PC or other devices, an ad placement
request is triggered via Double-click or Ad exchange. The load balancer gets the bid request and forwards
it to the Bid Server where tables are matched to examine what bid to return.
The ads can be fetched and stored directly from the Blockchain. Pixel Servers running on the top of Google
Compute Engine fulfill the ads requests. Modeling and Analytics run on the ads and campaign results via
a wide range of methods. BigQuery is used for querying and loading data to explore the campaign’s
effectiveness. On the other hand, the prediction API is used for implementing machine learning algorithms
to the history of bidding results for improving the campaigns.
23 | P a g e
c. Prediction and Control of Weather Crisis
Farmers usually have to confront unpredictable weather conditions while growing different types of crops.
Therefore, predicting and monitoring weather conditions are essential to the crop survival. Many of the
crops grown in the US cannot tolerate flooding due to excessive spring rains. The oxygen concentration
level reaches zero, making it difficult for the plants to perform life-sustaining functions like water uptake,
root growth and respiration.
Moreover, the lack of transparency in the current food chain ecosystems can result in unclear and high
surge pricing. Consumers don’t have an idea when did the crops suffer lousy weather conditions and what
led to the increased costs. Due to the ability of blockchain to offer traceability and transparency, farmers
and other stakeholders will be able to get a clear understanding of the price differences in the food
distribution market. Since authorized parties can trace the weather conditions from the blockchain ledger,
farmers can quickly get the crop insurance claims through smart contracts. Let’s explore how blockchain
can help control bad weather situations. Below are the step-by-step Blockchain-enabled Weather Control
Process for Agricultural Fields
Step 1: Agricultural Weather Stations sending essential information to the blockchain
Smart agriculture enables farmers to understand the crop’s behavior by deploying sensors and mapping
fields. Placing agricultural weather stations within the farms can help generate crucial information such
as soil temperature at different heights, air temperature, leaf wetness, rainfall, wind speed, dew point
temperature, relative humidity, solar radiation, wind direction and atmospheric pressure. All of the above
parameters are measured, recorded and saved in the blockchain enabling farmers and other authorized
entities to access it transparently.
Step 2: Farmers can take preventive actions
By analyzing the data generated by the weather station, farmers will be able to make informed decisions
related to the farming. For example, if they figure out that it may rain heavily in the next two days, it will
help them to take necessary actions in advance.
Step 3: Quick application for the crop insurance
In case of the damage during a weather crisis, farmers can quickly apply for the crop insurance claim
amount through the blockchain. The transparent and immutable behavior of the blockchain will enable
insurance companies and other authorized parties to access the data captured by the smart weather
station easily. They can directly query the blockchain to fetch the required information with the help of
smart contracts. After the insurance claim request is approved, farmers will automatically get the
requested amount in their respective wallets. Therefore, a blockchain-enabled solution can help farmers
get the compensation seamlessly and quickly.
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d. Managing Agricultural Finance
Lack of transparency, credit histories and difficulties in contract enforcement are some of the myriad
problems confronting between formal financial inclusion and smallholders. The inability to access financial
services can have an adverse impact on the performance of agricultural value chains due to which
producers cannot maximize their yields and buyers face struggles ensuring an efficient supply of
commodities.
The financial services do not only enable smallholders to invest in the agriculture, but also assist them in
relieving liquidity constraints. It results in the difficulty for buyers to pay farmers on delivery, forcing poor
smallholders to sell crops at the lower rates. Blockchain brings fairness in the process of agricultural
finance via transparency and shared control accessibility. Here’s how blockchain could help in managing
agricultural finance
Step 1: Stakeholders sharing information at every step of food production
Every time a transaction will take place, it will be stored in the blockchain, enabling all the involved parties
to access every single transaction transparently. Sharing essential information at every step of the food
production will bring more fairness to the entire system.
Step 2: Auditors can effectively conduct audits
Having the ability to store information permanently and securely, the blockchain can also serve as a source
of verification for the recorded transactions. Instead of asking farmers or retailers to send financial reports
for auditing purposes, the auditors will be able to verify the transactions directly via blockchain ledgers.
The automated auditing process can make the audit environment cost-effective. Rather than carrying out
assessments at the end of the year, audit firms will be in a position to conduct audits throughout the
period. Blockchain will make it possible to replace the random auditing by auditors, making it more
effective to access every single transaction.
In summary, here are the benefits of implementing the Blockchain in Agriculture:
1. Improved Quality Control and Food Safety

One of the significant applications of blockchain is bringing increased transparency to the supply
chain. It can help us to remove ineffective processes and ensure optimal quality control conditions.
For instance, crop failure is a prevalent issue faced by farmers around the globe. It usually happens
because of unfavorable climatic conditions, such as poorly distributed rainfall and erratic weather.
To solve this, companies like IBM are already investing millions into precision agriculture, creating
IoT devices that allow farmers to monitor factors such as the soil quality, pests, and irrigation that
could affect their crops.
25 | P a g e
By connecting these devices to a blockchain ledger, the results can be updated continuously and
viewed in real time by just looking at an application on their phone. It will allow them to check
that all factors are as they should be. If something is wrong, they will be notified immediately and
can make adjustments before it is too late.
Even more importantly, in the case of problems such as a food safety outbreak, it also gives us
the ability to find the source of the issue almost immediately. This has the potential to save more
than just time and money in the supply chain process—it could even save lives.
2. Increased Traceability in the Supply Chain

We’re witnessing a dramatic rise in consumer expectations for food standards. Most notably,
more and more consumers want to know where their food comes from. Using blockchain
technology will solve this problem by letting consumers know exactly where their food originated,
who planted it, and how fresh it is. It will only require workers to scan the product at each stage
in the process to update the database with information. Just imagine buying something from the
store and being able to find out absolutely everything about the product by just scanning the
barcode with your smartphone app.
Increasing the traceability of the supply chain will have a considerable impact in reducing food
fraud, false labeling, and cutting intermediaries out of the process to ensure producers get paid
fairly for their efforts and that consumers know exactly what they’re paying for.
Increased traceability will also help farmers by allowing them to record and update the status of
their crops and track them through the process of planting, harvesting, storage, and delivery by
simply using an app on their smartphone so they can see the exact status of their products at all
times and make adjustments if necessary.
Considering that roughly one-third of the food produced for human consumption—that’s
approximately 1.3 billion tons—every year is wasted, this innovation is long overdue. In Australia,
some farmers are already utilizing blockchain to track their production and reduce waste.
3. Increased Efficiency for Farmers

Currently, most farmers use a combination of multiple software apps, spreadsheets, and notes to
record their data and manage their processes. However, this is complicated and requires a lot of
effort to send this data to other service providers. Blockchain technology would allow farmers to
store all of their data in one place so that it can easily be accessed by those who need it, simplifying
the entire process and saving valuable time and energy. For instance, they’d be able to keep track
of things such as:
26 | P a g e
 Their business goals, and how they plan to reach these goals.
 The number of animals, health issues with animals, what they eat, and how often they
should be fed.
 How many different crop varieties are there, when they were planted, and how they are
performing.
 Their employee schedule, how much each employee needs to be paid, and how many
hours each employee has worked.
 Income and expenses.
Keeping track of everything on a single application instead of having a variety of different methods
clarifies the process and diminishes the chance of valuable information getting lost.
4. Fairer Payment for Farmers

There are currently several problems that make it difficult for farmers to get paid for their produce.
First of all, it often takes weeks for farmers to receive the full payment for their goods. To make
matters worse, traditional payment mechanisms—usually wire transfers—often take a significant
chunk of the farmers’ earnings.
Blockchain based smart contracts work by triggering payments automatically as soon as a specific,
previously-specified condition has been fulfilled by the buyer—and without charging extortionate
transaction fees. It means that the farmer could theoretically receive payment for their goods as
soon as they have been delivered, without a significant portion of their income being taken away
from them in the process.
Also, many farmers experience difficulty when they try to sell their products in the market at a
fair price. Right now, the intermediaries enjoy most of the profits, while doing a minimal amount
of work in comparison.
Smart contracts would completely eradicate the need for these middlemen, as it would allow
farmers to connect directly with retailers. Therefore, they’d be able to receive a fairer price for
their goods.
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ii. What is asset tokenization?

iii. How exactly does asset tokenization work?

iv. Benefits of assets tokenization

 Immutable — once an investor buys tokens, nobody can “erase” the ownership.

v. How does it look from a software development perspective?

vi. Why is real-world asset tokenization a game-changer?

 improvement of security infrastructure and safety regulations,

vii. Case Studies

C. Research Reports & Analysis

Palm oil market

coconut-based products. Until recently, MARDI successfully commercialized three coconut-based

ii. Blockchain Application in Agriculture

Supporting small-scale farmers

Food safety and integrity

Benefits and challenges

D. Core Business Concept

i. Preliminary Business & Revenue Model

Authorize the use of Land

Invests into Labuan Credit Token License

Salient features of the above model are as follows:

 The Offering Document should incorporate the following important features:

ii. Group Shareholding Structure

Labuan Credit Token License

Pepper Coconut Other Crops

1. Land Holding Entity

From our observation, Agriculture have some big problem to solve:

 Disconnection between supplier and retailer

1. Improve the transparency in the supply chain

2. Seamless payment across the supply chain

3. Introduction of Smart Farm

 Weather forecast, rain detection and alert

Step 1: Fishermen registers data to blockchain

Step 3: Consumer Experience

i. 3 Main Areas in Agriculture Blockchain Application

Current Global Food Supply Chain

Step 1: IoT devices generating data

Step 2: Cleaning and Enrichment of the collected data

- Adding Meta Information

- Making data ready for compliance

- Crop Quality Recommendations

Step 4: Data gets saved on the blockchain

b. Food Supply Chain Traceability and Improvement to Efficiency

Step 1: IoT sensors generating data or Farmers storing data

Step 2: Distribution of grown-up crops to the food processing companies

Step 3: Supply of Processed Food to Wholesalers and Retailers

Step 4: Consumers can backtrace the supply chain

c. Prediction and Control of Weather Crisis

Step 1: Agricultural Weather Stations sending essential information to the blockchain

Step 2: Farmers can take preventive actions

Step 3: Quick application for the crop insurance

d. Managing Agricultural Finance

Step 1: Stakeholders sharing information at every step of food production

Step 2: Auditors can effectively conduct audits

In summary, here are the benefits of implementing the Blockchain in Agriculture:

1. Improved Quality Control and Food Safety

2. Increased Traceability in the Supply Chain

3. Increased Efficiency for Farmers

4. Fairer Payment for Farmers

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