Farmers are switching to Stablecoins

Opinion: Henry Duckworth, founder and CEO of Agridex

We all need it and buy it. Food is a common universal land on the planet. It is not surprising that the agricultural industry is huge. In 2023, the European Union imported 155 million tons of agricultural products and exported 134 million tons further. The market is also growing, and it is expected to increase 3.45% every year from 2029.

But farmers and agricultural merchants face serious problems. They must export food from abroad and interact with foreign currency. However, financial systems, especially Africa’s financial systems, have been developed. The non -efficiency of transactions causes high transaction costs, border payment delays and high interest rates. Large corporations can better explore financial obstacles, but not always for small farmers who suffer the most pain with the old -fashioned banking system.

Blockchain technology and Stablecoins promise to soften agricultural merchants with unstable water. This technology, which removes brokers and provides financial inclusions, allows farmers to access the global market directly. Stablecoins, which is expected to be estimated to be $ 1 trillion in Africa’s food and agricultural markets by 2030, is simply more than another financial trend in the industry.

Border payment is hidden significant costs.

Border payment is the center of resource approaches, such as equipment and seeds, or trade between countries. International transactions are essential for African agriculture because exports to Africa are only 17%of the total African exports.

However, local bank systems are in a low development state and interfere with these payments with shocking degrees. The big stubborn point is that the traditional banking system is expensive. Farmers claim 3%to 6%. It is not important that the profit margin is already thinner.

In transactions, the demand for brokerage calls, generally, leads to much more exchange rate losses and often falls within 3% -10%. This affects Africa’s small businesses, which pay almost 200% more than large companies, allowing them to organize their transactions through the official channel.

Just as the cost is not bad enough, the process is painful. Farmers can expect to wait up to 120 days to agree to pay. This delay is fatal for businesses that rely on a quick approach to funds. They must take high profit loans without immediate liquidity, and further erect income.

Stablecoins can fix agricultural trade

Disappointingly, the old -fashioned financial system interferes with the global agricultural industry, but is arriving in a stable form of hope. The password, which is scheduled to reconstruct agricultural trade, provides three major pillars of change to farmers.

Stablecoins means that farmers and merchants can bypass the bank’s inefficiency. If the intermediary is taken out of the picture, it can be traded at a low cost. Farmers save 3% -6% per payment and receive funds in a few minutes instead of painful atmosphere of several weeks or months. result? These players have the driving capital needed to maintain their business.

The trader can forget the unstable local currency. You can access the global market by setting the price of the product with a stable digital asset. The fluctuating exchange rate will be a problem of the past. Companies operating in countries with fluctuations in currency will make the most relief because of the sudden devaluation of the currency can reduce profits overnight.

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Agricultural trade collapses due to tremendous systematic fraud and supply chain non -efficiency, and global food fraud is $ 40 billion every year and $ 500 billion in fake products. Stablecoins can be transformed into reducing the original movement of counterfeits across the supply chain, and the industry is much more efficient.

In Africa agriculture, the results are already coming out. For example, a large parrot headquartered in Zimbabwe promises a blockchain to improve trade efficiency between the borders while simplifying payments to suppliers. The company, which is proud of the growth and development of the entire continent, is only one of many African companies that follows Stablecoins.

Agriculture is still facing global challenges.

Stablecoins should be music in the ears of people working in agriculture. But the road can be a rock. Especially important regulatory uncertainty in Africa is an obstacle. Many countries have strict capital outflow control, so farmers and merchants must comply with local regulations or face legal issues.

Another limit is the technical barrier and educational gaps of the entire industry, and some farmers don’t fully identify and use technology. Since the infrastructure is very well established, stable farmers will not be able to completely access this stable mechanism to promote trade.