Santander, the largest bank in Spain, has spear loans that can be guaranteed by products symbolized in Argentina for farmers. The service effectively creates a new credit system, helping farmers in the inflation-ridden country access quick credit by pledging agricultural commodities like soybeans, corn, and wheat as collateral.
Santander partners with Agrotoken to provide commodity-backed loans
Santander has partnered with Agrotoken, an Argentina-based agricultural commodity tokenization platform, to offer loans against public blockchain stablecoins backed by agricultural commodities. The duo started their cooperation seven months ago and have already granted such loans to Argentinian farmers.
Agrotoken is the first “global tokenization infrastructure for agricultural products”. The startup turns grains into digital assets that can be stored or exchanged for inputs, services, and other assets. Eduardo Novillo Astrada, CEO and co-founder of Agrotoken, noted:
“With Santander, we are co-creating various financial products to provide agricultural producers with a service with which they can easily and smoothly access a new credit system guaranteed by their cereals.”
The process is quite transparent. Each Agrotoken represents a ton of grain that the farmer has locked, which is verified by a Proof of Grain Reserve (PoGR) test. Once the existence of the grain is validated, tokens are issued, which can then be exchanged for “seeds, vehicles, machinery, fuel, services and much more”.
Agrotoken expects 1,000 Argentine farmers to be able to receive Santander credits backed by tokens based on soybeans (SOYA), corn (CORA), and wheat (WHEA) over the next six months. These tokens were initially listed in February on Matba Rofex, an Argentinian exchange.
Agrotokens: an effective hedge against inflation for farmers in Argentina
Data shows that Argentina suffered from an average inflation rate of 192.03% from 1944 to 2022. The country experienced its highest level of inflation in 1990 when inflations soared above 20,000%. Even now in 2022, the country is suffering from inflation at an annual rate of more than 50%.
Meanwhile, since commodity prices generally rise when inflation picks up, they are seen as a strong hedge against inflation. Simply put, Argentine farmers can easily protect their wealth against inflation by storing their capital in agricultural products and crops. However, they may not have the proper tools to store their grain long term.
This is where Agrotokens come in. Farmers can lock their grains in a grain elevator and receive tokenized grains in return, which can be easily stored in a digital wallet. This way, they haven’t traded their grain for depreciated fiat currency, nor do they have to worry about the issues of securely and properly storing their grain.
And whenever a farmer needs money to pay for a service, they can instantly exchange their tokenized grains for local currency at market rates.
Notably, Santander and Agrotoken plan to further expand their offering to include Brazil and the United States by the end of 2022. These three countries together account for 70% of global wheat, corn and soybean production.
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Commodities rise as imports of Russian oil are banned in the United States
Gold and a slew of other commodities resumed their upward movement with more momentum after the United States announced its intention to go ahead with a ban on Russian oil imports.
On Monday morning, gold broke through the key $2,000 level, marking its highest level since August 2020. Currently, gold is trading at $2,012, up about 13% from to the US dollar over the past 24 hours. Other commodities, particularly oil and natural gas, also surged.
On Monday, European Brent crude oil hit highs above $130 in early trading, its highest since June 2008. Similarly, natural gas prices in Europe hit an all-time high, briefly touch 345 € per megawatt hour.
Specifically, nickel prices double to a record $100,000 a ton within hours on Tuesday in a short squeeze that would leave a Chinese nickel tycoon with billions of dollars in losses. Consequently, the London Metal Exchange (LME) canceled all nickel trading that took place in an unprecedented move.
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About the Author
Ruholamin Haqshanas is an accomplished crypto and finance journalist with over two years of writing experience in the field. He has a strong understanding of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi) and the emerging non-fungible token (NFT) market. He is an active user of digital assets for remittances.