ANALYZING AND FINANCING

VALUE CHAINS
IN AGRICULTURE

MAY 21, 2010

CENTURY PARK HOTEL
Manila
 What is Value Chain?

SEQUENCE OF STEPS IN THE PROCESS OF

PRODUCTION TO MARKET DELIVERY OF A PRODUCT.

.INPUT SUPPLY > AGRI

VALUE CHAIN APPROACHES
PRODUCTION > FIRST LEVEL
ARE A VEHICLE FOR LINKING
HANDLING >– PROCESSORS >
SMALL BUSINESSES TO
WHOLESALERS/DISTRIBUTORS
MARKETS
> RETAILERS >– CONSUMERS.
 VALUE CHAIN CONCEPT

End Users/
Consumers
Human Infrastructure
Resources Marketing

Production
Services CAPITAL

Inputs 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

Price
makers
Banana Chips Exporters
( about 15% of cardaba production)
MANILA
Price
EXPORTERS Makers,
Price takers; high med risk
risk; medium
Micro Processors proximity to First Fry Processors
Less than 5% of markets; few Processing their own
Cardaba production suppliers
production
TRADERS/
DISTRIBUTORS Source of info; Price
quality control at Makers,
Price makers but
community level; med risk;
shifts to price
Barangay has low degree of with some
takers when supply
Assembler influence at the options on
is very limited; low Agent community chain
risk; med proximity channels
to markets

CARDABA GROWERS/ TRADERS

Unripe banana
Good quality for processing
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)