The blockchain project is conducted in three communities in the Chiapas region, in southern Mexico. The financial inclusion of about 45,000 Mexican farmers is expected.
It was reported that the Inter-American Development Bank (IDB) approved, through its BID Lab innovation arm, the contribution of USD 600,000 for a blockchain technology project executed by FinTech EthicHub to facilitate financing to small Mexican farmers.
In order to boost the momentum of a technological platform managed by the aforementioned company, the multinational body consented to this financing to give financial resources to the unbanked farmers of that Latin American country.
It should be noted that the startup project is conducted in three communities in Chiapas, a region in the south of the country, where 77% of the rural population lives in poverty. Through this plan, which is based on the development of a blockchain platform, the IDB will give agile productive credits and, under conditions conforming to production cycles, at lower interest rates.
Purpose of the Project
It was said that the project with the blockchain foresees the financial inclusion of 45,000 small farmers of coffee, cocoa, and other crops to increase the productivity of their land and optimize the conditions of sale of their crops, as published in the official site of IDB Lab.
Until now, the communities of Chiapas receive their income based on agricultural, livestock and forestry production activities, but on a small scale and with high family involvement. However, IDB Lab notes that a large number of these small farmers have low productivity because they are not included in the banking financial system and because they do not have easy access to the markets of their products under favorable conditions, which makes it difficult for them to generate income, save and accumulate productive assets.
For this reason, the business model formulated by EthicHub plans to establish new mechanisms for direct marketing of products (contract farming) so that farmers can receive higher prices for their sale. The pilot plan is also expected to strengthen the digital identity of these producers with their credit history so that they can have easier access to the financial system.
The IDB, which invests a significant amount of resources for the development of Latin America and the Caribbean, has been optimistic about the application of blockchain technology to financing and land registries.
The international organization, together with the blockchain startup ChromaWay and the Bolivian IT services company Jalasoft, are also conducting other projects with blockchains only for land registries.
In that regard, the IDB hopes that ChromaWay’s sophisticated database can help ease the burden of efforts to restore property titles in Latin American countries, which can cost between USD 50 million and USD 100 million per project.
It should be noted that these projects normally involve the bank that collects the legal information of the farmers and the technical information to create an adequate registry of land ownership, in those cases where it had been sold informally.
By Willmen Blanco