Arya.ag Plans to Tokenise Grain Ownership Records on Avalanche

Arya.ag is starting to put records related to around $2 billion (roughly Rs. 19,052 crore) worth of stored farm produce onto the Avalanche blockchain. News from September 10 states that the platform will keep records of grain deposits, electronic warehouse receipts, and the loan status, allowing the lending firms access to confirm the crops being used as security. The Infosys co-founder, Nandan Nilekani, launched the project at the Global Fintech Festival held in Mumbai. The $2 billion figure (roughly Rs. 19,052 crore) is the estimated value of the crops stored in the warehouses of Arya.ag. It does not refer to the loans that have been recorded on the blockchain. 

Shared Ledger Could Help Lenders Verify Grain Collateral

The exact amount of collateral that has been injected into the new system is not disclosed by Arya.ag and Ava Labs. Farmers storing their produce in Indian registered warehouses will get the electronic negotiable warehouse receipts known as e-NWRs. A farmer may use the receipt to secure a loan while keeping the crop in storage and waiting for a suitable time to sell it. Arya.ag's blockchain links information about the deposited crop with its warehouse receipt and financing status. 

The bank will be able to verify through the record whether the grain exists, whether it has been used by another lender for security, and the outstanding loans. Warehouse managers and banks have some of this data stored in different systems at present. According to Arya.ag, its ledger system is created in such a way that all institutions involved have access to the same record.

The physical grain is still stored in a physical warehouse. The official e-NWR of India continues to be the financing document, whereas the blockchain record contains information that pertains to the crop, receipt, and loan. Arya.ag is not selling crop tokens to cryptocurrency investors or transferring crop ownership via a public exchange. However, it is said that the claims regarding “faster approvals, lower costs, or greater access to credit” are possible results that have yet to be proven through implementation, as per the statement given to the original report.

Aside from its blockchain initiative, Arya.ag also processes around $1.3 billion (roughly Rs. 12,383 crore) worth of agricultural financing annually, based on information released during the announcement. Its non-banking financing entity, Arya Dhan, contributes around $230 million (roughly Rs. 2,190 crore) to this annual figure. 

The banks and other financial institutions provide the loans to the remaining borrowers after assessing the crops stored at Arya.ag-managed storages. The decision by the lenders is based on the crop's volume, quality, market price, and current financing situation. The figures cited by TechCrunch in January put the total slightly higher. According to Arya.ag co-founder and CEO Prasanna Rao, the company arranged for nearly $1.5 billion (roughly Rs. 14,289 crore) worth of lending transactions per year and processed about $3 billion (roughly Rs. 28,578 crore) worth of grain annually.