Rancher puts cows on the blockchain for clout

On Friday, a clever startup manufactured a viral media story about a Brazilian rancher securing a $19,600 loan by tokenizing 10 cows.

However, omitted from the subsequent wall-to-wall media coverage was some very inconvenient context, such as the rancher’s seat on the board of a state-backed ranching fund, his massive herd, and plentiful access to traditional, real estate-based financing.

When the story hit social media on Friday, crypto influencers applauded blockchain technologies extending credit to a farmer in need.

Unfortunately, this feel-good story falls apart under the slightest scrutiny.

Firstly, the rancher’s expansive, multi-generational real estate exceeds 1.3 square miles, and as of the most recent estimates, had over 500 cows alongside other operations.

Even if the herd size hasn’t grown, the 10 animals in Friday’s announcement represent a mere 4% of the dairy’s more than 240 lactating cows.

Secondly, trade press profiles identify the operator of the farm, Fazenda Engenho Velho, as civil engineer João Guilherme Brenner whose family has owned the land for generations.

Unlike many farmers and ranchers who rent their land, his family owns its land outright and, as such, has access to conventional, real estate-based financing.

A president, director, and seven-figure rancher

In 2022, a magazine interview documented the rancher’s election as president of Paraná’s Holstein breeders association and his appointment to the board of directors of the Brazilian state’s livestock development fund.

His 10 Holstein cows in Imbituva, Paraná secured a credit note this week, worth roughly $19,700.

Despite that loan of 1% the value of his dairy’s land, press outlets gushed about “one of Brazil’s first uses of tokenized livestock as loan collateral.”

Press coverage soared past a million views through posts about tokenization ostensibly allowing farmers to access financial lifelines.

For context, Paraná’s agriculture department prices farmland of the Imbituva municipality at 23,200 to 126,900 Brazilian reais (BRL) per hectare across every soil classification except its worst.

Anywhere within that price range, Guilherme Brenner’s 360 hectares are worth millions of US dollars.

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The headlines look great

It’s not surprising to learn that the media cycle benefited a startup. Cowmed, an agtech that spearheaded both tokenized cattle deals, structured the stunt alongside a receivables fund, Target Fundo de Investimento em Direitos Creditórios.

In 2024, a similar yet separate company, tokenization startup Simple Token, set the goal of using tokenized livestock to unlock 200 million BRL worth of loans by the end of 2026, in partnership with Cowmed.

With less than six months left, actual disclosed credit across the lifetime of both companies’ tokenized livestock efforts is 99% short of their goal, although the privately held companies aren’t required to make public disclosures.

Cowmed has raised over $1 million across several rounds of financing since 2017. Its latest publicly accessible financing was a crowdfunding campaign that closed 5.9 million BRL at a valuation of $6.2 million.

Meanwhile, Halter, Cowmed’s competitor and maker of electronic fences and cattle collars, closed a $220 million round in March of this year at a $2 billion valuation.

In comparison, Cowmed could certainly use to catch up. It is probably quite happy about Friday’s virality.

Cowmed’s business is far more modest than its competitors. It charges roughly $5 per collar per month and reported less than $3.6 million in revenue last year.

Tokenized cows are no better than non-tokenized cows

In summary, for a loan worth less than $20,000, Cowmed earned a global marketing campaign with over a million views that would have cost many multiples of that from paid advertising.

The use of blockchain in the stunt added no discernable value beyond the addition of buzzwords for media. The arrangement relies on trust in one rancher, one collar maker, one tokenization provider, and one lender.

There’s no decentralization to speak of beyond trust in corporate executives.

For years, cattle have collateralized loans to ranchers. Moreover, wireless tracking of animal collars has existed without blockchain technologies for over a decade.

For this Brazilian rancher, traditional databases could have tracked his cows just as well as any blockchain.

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