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BART consortium: blockchain consortium focused on Brazilian agribusiness bond credit

Grant number: 18/08720-6
Support type:Research Grants - Innovative Research in Small Business - PIPE
Duration: March 01, 2019 - November 30, 2019
Field of knowledge:Agronomical Sciences - Agronomy
Principal Investigator:Guilherme de Almeida Costa
Grantee:Guilherme de Almeida Costa
Company:Bart Soluções de Tecnologia Digital S/A
CNAE: Desenvolvimento de programas de computador sob encomenda
Desenvolvimento e licenciamento de programas de computador não-customizáveis
City: Indaiatuba
Co-Principal Investigators:Mariana Silveira Bonora
Assoc. researchers: Renato Wihby Girotto ; Thiago Magalhães Zampieri
Associated scholarship(s):19/02623-1 - Bart Consortium: blockchain consortium focused on Brazilian agribusiness bond credit, BP.TT

Abstract

Until the 1980s, the government was primarily responsible for providing agricultural credit. However, the fiscal-financial crisis of the first half of the decade reduced its capacity for expansion and led to a gradual decline in public participation in rural sector financing. This lack of credit has created new alternatives for the private sector. In 1990, these operations were carried out through futures contracts, with a fixed price or to be fixed. In 1994, the Rural Product Certificate (CPR) was created as one of the first private financing contracts for agricultural products (commodities), thus expanding the market for paper-based products, creating greater attractiveness to investors, of buyers and with a direct consequence on the liquidity of the security. The barter is the fastest-growing model of private credit in agribusiness. The operation allows farmers to purchase agricultural inputs (eg, seeds, fertilizers, and pesticides) in advance, in the pre-harvest, without the need for payment in the act. In exchange, the producer undertakes to physically deliver a certain quantity of bags (equivalent to the price of inputs purchased at the time of issue of the credit certificate) to the creditor only after the harvest. Finally, the transaction is settled with a trading company, which purchases the sacks from the supplier supplier. Improving the traceability and streamlining the formalization of these securities and contracts generated in this type of operation can increase the purchase and sale interest of the same before the financial market, bringing new possibilities of financing to the members of the agricultural chain. The innovation will be through the application of Blockchain technology whose main objective is to conduct electronic transactions in a safe, traceable and consensus form of all participants, eliminating malicious people and possible fraud. The hypotheses of this project will test whether a model of negotiation and granting of credit via Blockchain differs significantly from the current model, where the information is asymmetric and untraceable. A methodology of comparison of indicators will be applied to test the hypothesis, where the main indicators measured will be: negotiation and formalization time, title traceability and transparency. For this, this project will be developed in two stages: 1st - using methodologies centered in the links of the chain, where information will be collected and validated with resellers, industries and tradings, in order to codify the business rules existing between them; 2 - using the concept of smart contracts (source code written within a Blockchain network) will transcribe all models of agricultural titles, the trading parameters (1st stage) in order to establish the optimization expected in private credit transactions. The main products of this project will be: i) a node structure using a private Blockchain network (consortium); (ii) Smart contracts based on existing business rules in private agricultural credit negotiations, including by applying improvements to them; iii) an API (interface for information integration) to receive information from agricultural titles from other platforms. (iv) methods to support the legal viability of the Bart Consortium. (AU)