Argentina’s fragile economy, hit by endemic problems that only worsened during the COVID-19 pandemic, has sparked mounting unrest in the country’s agricultural sector. Earlier this month, representatives of the majority of national producers opposed President Alberto Fernandez’s government decision to suspend all corn exports in order to contain inflation and put pressure on domestic corn prices.
The farmers’ strike followed a similar wave of resistance in the oilseed and soybean industries last December. The rise in labor unrest poses a challenge to administrators of the economy as agriculture accounts for 60% of national exports and around 10% of Argentina’s GDP.
With the peso in free fall, some overseas entrepreneurs see an opportunity to find a technology-driven solution that could provide an alternative to helping farmers weather the ongoing economic hardship in Argentina. In particular, CoreLedger and the technology company Abakus intend to open a peer-to-peer marketplace that will create a digital, blockchain-based “exchange economy” between agricultural producers in Argentina.
Tokenizing agricultural assets, the partners said, would help farmers hedge against inflation and gain access to liquidity both nationally and internationally. Such a marketplace would allow farmers to exchange token titles for other token assets on the platform – essentially a form of parallel, asset-backed currency for local producers.
Martin Furst, CEO of Abakus, claims that this facility would bring “greater freedom of choice” to farmers, while CoreLedger CEO Johannes Schweifer claims the approach could provide critical relief. In contrast to cash and stock-based savings plans, it is argued that agriculture-backed tokens functionally become stable coins backed by physical assets, making them well suited to a domestic context marked by currency depreciation. Schweifer argues:
“In an inflation-hit country, for these farmers access to physically secured assets can mean the difference between survival and success.”
After a 3.8% rise in consumer prices last October, persistent peso volatility and government tension during the country’s ongoing intense negotiations with the International Monetary Fund, local producers may be more receptive to alternative fintech strategies that can help them to escape the ruinous economic dynamism of the country.
In addition to blockchain entrepreneurs, cryptocurrency exchanges also seem to be paying attention to market opportunities in the region’s troubled economies. Brazil’s largest bitcoin exchange (BTC) – Mercado Bitcoin – recently announced plans to expand across Latin America, including Argentina. Data from useful tulips suggests that Argentina currently ranks seventh in the region in terms of peer-to-peer Bitcoin trading volume.