ANALYZING AND FINANCING
VALUE CHAINS
MAY 21, 2010
CENTURY PARK HOTEL
Manila
IN AGRICULTURE
What is Value Chain?
SEQUENCE OF STEPS IN THE PROCESS OF PRODUCTION TO MARKET DELIVERY OF A PRODUCT.
.INPUT SUPPLY > AGRI PRODUCTION > FIRST LEVEL
HANDLING >– PROCESSORS > WHOLESALERS/DISTRIBUTORS > RETAILERS >– CONSUMERS.
VALUE CHAIN APPROACHES ARE A VEHICLE FOR LINKING
SMALL BUSINESSES TO MARKETS
VALUE CHAIN CONCEPT
End Users/
Consumers
Marketing
Production
Inputs
Human
Resources
Services
Infrastructure
CAPITAL
Equipment
Tri-Partite Agreement between Farmer, Bank
and Processor/Exporter Farmer is assured of a fixed farm-gate price for his produce
Integrator/Exporter is assured of steady raw material supply
Bank is assured of loan collection
BANANA CHIPS CARDABA SUBSECTOR MAP
Local Retail Outlets Importers
Banana Chips Exporters
( about 15% of cardaba production)
MANILA
EXPORTERS
Micro Processors
Less than 5% of
Cardaba production
TRADERS/
DISTRIBUTORS
First Fry Processors
Processing their own
production
AssemblerBarangay
Agent
CARDABA GROWERS/ TRADERS
Price
makers
Unripe banana
Good quality for processing
Price makers but
shifts to price
takers when supply
is very limited; low
risk; med proximity
to markets
Price takers; high
risk; medium
proximity to
markets; few
suppliers
Source of info;
quality control at
community level;
has low degree of
influence at the
community chain
Price
Makers,
med risk
Price
Makers,
med risk;
with some
options on
channels
BANANA CHIPS PROCESSING ON-FARM: 1ST FRY
NEW
PROCESSED
PRODUCT
FOR EXPORT
What , therefore, are the opportunities for Microfinance?
A. Where are the opportunities for microfinance institutions for financing within the value chain?
* Input Distribution > MFIs can finance small traders of fertilizer/chemical requirements of farmers
* Production level > MFIs can finance labor, fertilizers, and other inputs needed in production with amounts determined through cash flow analysis
* Processing > MFIs can finance salary loan to employees, etc
* Trader/Wholesaler/Assembler/Consolidator > MFIs can finance working capital
* Retail > MFIs can finance micro business loan, etc).
B. Value chain analysis can expand opportunities for financing within a specific crop or sector (e.g. First Fry of Banana Chips)
Top Related