Blockchain start-up hopes to foster peer-to-peer lending between farmers

Australia-based BlockGrain says its technology could help growers earn additional revenue while helping others avoid costly bridge loans and overdrafts.

A Queensland-based start-up has launched a $20 million public token sale to help it power a blockchain software that streamlines agri logistics “from paddock to plate.”

The offering, which started in late April and ends on June 24, has allowed BlockGrain to collect more than $3.8 million so far. The company had already completed a A$3.5 million ($2.6 million; €2.2 million) private sale in February.

The transaction comes nearly three years after the company was established. A first version of its software has been used for the last two growing seasons, and more than 1,000 Australian farmers have now adopted it, chief executive Caile Ditterich told Agri investor.

Through blockchain technology, which allows for secure, traceable transactions to be recorded on a digital database shared by all users, it hopes to enable farmers, brokers and logistics companies to transfer data and automate the delivery process all along the supply chain.

Peer-to-peer, paddock-to-plate

One of the company’s longer-term ambitions, however, is to foster peer-to-peer lending among farmers.

“Every farm is different,” said Ditterich. Some years a particular group of farmers will achieve above-average yields and returns, finding themselves with extra cash to spare. Harvests and produce sales are also often out of sync between growers of different crops, leaving the possibility that some will need liquidity when some have extra on their hands.

“Using BlockGrain, farms of any size will be able to connect in a secure peer-to-peer lending environment that enables businesses with a cash surplus to offer short-term loans to those needing access to short-term capital,” the company said in a whitepaper released last month.

That will allow cash-rich farmers, who would currently earn 2 percent or less on the money they put in the bank, to earn extra revenue, Ditterich explained. Importantly, it will allow for those lacking short-term liquidity to avoid taking on expensive overdrafts or bridge finance.

He said loans priced at 5-6 percent would offer a good balance to both parties. Citing data from ANZ, BlockGrain says many farmers are still paying more than 7.70 percent for an overdraft facility and up to 13.95 percent for an agricultural-based consumer overdraft.

The company did not provide a timeline for the launch of peer-to-peer functionalities on its system.