Cows monitored by AI become loan guarantees in an unprecedented operation in Brazil Cowmed Disclosure For those from the countryside, using animals as collateral in bank loans is nothing new. But a new technology could make this model more attractive for financial institutions: monitoring dairy cows. Brazil carried out the first credit operation registered on B3 with a tokenized herd as collateral. ?? Do you have any reporting suggestions? Send to g1 With the token, the bank now has access to information collected by a collar that monitors the health and location of each cow, which gives the creditor more security, explains Humberto Brenner, director of Target FIDC, the company responsible for the operation. In the pioneering loan in the country, 10 animals were valued at R$120,000, allowing the release of R$100,000 for the Engenho Velho farm, in Belo Horizonte (MG).
Brazil launches first operation using AI-monitored cows as collateral for loans
Cows monitored by AI become loan guarantees in an unprecedented operation in Brazil Cowmed Disclosure For those from the countryside, using animals as collateral in bank loans is nothing new. But a new technology could...
The expert explains that animal operations have always been "an ugly duckling within the financial system". According to him, a cow valued at R$20,000 used to be equivalent to just R$8,000 in guarantee, because of the risks attributed. "The financial agent had no way of knowing where that animal was or what its health condition was. Because of these uncertainties, he began to apply penalties to the operation, either reducing the value of the guarantee or increasing the cost, as a way of compensating for the risk", he explains. The use of animals as collateral usually occurs in smaller loans, aimed at financing the harvest or working capital, for example. "Rural producers prefer to leave the property as collateral for larger operations. It doesn't make sense to use a license plate worth R$10 million in a working capital operation worth R$300,000", he states. How does the technology work? Cows monitored by AI become loan guarantees in an unprecedented operation in Brazil Disclosure / Cowmed The collar with artificial intelligence was developed by Cowmed and is the first aimed at dairy cows. The equipment monitors the animal's behavior, including feeding, resting, rumination, breathing, temperature and location. Based on this data, artificial intelligence can predict whether the animal is healthy or developing a disease. In the case of an illness, it is also able to identify whether it is being treated and whether the condition is improving or worsening. "It's like a smartwatch around a cow's neck, only much more advanced", explains Thiago Martins, CEO of Cowmed. Although the information is also used by the bank, the product is contracted by the rancher to assist in the management of the animals. João Guilherme Brenner, owner of the Engenho Velho farm, says he has been using the collar on his animals for 10 years. According to him, the data is consulted daily by veterinarians. The new thing now was tokenization. "The owner selects the animals, sends them for tokenization and the information automatically goes to the platform. Within the blockchain, a unique and inviolable code is created, which allows the financial institution to access the data and track this asset", informs the CEO of Cowmed. The token registered with B3 also prevents the same animal from being used as collateral in different loans. "We understand that, for the producer to have maximum efficiency, he needed to listen to the cow. It is the cow that has to tell us if she is able to reproduce, if she is healthy or not, if she is enjoying the food or not", says Martins. The collar also allows you to track milk production, as it brings together the entire history of the animal's productive life. Read also: Rice, coffee, wheat and more: how the fertilizer crisis — in an El Niño year — can put pressure on prices What if the animal dies? The bank has access to the panel with information on the health of cattle. If an animal dies, the institution is informed, and it is up to the producer to replace the head, depending on how much of the debt has already been paid off. Brenner, director of Target FIDC, explains that the contract establishes a guarantee ratio of 1.2. Therefore, it was necessary to offer R$120,000 in animals to obtain a loan of R$100,000. Therefore, as the debt is paid off, it is necessary to maintain the equivalence of 1.2 in relation to the outstanding balance. Therefore, if a cow dies after part of the debt has already been paid, it may not be necessary to replace the animal. "My vision is that the financial market will understand that this operation is much better than a car guarantee and even a property guarantee", says Brenner. According to him, in the case of the car, the bank does not know where the asset is or what condition it is in. Furthermore, if the vehicle is repossessed by the financial institution, it may remain in a yard for a long time, deteriorating until it is auctioned. The property, despite being considered a "gold standard of guarantee", requires the bank to take the property from the owner, and buyers are unlikely to appear at auctions willing to pay its market value. "Cattle have much greater liquidity. As they are practically a commodity, you just need to reduce the price a little to sell, with all the health history. Then, it becomes much easier", he says. READ ALSO European wine should be up to 20% cheaper with the EU-Mercosur agreement, but the reduction is still timid How foie gras is made, a food that was banned by Lula and reignited trade tension with France
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