ORMEX: Sustainable Imprint Exchange

My name is Goulnara Aguiar and I am the Founder of ORMEX.

Russian native, French living in France, and African by marriage. 

Master’s degree in “IT Architecture for Financial Markets” at Central School of Electronics (France), Blockchain Technology Exec Program from MIT, and an EMBA from INSEAD.

Goulnara is an expert of the hedging-risks models of 16 Commodities Exchanges. She is a former Global Leader for Capital Markets software solutions, at renowned software providers as Finastra (London) and Calypso Technology (San Francisco). For more than a decade she was leading, designing and promoting software solutions for the Leading Investment Banks and Financial Exchanges.

« My current ambition is to apply this niche knowledge towards sustainable agriculture development and create a real shift within the financial mainstream. My two children are global citizens, and I care what world we will leave to the next generation as our heritage.»

There is a growing demand from the biggest food producers of the world for sustainable agricultural products. Until now, it was hard to finance them and cover their risk at scale. Capital Markets do not have a way to measure the sustainability factor of traded products and therefore do not trade sustainable agricultural commodities. ORMEX is solving this problem.

Farmers input the verified data through the Ormex App. Buyers and Sellers provide their sustainable criteria to the blockchain platform and we do the matching. Then, we send this matched information to the financial exchange to make the transaction happen.

As a result, consumers can have access to healthier and sustainable food, farmers increase their income and the exchanges get access to the sustainable commodities market.

Our vision is to increase sustainable, agricultural commodities from 4% to 20% globally within the next 5 years.

We are tackling 2 problems: 1. The sustainability commodities are not traded on Listed agricultural commodity exchanges. 2. The environmental impact of conventional agriculture is responsible for ¼ of global warming. (WRI, 2019)

According to the UNCTAD (2019), commodity price fluctuations directly affect the incidence of poverty in 34 low-income countries, at least at 60% dependent on bulk agricultural commodities exports. Unpredictable price fluctuations with a negative pricing significantly reduces national revenue, costs millions of jobs and render farmers’ crops nearly worthless in one fell swoop. (UN,2019)

These countries have no incentive to diversify and produce sustainably as only conventional commodities are exchanged on Financial Markets. Thus the problem of global warming, engendered by the conventional agriculture, is not solved at a scale.

Commodity prices are fixed on financial markets. Listed trading is exclusively reserved to the conventional agriculture. Its risk coverage models does not take into account the mid-long term environmental and social risks. Thus, there is no alternative towards sustainable agriculture increase and diversification and healthier food for the consumers globally. 

Introducing sustainable commodities on Listed commodity exchanges could value social and environmental benefits and reduce climate-change and pandemic risks. With the new product differentiation comes its price differentiation from conventional commodities. This creates better living conditions for the farmers. Producing and consuming healthy food becomes a new norm for our humanity!

The members of the World Federation of Exchanges recognize their role in promoting this transition. (WFE, 2019) 

However, with 80 international quality labels, there is a lack of common impact measurements. We are aggregating sustainability factors between different actors to result in building new sustainable products on the exchanges.

ORMEX is a shared, secured, and trustable digital platform for the agricultural community, to trace their social and environmental impact at a new sale. ORMEX connects producers to the market, from farmers to the financial exchanges and validate their quality with their preferred Quality Labels.

ORMEX is powered by a phone-App for the farmers use; a blockchain platform for all other actors and AI/ML analytics to provide patterns on the benefits of sustainable commodities and hedge their risks. Connecting our solution to 3 leading agro exchanges in US, UK and China will cover 91% of the agro commodities trading market.

ORMEX is focusing on the countries who export agricultural commodities and hedge the risk of their production on Financial Exchanges.

As a first target, we focus on agricultural commodity dependence coutries:746 million people from 34 least developed and most vulnerable countries (LDCs): 47% in Sub-Saharan Africa, 41% in Latin-America and 13% in Asia. When prices go down, employment, exports and government revenue suffer.

There is 2,9 mln farmers that practice today organic agriculture. (FIBL, IFOAM, 2019) They represent only 0,5% of the family farmers globally. Thus, there is a real need to scale these practices if we want to feed 2 bln more people by 2050 without destroying our planet. 

ORMEX will reward small farmers participation on our phone App with a virtual currency that will partially pay for their Quality certification as well as communicate the real market prices. They could better negotiate, and obtain a quality certification, too costly for the small farmers today. 

Finally, adding sustainable commodities to the exchange helps farmers to have a direct access to the organic trade channels.

Overall, producing low-impact and more nourishing food enhance better living of family producers and their communities. It also reduces food insecurity in their countries.

With US$100 billion, sustainable agriculture represents only 4,5% of the total agricultural production. (FIBL, IFOAM, 2019) To achieve the SDGs by 2030, we need the implication of Exchanges trading agricultural commodities to channel their investments towards sustainable agriculture.

ORMEX is building a network of agricultural supply chain and financial communities using Blockchain technology and Artificial intelligence for the sustainable commodities trading. We value social and environmental benefits produced by small-farmers at the Exchanges level.

By helping commodity dependence countries diversify their economies with sustainable agriculture we help reduce poverty and fostering equality to protecting the planet and preserving peace.

The idea started 2 years ago. I was wondering how enhancing the risk-hedging (coverage) model for those who are buying commodities futures (FUT) on the Financial markets. My main point was to introduce the environmental benefits of sustainably produced products on the financial markets and reward those who are buying these products. 

During an informal discussion about this concept with one of the exchanges, the answer was: "This can defenitely be worthwhile, even if the idea of changing our actual risk-modelling is crazy. However, there is something more important than that! We do not have sustainable commodities available for trading!" I started analyzing other exchanges and the result was : none of them was trading sustainable commodities in any available segments: not in agriculture, nor in energy or metals.

So, it was clear that before providing any incentives to the buyers of sustainable commodities on the exchange, we should first solve the main issue: start trading sustainable commodities.

The idea of specifically focusing on agricultural segment comes from my family traditions. My grand-parents loved farming. During my childhood in Russia, I saw that planting reproducible, noutrishious and climate-resistant food without pesticides was possible and hugelly contributed to our health.

According to the most scientists of this earth, this project is a must have, if we wish to survive and feed 9 billion people in 2050 without destroying our planet. If we do nothing, we will need to destroy the total available forest of the earth before 2050. According to GlobalForestWatch, we lost a football pitch of primary rainforest every 6 seconds in 2019! Most of it because of large-scale and industrially produced agriculture.

Sustainable agriculture represents only 4,5% of the global agricultural production (FIBL, IFOAM, 2019). To scale it at a speed required to achieve the SDG goals of Paris Agreement by 2030, we need the implication of Exchanges trading agricultural commodities. From US$7 trillion required to achieve this goal, only half a trillion US$ has been invested by the financial institutions (UN, 2019).

I deeply investigated if the implication of exchanges in this process can be really positive, or stay at a greenwhashing level. What motivates me alot, is that in commodities trading a big part of the exchanges concerns the real physical delivery of agricultural crops. So, there is a link to the real world, and thus a real positive consequence on people's lifes can be possible. 

First of all I have a clear vision of what I wish to acheive within the next 5 years: introduce sustainable agricultural commodities in the financial maintstream.

To acheive this vision, I am basing on my past experiences of software creation for the Financial markets, my knowledge of leading a company acheived during my Executive MBA studies at INSEAD as the knowledge accumulated during the last 2 years learning the area I did not know: sustainable agriculture practicies. 

When I was working for Calypso Technology, a young Californian company at that time, during the first years we were less than 5, to support all Back-Offices of major Investment Banks of the world (more than 300 customers!). 

After few years, I became a Business Analyst and further a Product Manager for Commodities Trading and its Risk Management. I was one of the rarest persons in the world, to deeply undestand this area and reproduce the risk models of the 16 Financial Exchanges worldwide! This is a top noche knowledge, a black box. Moreover, I have delivered this project in 15 months, instead of 3-5 years required generally. 

During my studies at INSEAD I have won the Best Negotiator Award.

Having this niche experience of Capital Markets software, going out of my confort zone and learn the agriculture, learn how to lead a company - this is what uniquely position me to deliver this project and solve the problem.

I have all the tenacity, carage and negotiation skills to acheive my goal.

At my last corporate position, I was a Global Lead of Capital Markets solutions at Finastra, 3rd FinTech in the world. Finastra (merge of Misys and D+H) has the broadest set of financial software solutions, with $2.1 billion in revenues, 10,000 employees and over 9,000 customers, including 48 of the top 50 banks globally.

Within my role in Sales Operations, I was the owner of Go-to-Market (GTM), creating a vision for Post-Trade Processing and leading a Global Campaign for the year.

As a functional expert I was leading 5 software solutions for Investment banks: Global Back-Office, Securities Finance and Collateral Management, Machine learning (ML) and Regulatory Reporting. 650 persons within the cross-functionnal teams.

When a new director was positioned, I was layed aside. It was sudden. I was concidering that when you accomplish your work with success this could not happen. But it happened.

After two months of depression I have rebuilt myself, integrated one of the best business schools in the world, INSEAD, and started an Executive MBA program. 

I decided to lunch a startup company, with a purpose greater than generating revenue or cutting costs for the investments banks. 

This experience made we think larger, made me stronger!

I am a perseverant, passionate and inspiring woman - Leader!

Grew up in Russia in a middle class family until my baccalaureate at 16, acheived with distinction.

Perseverant because decided to study in Europe; during the crisis of 98, this was in the measure of impossible. Got one-way ticket and arrived to France on my own on my 17th birthday, without speaking french. Being perceverant follows me during all my studies and work experience. If I decided something, I will convince all people around to help, unite our strengths and will finally achieve my goal. “I did not know that this was impossible, so I just did it.”

Passionate and creative as this is my nature. I am a piano passionate and a music composer. Music brought a different dimension of seeing my life, understand people, and look largely at the situations.

I am also passionate at work, while creating useful solutions for people. And this passion is definitely transmitted to my clients.

Inspiring is definitely a Leader characteristics. At work my colleagues used to compare me to a locomotive. This is very rewarding. Inspiring is looking beyoug what we have learnt, bring people to a common vision of well-being.

• Our solution is unique in the conjunction of sustainable factors that we measure and the fact to bring them at the exchange level. For the first time a Blockchain will be used to trace the sustainability (social and environmental) factors with a holistic approach in one place. No need to choose one quality standard to another.

• AI /ML neural networks will help us to determine meaningful patterns of the social and environmental benefits or trade-offs of sustainable agricultural trading and its direct impact on the lives of real farmers and their community.

• ORMEX helps Sustainable Agriculture be part of the financial mainstream, which is Listed Commodities Trading, with US$46 trillion nominal value (2019) for the agricultural segment. With other financial asset classes, as Equities and Social and Green Bonds, the financial institutions invested US$0,5 trillion, from 7 trillion required by the Paris Agreement. To reach the SDGs on a timely manner, we need to involve Commodity Exchanges.

• Finally, ORMEX is creating an inclusive community of diversified actors, from Farmers to the Exchanges – who need one another to resiliently co-exist and to co-develop.

• Applying blockchain protocols in Capital Markets, is already used by Komgo and Vakt. They are not specialized on sustainable factors traceability or sustainable agriculture and do not have any connectivity with the farmers.

On Financial markets trading agricultural commodities contracts, there is no differentiation between a sustainably produced and a conventional agricultural product.  International markets are driven by conventional lowest prices that does not consider the conditions of production and consequences they have on the consumers’ health as global warming. Since 2019, supply chain actors urge Exchanges to introduce sustainable agricultural products. (WFE, 2019) With more than 80 international Quality Labels and Standards, it is very hard to qualify a sustainable agriculture product.(WFE, 2019) ORMEX provides a service to the Exchanges, by collecting social and environmental measures of the certified sustainable commodities from Farmers on a digital platform and aggregate at a commodity level. The immediate output of this, is the possibility for the exchange to introduce at least 4 main sustainable agricultural commodities (rice, corn, coffee, and cacao) currently traded on the exchanges. The commodities exports of these products directly feed 70% of total population of 34 agricultural commodity dependent countries.(UN, 2019) The outcome of this activity is an exponential increase of investments towards sustainable agriculture. Another long-term goal is the possibility to extend in time economic shocks due to the law nutritious food pandemics.

248 million farmers from 34 lowest income are heavily dependent from agricultural exports (UNCTADStat, 2019) Their revenue is extremely low and varies at the rate of price fluctuation on the exchanges. Only 3% of the final consumer price is going to the farmer (OECD, 2019). Farmers have no access to the market prices and obtaining a quality label certification it too costly for them. ORMEX provide a Web-App for the Farmers that shows them the daily market prices for their crops. The immediate output is better negotiation power and income increase for these farmers. In return they provide Ormex social and environmental data required in the App for each crop production. According to the sustainable impact generated by their daily activity, they receive virtual Tokens, which can be spent on paying partially for their Quality Certification in Mid-Long Term. The outcomes are that the farmer will start producing sustainable food and be less dependent on conventional exports.

Our solution is currently tested in 3 regions of Kenya with 24 farmers and Togo. 

In year 1 we plan to touch 2800 farmers by partnering with a quality Label in 10 lowest-income countires. 

In 5 years we plan to make our App vocal and in local dialects to attend more participants. Our blockchian platform accepts multiple labels. We wish to attend 3M farmers in 17 other lowerest-income countries with at least 3 other quality lables.

Ormex long-term goal is to increase the global sustainable agriculture from 4,5% to 20% in 5 years. Our financing model is based on Licensing and Transaction Fees from the Financial Exchanges. We plan to scale by partnering with quality labels and connect Ormex platform with 3 leading exchanges (91% of market share) in US, Europe, and China.

Year 1:

a.First 6 months: R&D to make a successful Pilot with the representatives of the value chain (2-3 small farmers, 1 Country wholesaler, 1 Import Wholesaler, a Sustainable Label and a Buyer.)

b.Next 6 months: work on the POC integration between the Blockchain and the selected combined commodities (rice, coffee, corn) on Financial Exchange and KPI settings of outcomes.

Year 2: 

Go-live on the 1st exchange. AI development of Neural-networks and sustainability patterns analysis: on sustainable as on conventional agro-commodities. 

Year 3: 

Go-live on the 2nd and 3rd Exchanges, covering 91% of the total commodities market: CME (US) 24%, ICE FUT Europe (UK) 60% and Zhengzhou Commodities Exchange (China) 7%.

Year 4 and 5: adapt and integrate sustainability factors into the hedge-risk model of CME Group (the most widely used risk model for the majority of the exchanges).

We need an official buy-in from at least one Financial Exchange. The most important one is ICE Europe (Intercontinental Exchange) as it covers 60% of agricultural commodities market.

Find the 1st supply chain adopters (EFTA, FairTrade, Ecocert, Unilever, Danone and Nestle) who already trading sustainability agriculture, but not on listed commodities.

Financial investments for the first 2 years of R&D.

Goulnara has already started the discussions with  her contacts at one of the exchanges in US. She is currently in discussion with Commerce Equitable for the prototype validation.

According to the World Federation of Exchanges, Nestle and Unilever are pro-active on adding sustainable commodities on the financial exchanges. They are pushed by their consumers on providing traceable goods and respecting the environmental and social criteria of their production.

For the financial investments we hope that our participation in this competition will generate interest and help us to gain involvement of future partners and clients at different levels: Exchanges, Tier 1 Financial institutions - members of commodity exchanges, private funds investors in sustainable development, governments willing to propagate and follow sustainable agricultural measures at the national level, Central European Bank, Buyers of agricultural commodities. We are currently developing a strategy to finance our next Pilot phase with the 1st set of clients.

Our Business Model is based on a Web-App, Blockchain connectivity service and AI analytics service for the market participants, Exchanges, and Governments. 

Our model is based on yearly Licensing Fees from Financial Exchanges and the clients of sustainable commodities. 

A Transaction Fee of 0,5% per transaction for the Blockchain clients. This amount will decrease basing on the number of transactions realized. For 100k Transactions - US$750K Global Profit, for 1M TRs - US$ 5MGP, for 10M - US$35M.

Additional License will be for the AI analysis.

A special consulting license will be offered to the Governments and Financial Institutions.

In financial markets, we are targeting 3 Exchanges/Clearing Houses representing 91% of all agricultural commodities exchanges: ICE FUT Europe, UK (60%), Chicago Merchant Exchange US (24%) and Zhengzhou Commodities Exchange, China (7%). To be able to trade sustainable commodities, they need a holistic, trustable, and secured traceability solution. This is what Ormex will provide them as a service. 

Supply Chain community is interested in sustainable trading through exchanges and will be able to share more this generated value with their consumers in demand of transparency. (WFE,2019)

The app will be distributed to the farmers via Quality Labels network, prioritizing the agriculture commodity dependent 34 countries. To touch more farmers, we are planning to deliver the Web-App for free and make it vocal with local languages (H1/Y1 R&D) for all illiterate farmers.  

The Farmers will get two benefits: Tokens on their App Account and actualized Market prices for better negotiation power. 

In financial markets, we are targeting 3 Exchanges/Clearing Houses representing 91% of all agricultural commodities exchanges: ICE FUT Europe, UK (60%), Chicago Merchant Exchange US (24%) and Zhengzhou Commodities Exchange, China (7%). To be able to trade sustainable commodities, they need a holistic, trustable, and secured traceability solution. This is what Ormex will provide them as a service. 

The Reveniew from the Licensing Fees will cover the expenses starting from H2/Y2.

A Transaction Fee of 0,5% per transaction for the Blockchain clients. This amount will decrease basing on the number of transactions realized. or 100k Transactions - US$750K Global Profit, for 1M TRs - US$ 5MGP, for 10M - US$35M.

No

We are currently at Prototype phase. This will be our first round of Funding. As of today, Goulnara has 100% of the company.

For the H1/ Y1, starting in Sept 2020, we wish to win financial grants, as MIT Solve and public subventions, for the total amount of US$ 500k.These will permit us to deploy and test the Pilot of our solution within the first set of players of the agricultural community and financial markets and develop a vocal App, traduced in their dialect for the illiterate farmers. 

For the H2/ Y1, starting in Feb 2020 we need US$1 million (equity&bond) to connect the solution to the first Financial Exchange in US. 

For the Y2, starting in Sept 2021, we need between US$3-5 million (equity&bond) to scale to 2 other Financial exchanges in Europe and China, on-board Farmers from 20 other countries in Africa, LATAM and Asia, go-live on the 1st Financial Exchange in US and start to implement the AI algorithms to measure the KPI for this exchange. 

Our previewed TRI is at 23 percent.

H1/Y1, starting in Sept 2020, our expenses total US$550k. 

1) We plan to hire the following 6 profiles for the R&D: senior IT for the Blockchain development, junior IT, a Business Analyst, an APP designer, a UX designer, Expert in Ecology economics. These Expences represent 73% of Total expenses.

2) The rest is reserved for the Hardware, Operations, first IP patent, occupancy, advisors: Accountant, Lawyer.

H2/Y1, starting in Feb 2021, our expenses total US$ 1 million we plan to hire 3 new profiles: an AI specialist, a Marketing specialist and another Business Analysis for the testing and the customer support. The rest is reserved for the Servers/Hardware, Subscriptions for the live-testing on Ethereum, travels to meet with Quality Labels and Farmers, Organize workshops with supply-chain and Financial-exchange.

ORMEX shares the same goal with Elevate Prize: apply a Tech solution at the service of sustainable agriculture development. Joining our forces can make both parties attend our mutual goals and involve new actors, as Financial Exchanges to achieve SDGs goals of Paris Agreement by 2030. 

Goulnara have studied “Blockchain and its applications” with MIT (on-line) in august last year, 2019. This is one of the best technical trainings she has got. It was just a natural choice to apply to this competition. She could not have dreamed of a better place to promote her project and create partnerships.

We participate in this competition with 2 objectives: 

1) Benefit from Elevate Prize network and exposure at the international level, to get the agricultural community and financial exchanges on-board. 

2) Fund the first 1-2 years of R&D. This will help propel Ormex to the next level, higher new team members and start the Pilot work.