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  • The year of Fiagro: How tokens can modernize agribusiness investment in 2023 | Opinion

The year of Fiagro: How tokens can modernize agribusiness investment in 2023 | Opinion

Responsible for almost 30% of Brazil’s GDP, with a positive balance of US$ 105 billion in 2021, agribusiness enters 2023 as another promise for leveraging the Brazilian economy. There are already different ways to invest in the sector, such as buying shares in companies and betting on fixed income bonds. But now Fiagro is emerging, bringing more possibilities for small investors to have access to agribusiness.

Fiagro is nothing more than the acronym for the agricultural investment funds, an initiative of the Brazilian government that aims to stimulate the development of production in the country through investments in fund quotas and portfolios of receivables in the sector.

This type of fund invests in the productive chains of the agribusiness, either in real estate linked to the sector or in the activity itself. Until then, most of the fundraising for the segment came from institutional investors. However, with Fiagro, individuals or companies can now count on an alternative to provide resources in this area that is so important for the national economy.

The financial market is already paying attention to this year’s trend. In the search for the best options to gain market share, the blockchain contribution modality is among the most promising. A safe and innovative way to obtain credit, the advantage in question is to have the same probability of return, but with much less bureaucracy, more agility, and less costs than would occur within a traditional fund.

The process of transforming tangible, real-world assets into digital representations on the blockchain, which is called tokenization, has been gaining momentum around the world. In agribusiness, besides guaranteeing agility and liquidity for the operations, it can also be efficient to guarantee predictability for the products.

In addition, it is a way to raise funds, since the tokens can be used as collateral for credit operations in the traditional financial system.

The technology allows farmers to sell their crops on the international market in a simpler way and to certify the quality and origin of the production. In practice, the
works like this: Commodity-backed tokens represent the amount of agricultural production. Then the farmer can tokenize his crop and sell it in advance to investors.

Another possibility offered by this investment model to generate profit for the rural producer’s pocket is through the final consumer. Using an app that tracks where the food came from, the customer can give the farmer a cryptogorget.

Revolution in practice

Today, it is already possible to tokenize stocks, future crop rights, milk production from a herd, patents, new farming projects, among other assets.

A good example is Agrotoken in Argentina, which tokenizes soybean stock stored at a partner company. The grain ballast supports the stablecoin Soya, which is traded on the digital currency market. If a company wants to advance wheat production, for example, it can offer tokens of the project, similar to what is done with stocks. The company arrived in Brazil in 2022.

It is also possible to use blockchain to tokenize production chains, tracking all activities and controlling company processes. A great example is the tokenization of the sugarcane production chain in Brazil, a project led by Embrapa since 2021.

The future of Brazil is directly linked to agribusiness, and the future of agribusiness lies in innovation. By optimizing management and operations with the massive use of new technologies, the market breaks standards in search of evolution, and, without a doubt, tokenizing is one of the answers to the challenges in the area.

Source: Bitcoin Portal

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