Fresh Supply Co taps blockchain to offer farmers better credit terms and boost working capital

If a lender can see where a product is in a supply chain, it’s more likely to lend to farmers who have ran out of cash, Fresh Supply Co says.

Financiers normally have poor visibility over farms and factories beyond profit and loss statements when completing credit risk assessments.

Brisbane-based fintech Fresh Supply Co is harnessing blockchain to give lenders greater oversight over agrifood supply chains and therefore offer farmers and food producers better credit and lending terms.

Fresh Supply Co (FSCO) was the biggest user of MasterCard Provenance and has migrated to the public Hedera network, processing about $700m worth of assets in the past year.

It has set a $3bn target as it moves to accelerate payments across Australia’s agribusiness and food manufacturing sectors.

Chief executive David Inderias – who heads a team of 25 staff – said financiers normally had poor visibility over farms and factories beyond profit and loss statements when completing credit risk assessments.

He said by adopting blockchain technology, a lender could see where particular products were in a supply chain – whether it was grain in a silo or chilled wagyu steaks being shipped overseas – and then offer more favourable credit terms.

“If I am an avocado farmer, I’ve spent all my cash but I have a great contract that’s going to Tesco or Vanguard, for the financier saying ‘I have comfort, I can see where the product is … you have a longstanding contract, we can lend you a bit of cash to help you get the product to where it needs to be’,” Mr Inderias said.

“If I can see what you’ve got and what you’re doing with it, I’m much more likely to step in, in a tough time, and provide you with the capital that you need.”

The platform works by tokenising assets across the agrifood supply chain – including processes such as fulfilment, shipping and customs – and tying them together to enable tracking and greater oversight for the lender.

In early 2021 Eftpos Australia joined the ranks of Google, IBM and Nomura as an owner and member of the Hedera Governing Council, which aims to spearhead the next generation of payments technology.

Other members include Boeing, Avery Dennison, Dentons, Deutsche Telekom, DLA Piper, FIS (WorldPay), LG Electronics, Magalu, Swirlds, Tata Communications, University College London, Wipro, and Zain Group.

The Hedera Hashgraph, a distributed ledger, is attempting to shake up the payments landscape by operating a network to enable things like fast, low-cost micropayments and supply chain tracking, and also can integrate with the internet of things.

But the hype around blockchain technology has hit financial markets in ebbs and flows, and some market participants remain cautious on its broader application.

Mr Inderias said FSCO chose Hedera over other blockchains because of its high throughput, fast finality, low transaction costs, reliability, strong governance and low energy consumption. He said the new lending platform was generating greater efficiencies and transparency for funders.