Blockchain to help farmers access credit, create futures market

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December 14, 2025 | 12:00am

MANILA, Philippines — Blockchain technology may help Filipino farmers access much-needed financial credit to boost their capital and may even create the country’s commodity futures market, an Asian Institute of Management (AIM) professor said.

Daniel Broby, the academic program director of AIM’s Master of Science in Financial Technology, said employing blockchain in the agriculture sector, especially in crops like rice, could contribute to addressing farmers’ lack of access to financial credit.

Broby explained that the two persisting issues of farming in the country are small landholdings and lack of financial access.

He said farmers aggregating their produce through a cooperative set-up so that they achieve economies of scale could solve the problem of small landholdings.

The establishment of a futures market, which the Securities and Exchange Commission has proposed since last year, would modernize rice trading in the country and even globally, Broby added.

The blockchain technology will serve as a complementary system to the futures market wherein the aggregated produce of farmers will be tokenized and put on the blockchain that will be traded as standardized units, the professor said.

The use of blockchain allows for transparent trading in the market, minimizing the consequences of information asymmetry to both buyers and consumers, Broby said.

Information asymmetry happens when an individual in a market has more or better information than the others that may result in market inefficiencies and exploitations.

“It now becomes a matter of public record. It cannot be changed, it is time-stamped and it is a very useful tool in a way to create certainty and clarity in the market,” Broby told The STAR.

“Once a specific volume of contract meets a certain price level then it is automatically sold and eventually distributed to the farmers,” he added.

Broby admitted that such a concept remains a “vision” but emphasized that it is viable. He noted that the Philippines has the opportunity to host the world’s rice futures market given the plan disclosed by the SEC.

“With blockchain, it is easier to implement and cheaper to set-up,” Broby said.

Making the rice futures market international than local would allow for more competitive pricing and ensure fairer trade across rice-producing countries, Broby said.

“This is not done anywhere else so there is a massive opportunity for it. It takes a vision to do so,” he said.

Once such a system is established, financial credit may follow into the pockets of farmers. But how? The smart contracts set in the blockchain may serve as a proof of farmers’ liquidation or guarantee that banks can lend against, Broby said.

One of the challenges faced by Filipino farmers in accessing financial credit is the absence of collateral.

“It updates the entire supply chain from farmers to markets to the banking system,” he said.

The use of blockchain in the rice industry has been done in Cambodia when Oxfam piloted a blockchain platform called Blocrice in 2018 to manage contract-farming agreements between organic rice farmers and exporters and processors, according to the United Nations’ Food and Agriculture Organization (FAO).

FAO noted that blockchain and smart contracts indeed have the advantage of making contractual transactions more transparent, trustworthy and integrate producers in contract farming transactions.

Citing the UN Development Program, FAO explained that smart contract is an “electronic version of a document that is composed of a set of codes that distill the terms of an agreement and are stored on the blockchain.”

“The resulting smart contracts represent a virtual protocol intended to digitally facilitate, verify or enforce the negotiation or performance of an agricultural contract. Such contracts enable trade, reduce paperwork, facilitate payments and mitigate the risk of fraud,” FAO said.