Tokenization in agribusiness is the new revolution in the field for the most important economic sector in Brazil, with a 30% share of the national GDP in 2021, triple that of the construction sector – which also invests in asset tokens .

The Brazilian agro market has consolidated itself in recent years as one of the largest in the world, in some cases surpassing traditional countries such as the United States in soybean production.

It is true that the agribusiness segments were not affected by the pandemic in 2020 like the others, as it is an essential market for subsistence.

With families isolated at home and companies empty, agribusiness GDP grew by 24% in 2020, according to CNA.

Even on a path of full growth, for agribusiness companies there are obstacles that still impede growth or harm profitability.

What are these challenges? And how can blockchain with tokens help overcome them?

BLOCKBR prepared this article to understand the moment of agribusiness in Brazil and the valuable contribution of the agro token to achieve greater results!

THE CHALLENGES OF BRAZILIAN AGRIBUSINESS

Brazilian agribusiness is the third largest food producer in the world, behind only the United States and China. Between 1975 and 2017, grain production grew more than sixfold – from 38 to 236 million tons annually.

A highlight in Brazil’s performance in the field is crop yields per hectare , which grew 270% in corn , the lowest percentage among the main products.

In addition, the Brazilian agricultural business is a world leader in the production and export of coffee , sugar cane and soy, in addition to being self-sufficient in wheat and export.

The expressive results in recent decades and such a large growth curve in recent years are the result of a combination of some factors, including:

• New technologies in the field and productive management;
• Growth of external demand;
• Greater availability of rural credit ;
• Agricultural equipment with embedded technology.

THE CHALLENGES OF BRAZILIAN AGRIBUSINESS

Despite the advances in Brazilian agriculture and livestock in the professionalization of their activities and massive digitization, bringing exceptional results, the world is renewed and new challenges will always exist.

The next cycle of transformations will be strongly within organizations, with changes that further qualify the quantitative results achieved.

MANAGEMENT MODERNIZATION

Agribusiness is made up of a significant portion of family businesses and their challenges lie in incorporating modern governance practices.

Among them are:

• Decentralization of financial services – DeFi – a blockchain -based technology that eliminates financial intermediaries and provides agility in relationships with customers, suppliers and trading partners;
• Data mapping and scenario simulation solutions, allowing to make increasingly assertive decisions with costs compatible with the needs;
• The third wave of the web with technological innovations such as receipts and payments with cryptocurrencies , expanding commercial borders, reducing costs and optimizing revenues.

INCORPORATION OF NEW TECHNOLOGIES

Here are the great achievements of agtechs , the sector that combines technological innovations with the realities of agribusiness .

• Guided and automated equipment;
• Individualized livestock control;
• Microbiological domestication;
• Tokenization of agricultural production and production chains.

Let’s talk about what tokenization can add quality to agribusiness !

WHAT IS TOKENIZATION IN AGRIBUSINESS?

Tokenizing in agribusiness combines efficiency, security, transparency and lower costs to optimize market relations and profits for agribusiness companies . It consists of generating tokens , encrypted records that will represent an asset traded on the blockchain .

TOKENIZATION OF ASSETS IN AGRIBUSINESS

It is possible to tokenize stocks, future crop rights , dairy production from a herd, patents, new agricultural projects and other assets.

A good example is Agrotoken, in Argentina, which tokenizes soy stock stored in a partner company. The grain’s backing supports the Soya stablecoin , which is traded on the digital currency market .

If a company wants to advance in the production of wheat , for example, it can offer project tokens , similar to what is done with shares.

There are three important differentiators in agribusiness tokenization :

• No intermediaries: less bureaucracy and costs;
• No geographic limitation: increases the target audience base;
• Total system availability: encourages investors abroad.

Tokenizing agricultural production will be a strategy for small businesses to market their products, using the P2P methodology – directly, without intermediaries.

TOKENIZATION STEPS IN AGRIBUSINESS

1. The company specializing in tokenization studies the feasibility of tokenizing the asset, evaluating all aspects (commercial, legal, tax);
2. The asset is divided into a number of tokens . Thus, the value of each token will be accessible to the greatest possible number of people and companies interested in buying tokens (shares) of the asset;
3. The tokens are offered on a blockchain, supported by the smart contract – a digital document with the rights, obligations and guarantees of the token issuer (the company) and the investors;
4. All computers that make up the network, without human interference, must validate each transaction, using the smart contract ;
5. At the end of the fundraising period with the tokenization , the blockchain electronically transfers the calculated capital to the company and credits investors for the purchased tokens ;
6. It is also the blockchain ‘s responsibility to remunerate each token in the manner provided for in the tokenization process .

TOKENIZATION OF PRODUCTION CHAINS IN AGRIBUSINESS

It is also possible to use blockchain to tokenize supply 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 use of blockchain in process management will make risk and opportunity analysis more agile, increasing the effectiveness of agro production .

BENEFITS OF TOKENIZATION FOR AGRIBUSINESS

The benefits of tokenizing agribusiness, as we can see, are many. Let’s introduce some of them.

DEMOCRATIZATION IN INVESTMENT

The fractionation of the asset or project allows small and medium investors to participate in the process, increasing the base of potential buyers and helping to spread the word about the investment opportunity.

GREATER TRANSPARENCY IN TRANSACTIONS

Each transaction is recorded in a digital ledger , is given a unique key and is available for consultation. The smart contract digitally reflects what would be legally done in a conventional transaction.

MORE SECURITY

Blockchain is the technology used to create and trade cryptocurrencies and has the highest levels of data security in addition to using top-notch encryption.

• Token balances and data are absolutely protected;
• There is no risk of fraud, as all points on the network have approved conditions and can prevent a tampered transaction from being validated.

GREATER LIQUIDITY IN RESULTS

There are no intermediaries between the company and the interested parties, such as brokers and management companies used in asset funds. This substantially reduces the cost of operation.

The future of agribusiness lies in the increasing professionalism in management and operations and in the massive use of new technologies , breaking standards that do not meet the strategic needs of the sector. Tokenizing is one of them!

BLOCKBR Digital Assets is a fintech that combines technological innovation and digital knowledge to transform physical assets into digital ones, in the asset tokenization process.

The offer of tokenized physical and financial assets, both current and new, is democratic and decentralized, which makes investing safer, simpler and more efficient.

We enable, structure, issue and offer tokens on our platform and beyond. Be aware that tokens depend on feasibility and regulatory factors.

Do you want to tokenize your business or part of it? Do you have a business solution and does it make sense to issue your own token ?

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