The opportunity to deliver credit through the barter parallel credit market is not without risks. Barter deals are still riddled with frauds and embezzlement of the due grains.
One of the safety nets used is the monitoring of farmers by field teams, which is an expensive and failable method due to the huge extent of the areas visited and the flash harvests driven by farmers in bad faith.
TerraMagna‘s and ICEYE‘s joint solution enables day-and-night, through-clouds, every-three-hours harvest monitoring, enabling creditors to always know what is happening to their grains.
Agribusiness financing in Brazil was heavily subsidized. As cheap credit dries up due to changes in the political scenario, the parallel credit market is skyrocketing. The traditional financial market accounts only for 15% of the total funding in Mato Grosso, Brazil’s powerhouse for soybean production, against 52% from the parallel market.
This parallel market, based mainly on barter – the exchange of agricultural inputs for part of the harvest by the end of the season – has risks of its own. Besides the market risk – you are actually long on soybean, for instance – the moral risk associated to the embezzlement of the grains or other frauds constantly haunts financiers and keeps international investment away.
To address those fears, contractor field teams are employed to scout producers at least thrice each season. The main issue? Brazil is huge and its countryside is lacking in infrastructure, meaning surveying is ineffective and those three visits are not always done.
The most dangerous period of the season for financiers is harvest time. If grains are not sent to the appropriate silo, they will be untraceable after some days and debt will be rolled to the next year.
TerraMagna is a Brazilian company that provides transparency in agriculture credit concession through standardization of rural debt bonds, credit scoring of farmers based on their land historical productivity and environmental friendliness, and constant monitoring of farmers’ crops from space, from seeding through harvest.
ICEYE is a Finnish company building a satellite-based service to provide the world with access to near-real-time imagery from space. Their synthetic aperture radar (SAR) instrument can capture images through clouds, darkness and other obscuring elements, making it more reliable for operational use than optical camera systems.
TerraMagna’s and ICEYE’s joint solution leverages ICEYE’s subdaily SAR revisit rate, neural networks and Information Services, with TerraMagna’s proprietary data set and algorithms on harvest detection, enabling creditors to know in quasi-real-time the status of their warranties and to intervene swiftly in cases of grain misappropriation.