How to use
- Borrower—set the value of grain in store, an advance rate, and the two rates you are choosing between. The window defaults to 180 days, the length of a typical storage cycle. The last slider prices a full FX hedge if you do not accept that a dollar-priced crop hedges a dollar loan by itself.
- Lender—set an advance rate, the discount a standby buyer would demand, and how far the commodity falls. The cards show what the pool recovers before insurance, what insurance pays, and what is left as a loss.
- Where the rate comes from—build the borrower’s all-in rate from the investor’s return plus each cost of running the rail. The blue band is our own published required-yield corridor for this asset class, so you can see where any given assumption sits against it.
Defaults reproduce the figures in the partner brief: a $1M lot at 60% LTV, a 15% standby discount, and 80–90% insurance cover.
Calculator
A cooperative or trader has graded, insured grain sitting in a certified warehouse. It can borrow against that grain in dollars instead of rolling market-rate reais.
No hedge in the base case. Soy, corn and coffee settle against dollar benchmarks, so a dollar loan against a dollar-priced crop carries no currency mismatch by construction. Not everyone accepts that—drag the last slider to price a full hedge and watch the advantage narrow. At the current CDI–SOFR differential a full hedge costs roughly 10 pp, which is what collapses most "cheap dollars" pitches. Whether a cooperative treats its crop as a natural hedge is one of the open questions we are putting to the market.
The first question every lender asks is not the yield—it is what happens on the day the borrower stops paying. Set a price crash and see what the pool actually recovers.
What has to be true. The standby bid is a design parameter, not a signed commitment—no grain desk has committed to it yet, and asking them to is one of the open questions we are putting to the market. The insurance line assumes the shortfall is a covered peril and that the warehouse is instrumented well enough for the claim to pay. Both are what the operational workstream exists to install.
The borrower's rate is the investor's return plus the cost of running the rail. Nothing else. Build the stack yourself—including at the yield our own required-yield calculator argues this asset should pay.
The number we argue about most. The brief targets 8–10% for the investor. Our own adjudication of what this asset should pay puts uninsured senior paper at 11.0–13.5%, central 12.25%—the gap is what a senior tranche, 80–90% loss cover and a 50–60% advance rate are supposed to compress. That compression is a claim, not a result: it gets settled on the first real allocation, not in this calculator. Drag the investor slider to 12.25% and the thesis still clears the local benchmark—by less.
Formulas
Borrower—what the window costs either way. Interest is simple, not compounded: the loan is repaid in one bullet at the end of a storage cycle, so a day-count fraction is the honest way to price it.
- V — value of the grain in store, marked to a public benchmark (CEPEA/ESALQ, B3), US$
- AR — advance rate, loan as a share of collateral value (50–60% at launch, 80% the ceiling)
- L — loan against the lot, US$
- r — all-in annual rate on the leg being priced: r_BRL for the local line, r_USD for the warehouse line
- d — storage window in days (180 by default—roughly one post-harvest cycle)
- Δr — the spread the borrower actually captures, percentage points
- h — hedge cost, 0 in the base case: soy and corn settle against dollar benchmarks, so a dollar loan against a dollar-priced crop needs no hedge. Set h ≈ CDI − SOFR (~10 pp) to price a full hedge instead
- ΔC — money that stays with the farm over the window, US$
Lender—what the pool recovers on default. The advance rate sets the headline cushion, but the liquidator’s discount eats it before the price does. That is why the second break-even below is the number worth negotiating.
- C₀ — initial collateral coverage (1.67× at AR = 60%)
- ΔP — commodity drawdown within the window, share of benchmark value
- k — standby buyer’s discount to benchmark (15–20% by design, unsigned)
- Proceeds — what a 24–72-hour standby sale actually pays the pool, US$
- ι — share of a shortfall covered by insurance (80–90% design target)
- Loss — what lands on the pool after insurance, US$
- ΔP*_raw — drawdown at which collateral value falls to the loan: 40% at AR = 60%. This is the number decks quote
- ΔP* — drawdown at which the standby sale stops repaying the loan in full: 29.4% at AR = 60%, k = 15%. This is the number that binds
- The gap between the two is the liquidator’s discount. Widen k and the real cushion shrinks far faster than the headline coverage suggests; at AR / (1 − k) ≥ 1 the structure is under-collateralised on day one
Where the rate comes from. No margin is hidden between the investor and the borrower—the difference is the cost of running the rail, itemised.
- r_inv — the investor’s net target return, USD (8–10% for senior, insured, over-collateralised paper)
- cᵢ — the four costs of the rail, percentage points: origination and servicing, verification and monitoring, insurance, structuring
- r_layer — total cost of the rail (1–3 pp)
- r_borrower — what the borrower pays all-in, USD-denominated, disbursed and repaid onshore in reais
- Δ — the gap against the local benchmark. At r_inv = 12.25%—the central of our own required-yield corridor—Δ is still positive, which is the honest test of the thesis
What each panel is really asking
The borrower panel tests one comparison: a cooperative’s real cost of money against a dollar line secured by grain it already holds. The honest weakness is the currency. We treat soy and corn revenue as a natural dollar hedge—the crop is priced off CBOT and settled against CEPEA/ESALQ, so the loan and the collateral move together. A treasurer who disagrees can price the hedge with the last slider and watch roughly 10 percentage points of advantage disappear. Which of those two views a cooperative actually holds is one of the open questions we are asking the market.
The lender panel is the default-day question in arithmetic. At a 60% advance rate the loan is covered 1.67 times, and the collateral only falls below the loan after a 40% crash. But the number that matters is the second one: through a standby buyer taking a 15% discount, the pool stays whole until the commodity falls about 29%—because the discount eats the buffer before the price does. Widen the discount and that cushion shrinks fast, which is exactly why the discount, not the advance rate, is the parameter to negotiate hardest.
The stack panel is where we argue with ourselves. Our required-yield calculator builds a corridor of 11.0–13.5% for uninsured senior Brazilian agri debt. The brief targets 8–10% for a senior, insured, over-collateralised position—below that corridor. The gap is a claim: that seniority, 80–90% loss cover and a 50–60% advance rate compress the required return. Set the investor slider to 12.25% and the borrower still lands several points under the local benchmark. The thesis does not depend on winning that argument; the size of the saving does.
Related
- Agri Debt Yield Calculator—the layer-by-layer build-up of required USD yield for this asset class
- Agri debt yield: what tokenized farm credit should pay
- The agricultural finance stack
- Tokenizing agricultural assets