Agricultural finance book pdf

Although there is no universally accepted definition of the term, it normally refers to the whole range of goods and services necessary for an agricultural product to move from the farm to the final customer or consumer. At the heart of the agricultural value chain concept is the idea of actors connected along a chain producing and delivering goods to consumers agricultural finance book pdf a sequence of activities. The approach has been found useful, particularly by donors, in that it has resulted in a consideration of all those factors impacting on the ability of farmers to access markets profitably, leading to a broader range of chain interventions. It is used both for upgrading existing chains and for donors to identify market opportunities for small farmers.

There is no commonly agreed definition of what is actually meant by agricultural value chains. An international, or regional commodity market. A dedicated chain designed to meet the needs of one or a limited number of buyers. This usage, which is arguably most faithful to Porter’s concept, stresses that a value chain is designed to capture value for all actors by carrying out activities to meet the demand of consumers or of a particular retailer, processor or food service company supplying those consumers. Emphasis is firmly placed on demand as the source of the value. However, the application of value chain analysis is being interpreted differently by different organisations, with possible repercussions for their development impact.

The proliferation of guides has taken place in an environment where key conceptual and methodological elements of value chain analysis and development are still evolving. Many of these guides include not only detailed procedures that require experts to carry out the analysis but also use detailed quasi-academic methodologies. A major subset of value chain development work is concerned with ways of linking producers to companies, and hence into the value chains. Companies often also agree to support the farmer through input supply, land preparation, extension advice and transporting produce to their premises. Agricultural value chain finance is concerned with the flows of funds to and within a value chain to meet the needs of chain actors for finance, to secure sales, to buy inputs or produce, or to improve efficiency. Examining the potential for value chain finance involves a holistic approach to analyze the chain, those working in it, and their inter-linkages.

These linkages allow financing to flow through the chain. For example, inputs can be provided to farmers and the cost can be repaid directly when the product is delivered, without need for farmers taking a loan from a bank or similar institution. This is common under contract farming arrangements. Types of value chain finance include product financing through trader and input supplier credit or credit supplied by a marketing company or a lead firm. Other trade finance instruments include receivables financing where the bank advances funds against an assignment of future receivables from the buyer, and factoring in which a business sells its accounts receivable at a discount. Also falling under value chain finance are asset collateralization, such as on the basis of warehouse receipts, and risk mitigation, such as forward contracting, futures and insurance. ICTs, have become an important tool in promoting agricultural value chain efficiency.

There has been a rapid expansion in the use of mobile technologies, in particular. The price of ICT services is falling and the technologies are becoming more affordable to many in developing countries. Kenya, which provides information on the gestation period, on artificial insemination of the cows, and on how to look after them. Other applications have been developed to promote provision of crop insurance through input dealers, for example. ICTs are also being used to strengthen the capacity of extension officers and NGO field staff to reach farmers with timely and accurate information and, at the same time, help capture data from the field. Farmer representatives are trained to use ICT applications on a smartphone to provide agricultural information and extension support.