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Contxto – The Inter-American Development Bank (IDB) announced that US$600,000 are tagged to finance small agriculture farmers in Chiapas using blockchain technology. The project will be handled by Spaniard startup, EthicHub.
This southern Mexican state is one of the country’s poorest, so the over 45,000 farmers that this initiative is designed to help will hopefully be well served.
These cacao, coffee, and other sub-tropical crop areas have a poverty rate of around 77 percent on average. The hope is that the implementation of these measures will boost productivity and sales, and enrich the local population.
Through EthicHub’s platform, farmers in Chiapas without access to banking will benefit in two ways. First, it will help commercialize their products so they reach a better price at market.
Second, the system will also assist in facilitating credit lines. Initial access to credit terms will be based on the crop’s production cycles and at reportedly lower interest rates. Naturally, this will result in farmers building a positive credit history so they can access even better financing options in the future.
As usual, there are expansion plans to help other crop producers and reach other parts of Latin America if it proves successful.
Hi-tech solutions for low tech areas
Small farmers like those in Chiapas are key producers in their communities and contribute greatly to local food security. Likewise in other parts of the region, like Brazil, small producers constitute almost 40 percent of the food produced in their localities. This proportion is even higher in Central America—like in the state’s neighboring Guatemala—at 60 percent according to the International Fund for Agricultural Development (IFAD).
Despite these numbers, small farmers are greatly overlooked and have limited access to technology and financing. Yet they represent a significant market with growth potential. It just needs some more investment.
Don’t get me wrong. This is not an easy undertaking. Developing basic infrastructure in these rural communities might be one of the reasons investors sideline the market. But enormous investments aren’t necessary (but they’d be welcome, mind you). Relatively simple agrotech can take things to the next level.
For example, the use of satellite imaging to review crops’ status can help farmers make more informed decisions, as Peruvian Agros and Brazilian Agronow have shown. Drones can also help save small farmers a lot of their precious time to scan their fields.
Agrotech has the potential to provide some serious inclusion and growth to the fields and orchards of Latin America. Moreover, it also has the potential to improve the welfare of the millions of families who make a living from it. It just needs investors to believe in the innovative ideas that are out there.
Meanwhile, the IDB keeps moving
The IDB has been a busy bee when it comes to technology and startups as of late.
In September it was buddying up with SoftBank—always Softbank! Then, in October it launched its regional blockchain project. It also has an ongoing land registry project in Peru, Paraguay, and Bolivia.
What their next undertaking will be is yet to be determined. However, if its recent activity says anything, it’ll likely be in blockchain.