From Pasture to Blockchain: How Tokenized Cows Are Revolutionizing Agricultural Finance in Brazil
A pioneering transaction in Brazil has used tokenized cows as collateral for a loan, showcasing how blockchain technology can revolutionize agricultural finance. The Engendro Velho farm in Paraná received a loan of nearly $20,000 (R$100,000) from BMP, a direct credit society, using a herd of ten cows as collateral. The cows were tokenized using technology from Cowmed, which provides smart collars that monitor each animal’s health, feeding, and location in real time. The transaction was registered with B3, Brazil’s stock exchange, as a movable asset.
Humberto Brenner, a director at Target FIDC, the fintech that registered the transaction, noted that the monitoring allows creditors to assess the herd’s status at any time, reducing risk. This could increase the value of each cow by up to 2.5 times compared to non-monitored agreements. ‘Monitoring eliminates that uncertainty,’ Brenner said.
Thiago Martins, CEO of Cowmed, explained that the digitization of cows as unique, monitored assets enables formal registration with B3. If a cow dies, it can be substituted as long as 120% collateralization is maintained. ‘We took the cow, which is a real, tangible asset, and turned it into a digital asset backed by a unique code monitored in real time,’ Martins said.
The innovation opens new credit sources for farmers, offering more attractive pricing and higher limits. Cowmed currently serves over 1,400 farms with more than 900,000 cows connected. Martins expects up to 20% of its monitored herd to be used in loan transactions within two years, representing a credit volume of $78.5 million.