Many believe blockchain technology will revolutionize fintech (financial technology), and some are even exploring how the changes in healthcare are reshaping financial services. However, according to Joe Young, president and co-founder of Growers Edge Financial, the real frontier for fintech is agriculture.

There is currently a big gap to bridge between fintech and agriculture. Growers need to increase farm output by 70 percent to meet 2050 population forecasts, but farm profitability is tanking in the midst of harsh commodity markets, volatile weather patterns, shifting customer demands and global trade wars.

“Sustained decline in farm profitability has made growers risk averse to adopting the latest technologies,” Young said. “The end of the commodity super cycles has seen a 40 percent decline since 2013, driving net farm income down almost 50 percent during the same time period.

“Meanwhile, other sectors such as personal lending has seen new fintech tools and techniques brought to fruition, including modern portfolios, innovating credit scoring and the application of artificial intelligence,” he continued.

Because of the speed in which there has been change in the financial sector, modern agriculture has been outpaced, creating a large gap between ag and fintech.

“New technologies for agronomic solutions in ag have not seen similar advances in solving the problems of access to capital and risk mitigation,” Young said. “Meanwhile, lenders are tightening underwriting rules and focusing on asset-based loans due to the state of the farm economy to ensure profits for their organization.

“Today, almost 40 percent of the land being farmed is on land rented to the farmer. The asset-based lending approach doesn’t work well in these situations. The majority of fintech solutions entering the market have been to streamline processing of the loan, which benefits the lender and allows for increased visibility of the loan for the farmer,” he added.

Young’s company, Growers Edge, is helping farmers bridge this gap, solving a fundamental pain point for the farmer by focusing on providing financial products that improve long-term cash flow, all while leveraging data science to design relevant financial products.

“The focus of the company has been to improve sustainable farm profitability by providing powerful risk analytic and farm management tools and products,” he said.

Young says it’s a great time to invest in technologies that increase return on investment on the farm, especially with farmers having so many voices in their ear telling them to cut costs in order to improve profitability.

“Guaranteeing performance for the farmer has proven effective at demystifying the technology being considered. We need to cut through the noise of the flood of product claims being tossed around by tech providers, and improve cash flow on the farm,” he said.

In conclusion, Young sees blockchain technology as particularly suited to help agriculture in the coming years, especially as a tool to promote transparency in the supply chain.

“Some companies are already working on this challenge,” he said. “Smart contracting and other related transactions in grain marketing can also be enabled by blockchain technology. Even at Growers Edge, we are looking at Ethereum as a platform to enable compliance with warranty terms; however, we should not take our eyes off the ball of solving what the grower really needs – access to cost efficient capital and a way to manage the risk of their operations.”

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