Cattle markets

Swiss entrepreneurs bring blockchain to Bolivian ranchers.

Bolivia has 9.7 million head of cattle, 74% of which is concentrated in two departments in the east and north of the country: Santa Cruz with 4.3 million and Beni with 3 million. These are fertile lands cover 53% of the national territory and have a warm climate with a good water supply.

Despite the high quality of Bolivian meat, exports are still low, primarily because Bolivian beef does not meet certain international phytosanitary requirements, such as the certificate of freedom from foot-and-mouth disease.

However, since 2000 a small flow of meat exports has been growing and 2019 saw the highest levels of export to international markets: 3,533 tons with a commercial value of USD 16.1 million. This was due to the beginning of the trade agreement between Bolivia and China, negotiated in 2017 and 2018.

Although livestock producers can access productive credits in Bolivia that have special conditions, the main difficulty they face is the accounting and monitoring of livestock to provide a more predictable guarantee to banks.

A blockchain-based market could help with this and although cryptocurrencies are prohibited in Bolivia and there is no regulation to trade commodities digitally, a small group of private investors have started experimenting with the tokenisation of cattle.

The Rancho La Pradera in Bolivia, will use the native token of Finka, to facilitate exchanges, each time the sale of livestock occurs, a part of the profits generated will be distributed among the token holders. Likewise, token holders will have the right to visit Rancho La Pradera, and experience livestock first-hand. 

Blockchain could help reduce the need for traditional, inefficient and corrupt intermediaries but without regulation it is unlikely to succeed in Bolivia, perhaps that is why it has been so low key, a finance executive at the Productive Development Bank of Bolivia (BPD) says, “This has gone almost unnoticed in Bolivia, I found out by chance because I met the software expert who is developing it.”

“This has gone almost unnoticed in Bolivia, I found out by chance because I met the software expert who is developing it.”

Finance Executive, Productive Development Bank of Bolivia

The finance executive continues to highlight the risks associated with the lack of regulation but also sees the opportunity, “What ranchers are looking for is to diversify their sources of financing and improve their financial security. Tokenising allows many new types of investors to invest worldwide and also allows them to insure the livestock as each animal is tracked daily.

“I am quite certain if the government finds out that, they will try to prevent it.”

Former Finance Minister, MAS party Bolivia

To gauge the governments attitude towards the sector, we also spoke to a former finance minister of the MAS party, “There is no regulation in the country for this and since it is a financial instrument it is prohibited without regulation by law. I am quite certain if the government finds out that, they will try to prevent it. Leaving aside ideology, international reserves are very low and they want to prevent foreign exchange leaving the country. If blockchain and cryptocurrencies are approved, there will be more money leaving Bolivia than coming in, I assure you.”

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