# Tokenise stored grain as loan collateral

> 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.

**Sector:** Primary sector · **Industry:** Agriculture · **Organisation:** Agrotoken · **Maturity level:** Production

Canonical URL: https://www.sapientblock.com/en/use-cases/agrotoken-eingelagertes-getreide-kreditsicherheit-tokenisieren

## Documentation status

- **Project status:** Production
- **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.

## Benefits

- A new commodity-backed collateral class for agricultural financing.
- A transferable pattern for other storable raw materials.
- Farmers retain the decision over when to sell their harvest.
- Operating inputs can be paid for directly against tokenised goods.
- 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.
- Clearer data basis for credit assessment than with purely contractual collateral transfers.
- New tasks in confirming and documenting inventory.

## Challenges

- Banks must establish valuation and realisation processes for a new collateral class.
- 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.
- 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.

## Sources

- [Santander and Agrotoken join forces to offer loans secured by cryptoassets](https://www.santander.com/en/press-room/press-releases/2022/03/santander-and-agrotoken-join-forces-to-offer-loans-secured-by-cryptoassets)
- [Santander provides crypto loans against Agrotoken tokenized commodities](https://www.ledgerinsights.com/santander-provides-crypto-loans-against-agrotoken-tokenized-commodities-blockchain/)
- [Grain-Backed Crypto Tokens Open New Possibilities for Farm Loans, Purchases](https://www.pymnts.com/cryptocurrency/2022/grain-backed-crypto-tokens-open-new-possibilities-farm-loans-purchases/)