Tokenise stored grain as loan collateral
Sector: Primary sector · Industry: Agriculture · Organisation: Agrotoken · Maturity level: Production
Argentine company Agrotoken issues a backed token for every tonne of grain held in storage, with PwC monitoring that the backing holds. Banco Santander Argentina grants loans against these tokens as collateral, allowing farmers to finance inputs without selling their harvest early. A partnership with Visa additionally lets the tokens be spent by card, and more than USD 30 million in volume has been traded.
Documentation status
- Project status: Production (as of 07 March 2022) — The cooperation with Banco Santander Argentina was launched in March 2022 with a target of 1,000 farmers within six months; Visa payment integration followed in the same year.
- Evidence: Evidence medium
- Editorial review: pending
Description
The Argentinian company Agrotoken issues a covered token for each tonne of stored grain, making farmers' inventory pledgeable. In Argentina, farms hold a large part of their assets physically in stored grain, which in a high-inflation environment with limited foreign exchange access was neither usable as collateral nor as a means of payment without selling it. Banco Santander Argentina grants loans via the tokens, and a cooperation with Visa additionally allows their use for purchasing operating inputs by card.
Agrotoken issues three commodity-backed tokens: SOYA for soy, CORA for maize, and WHEA for wheat, each representing one tonne of actually stored goods. Coverage is monitored by PwC, which verifies that there are never more tokens in circulation than goods in the warehouse; this independent audit step is a prerequisite for a bank to accept the tokens as collateral. In March 2022, Banco Santander announced the cooperation with a target of 1,000 Argentinian farmers to receive loans against SOYA, CORA, and WHEA within six months. In the same year, a cooperation with Visa was added, allowing tokens to be used via card for purchases; among other things, a transaction equivalent to 0.021 tonnes of maize was reported. According to industry reports, a volume of more than 30 million US dollars has already been traded. The case is explicitly not a speculative crypto use case because each token is backed by physically present, independently audited goods.
Perspectives
B2B — organisations perspective
For banks and agricultural traders, the case shows how a physical inventory can be transformed into a bankable security without transferring ownership, provided the coverage is independently verified. Companies in other markets with storable goods, such as metals or chemicals, can transfer the pattern of warehouse confirmation, token issuance, and auditor control.
B2C — consumers perspective
Farmers retain the decision over when to sell their harvest and can still access funds at short notice. The tokens can also be used via card for purchasing operating inputs, so no detour via a sale is necessary.
Employees perspective
In agricultural customer service and credit assessment, the evaluation of a tokenised inventory replaces classic collateral checks, requiring new knowledge about coverage proofs and warehouse logistics. For silo operators, there is the additional task of confirming inventories in a form usable for token issuance.
Benefits
General
- Stored harvest becomes pledgeable without needing to be sold.
- Coverage is independently verified by PwC against the actual inventory.
- Tokens can be used directly for purchases via a Visa cooperation.
- In a high-inflation environment, the collateral retains its real value because it is tied to the goods.
B2B — organisations
- A new commodity-backed collateral class for agricultural financing.
- A transferable pattern for other storable raw materials.
B2C — consumers
- Farmers retain the decision over when to sell their harvest.
- Operating inputs can be paid for directly against tokenised goods.
Employees
- Clearer data basis for credit assessment than with purely contractual collateral transfers.
- New tasks in confirming and documenting inventory.
Challenges
General
- Coverage depends entirely on the reliability of the connected warehouse operators and the independent audit.
- Regulatory recognition of tokenised goods as collateral is not granted in every country.
- Price fluctuations of the goods directly affect the collateral value.
B2B — organisations
- Banks must establish valuation and realisation processes for a new collateral class.
Employees
- Advisors need knowledge about coverage proofs and warehouse logistics.
Technology foundation
Agrotoken issues commodity-backed tokens on a public blockchain, one for each tonne of stored soy, corn or wheat, and has PwC verify the backing against the actual inventory. A public register is sensible here because the bank, card network, silo operator and farmer all need to use the same proof of ownership without any party gaining control of the register.
Implementation examples
Loans from Banco Santander Argentina against tokenised grain
Argentinian farmers hold their assets physically in stored grain, which in a high inflation environment with limited foreign exchange access was unusable as loan collateral or means of payment without selling it.
Agrotoken issues a backed token for each tonne of stored soy, corn or wheat, against which Banco Santander Argentina grants working capital loans. PwC monitors that there are never more tokens in circulation than goods in storage.
The tokens SOYA, CORA and WHEA each represent one tonne of actually stored goods; independent coverage verification by PwC is the prerequisite for a bank to accept them as collateral. In March 2022 Banco Santander announced the cooperation with a target of 1,000 Argentinian farmers within six months. In the same year a Visa cooperation was added, allowing the tokens to be used for purchases by card; overall a volume of more than 30 million US dollars has already been traded.
More than 30 million US dollars tokenised trading volume; target size of 1,000 farmers within six months after the start of the Santander cooperation.
Lack of bankable collateral despite existing goods, forced sale of harvest due to liquidity shortages, and proof that each token actually corresponds to goods in storage.
Tags
Agricultural financing, Tokenisation, Commodity coverage, Loan collateral, High inflation