Unbacked Bitcoin Meet “Agrocoin”: Mexico’s Chili Pepper-Backed Cryptocurrency

Not The Onion (pun and no pun intended) but the first ever agricultural cryptocurrency backed by a chili pepper. Eat your digital heart out Bitcoin…

 

By Isaid Mera from El Financiero and translated into English by Google

It will not be difficult for you to imagine yourself in Cancun. Do not even imagine eating cochinita pibil, one of the typical foods of the Riviera Maya. Where the surprise comes is in the habanero sauce that you use to accompany your tacos. This was produced thanks to cryptocurrencies.

Amar Hidroponia, a Mexican firm headed by Rodrigo Domenzain, launched at the end of 2017 the ‘agrocoin’, the first agricultural cryptocurrency in the world, which works as an investment vehicle to finance the production of Havana chilies using the technique of hydroponics.

Currently, 5 hectares are being financed by agrocoins, and the first harvest of this model will be in March. The goal is that by the end of the year there will be 100 hectares operating thanks to the cryptocurrency.

Anyone can acquire an agrocoin, which costs 500 pesos, and is equivalent to one square meter of land and production. For every hectare there are 10 thousand agrocoins.

“The decision to use that vehicle was to democratize the investment. Because that way it allows a small investor to become a big producer, “Domenzain tells El Financiero.

Although agrocoin has behind it a blockchain technology (such as the volatile bitcoin) developed by the same company, the entrepreneur emphasizes that it is not speculative, and has the advantage of being backed by a productive asset: the production of habanero peppers.

“I would not see it as virtual money, (…) because in this case you are selling real issues, there are hectares, there is production, there are jobs”.

A normal franchise with the company has a value of 3 million 150 thousand pesos, which includes the purchase of one hectare of land in the town of Leona Vicario, in Puerto Morelos, Quintana Roo, the construction of the facility for the plants, and the working capital to produce the first cycle.

The profits for Rodrigo and his company are in a ‘Uber’ style model: they do not have hectares in their name and instead they keep 20 percent of the production of each hectare as a royalty.

By requiring a heavy investment to be a franchisee, the firm created the agrocoins, and thus allow investors of all levels to participate.

According to the firm, each square meter of land allows to produce up to 6 kilos of habanero pepper. Each one has a price of between 50 and 70 pesos, which is why there are sales of between 300 and 420 pesos. This is deducted 250 pesos of operating costs, which include inputs, labor, and royalties, so there is an annual gain of between 50 and 170 pesos.

“It is a business and the business will have its portfolio balanced, but during the period there may be decreases in the price, it may increase, or decrease, so the payments are made quarterly,” explains Domenzain.

 
Rodrigo Domenzain, director of Amar Hidroponia, the creator of the ‘agrocoin’. Isaid Mera

The price of the product often depends on where it is marketed. If it is in the United States, where they send 80 percent of production, the price is usually higher than in Mexico, where it is destined, mainly in Cancun, the other 20 percent.

Regarding the Fintech Law, which would regulate cryptocurrencies, but is not yet approved in Mexico, Domenzain explains that to avoid problems, his firm asks all investors for documents such as a copy of identification, photographs, proof of address and tax documents to avoid anonymity. that even leads to money laundering.

“No (I’m worried) absolutely nothing” what could happen with the Fintech Law, says the businessman, stating that his entire operation is in compliance with the law. In addition, “the blockchain allows us to give certainty to any investor who owns a folio and that is not repeatable, and that in a series there are only 10 thousand units for sale and lets know in what hectare he invested”.

In September, the ‘Lock up’ will be lifted, a period in which the first investors must maintain their agrocoins, so that a secondary market will be opened where the agrocoins can be commercialized.

The firm is optimistic and believes that with the good returns that the first investors will have, in the secondary market the agrocoins will surpass 500 pesos, even reaching 1,000 pesos.

And in the future, once the total of agrocoins are sold to finance the 100 target hectares, that is to say one million, the company plans to launch a second version of the currency and use it to finance entrepreneurs in the agronomy sector.

“Why is agribusiness so important? It is at the base of society, generating jobs in the most recondite areas (…) The country is full and full of unused areas that can be timber, vegetables, legumes, grains, and agrocoin is an investment vehicle “.