CeDeFi Breakdown: Loan Program Basics & Trade Finance
Dimitra Incorporated ($DMTR) is entering the agricultural lending market, making microloans available to 570 million farmers globally through Dimitra’s proprietary agricultural management platform. The platform will provide loans in three areas, crop inputs, livestock, and trade finance. Dimitra is banking the unbanked by providing access to capital to those that don’t have access to capital.
The loans that Dimitra is offering provide smallholder farmers the opportunity to collateralize their crops by securing a loan with crop certificates (a promissory note related to harvest). For example, these loans can be for inputs (seed, fertilizer, and chemicals) which are then repaid upon harvest and when the crops are sold to market. Keep reading for a step-by-step guide on how these microloans work.
Loans Program Basics:
- Dimitra signs agreements with cooperatives, farmers’ unions, and farming associations. Every farmer in these cooperatives is given access to Dimitra’s basic application. The cooperative or lending institutions will maintain default insurance for their members.
- Farmers begin to register their livestock or crops in the Connected Farmer App. The data collected through the app helps determine loan approvals. The app allows farmers to join Dimitra’s Farmers Points Program and help with tracking and tracing their livestock and products.
- Farmer members of partner cooperatives apply for loans in the Dimitra Connected Farmer App as the app meets KYC requirements for loan provision. The loan approval is automated.
- The farmer receives USDT in a personal wallet. A QR code is generated to allow local institutions to help farmers convert USDT to local currency.
- The farmer buys seed, fertilizer, chemicals, other farming needs, etc.
- The farmer uses the Dimitra Connected Farmer application to help maximize yield, reduce cost, and mitigate risk.
- The farmer harvests and sells their crops.
- The farmer pays back the loan with interest.
The following scenario is directly applicable to trade finance deals. Consider what happens if a farmer can produce the crops needed throughout the season but is waiting on export or an external vendor for payment?
- The farmer harvests and applies for a trade finance loan and waits for payment to arrive from the export customer.
- The export customer agrees to pay Dimitra upon receipt, and the farmer receives 80% of the invoice for their crops.
- The export customer receives the shipment and then pays Dimitra through the smart contract.
- Dimitra and the farmer reconcile fees and interest, and the farmer receives the balance of the proceeds.
The trade finance method benefits both the farmer exporting their goods and the customer importing them by introducing Dimitra as a third party to mitigate their payment and supply risks. Dimitra provides the farmers with accelerated receivables and the customer with extended credit. Combining the financial and agriculture industries while integrating more parts in the supply chain gives farmers and exporters customers more opportunities to conduct business.
Each lending partner will receive access to a portal or application integration to help manage members and track each step from the loan approval to shipping, and lastly, payment. In addition, Dimitra will introduce more parties into the system by integrating trade finance, creating full transparency for each party involved.
Dimitra is a global Agtech company with a mission to help smallholder farmers across the world. Dimitra works with governments, government agencies, NGOs, and for-profit organizations. The Dimitra platform is built on blockchain technology and incorporates mobile technology, machine learning, IoT devices, satellite and drone imagery, genomics, and advanced farming research. Through our data-driven approach, Dimitra helps farmers increase yields, reduces expenses, and mitigates risk. Dimitra believes that every smallholder farmer, regardless of economic standing, should benefit from simple, beautiful, and useful technology. If you’d like to know more please consult our website at: https://dimitra.io/