Farmers are moving to Stablecoins

Opinion by: Henry Duckworth, founder and CEO of Agridex

We all need and buy it. Food is a common, universal soil throughout the planet. It should be no surprise after the agricultural industry is huge. In 2023 the European Union united that is imported 154 million tons of agricultural products and exporting 134 million tons more. The market is also growing, expected To extend by 3.45% yearly -from this year to reach $ 5.52 trillion by 2029.

However, agricultural farmers and merchants face a serious problem. They need to export food abroad and interact with foreign currencies. The financial system – especially in Africa – is, however, not prosperous. The futility of their trade results at high transaction costs, delayed cross-border payments, and high interest rates for loans. Large corporations may better navigate financial barriers, but they do not always occur for small farmers, which suffer more from timely banking systems.

Blockchain technology and stablecoins promise to smooth out unstable water for agricultural entrepreneurs. Deleting intermediaries and providing financial integration, technology provides direct access to farmers in the global market. In the African food and agriculture market predicts that cost $ 1 trillion by 2030, Stablecoins stand to be more than another financial trend for the industry.

Cross-border payments hide significant costs

Cross-border payments are the beat heart of agricultural trade, resources access centers, such as equipment and bone, or engaged in trade between countries. International transactions are important to African agriculture, as exports within Africa represent only 17% of African exporting total.

Local banking systems are, however, these payments are not prosperous and hindering to a surprising degree. A huge sticking point is that traditional banking systems are expensive – they charge farmers between 3% and 6% in fees. This is not a small thing when the income margins are thin.

In transactions, demand for a currency mediator, usually the US dollar, leads to more exchange rate losses, which often falls within a 3% -10% range. It affects small businesses in Africa, which can pay nearly 200% more than larger companies to clear their transactions through formal channels.

As if the cost is not bad enough, the process is also painful slow. Farmers expect to wait up to 120 days for repayment remarks. These delays are devastating for businesses that rely on quickly accessing funds. They are forced to take high -interest loans without immediate liquidity, furthering their income.

Stablecoins can fix agricultural trade

Failure to outdated financial systems prevents the global agricultural industry, but a hopeless glimmer will come in the form of Stablecoins. It is hoped to reshape the trade in agriculture, the crypto of farmers offers three main pillars of transformation.

Stablecoins mean farmers and merchants can miss banking efficiency. In the mediators taken by the photo, they can transact immediately and have a lower cost. Farmers save between 3% -6% per payment, and funds are received in minutes rather than a painful wait for weeks or months. The result? These players have a working capital needed to stay in business.

Traders can forget about unstable local currencies. By pricing their goods in a stable digital asset, they will gain access to global markets. Bagu -change of exchange rates will be a problem in the past. Businesses that operate in countries with money -changing money will feel that the relief is most intense, as the sudden appreciation of a money has the power to eradicate the income overnight.

Recently: Web2 failed on vertical farms – they need a depin to survive

Agriculture trade is crippled by immense, systematic fraud and supply chain chains, with global food fraud Cost $ 40 billion annually and global trade in fake goods another surprisingly $ 500 billion. Stablecoins can be a change in reducing the original movement of fake goods throughout the supply chains, making the industry better.

Results are already seen In African agribusiness. For example, Zimbabwe-based congregate-based zimbabwe, is conducting a blockchain to streamline payments to its suppliers while improving cross-border trade efficiency. The company, which boasts itself in growth and development throughout the continent, is just one of the many African businesses that get behind Stablecoins and reap benefits.

Agriculture is still faced with global challenges

Stablecoins should be music to the ears of agricultural employers. The road there may, however, be rocky. Significant uncertainty in regulation, especially in Africa, is a drawback. Many countries have strict control over capital flow, so farmers and merchants must comply with local regulations or deal with legal issues.

Another limit is technology barriers and an education gap throughout the industry, which prevents some farmers from fully handled and using technology. Farmers in Europe, who require less than stablecoins because the infrastructure is relatively well -established, will also not have full access to stable mechanisms for facilitating trade.