Page 46 - Banking Finance July 2023

ARTICLE

1. Arrows from input supply to all other stages show that input supply is a cross cutting function.
2. Arrows from production directly to processing and distribution indicate that some farmers may deliver crops directly
to factors or directly to final markets (for unprocessed goods).

Agriculture Value Chain participants
Participant Main feature Typical demand for financial
services
Input suppliers Provide farmers with the inputs necessary for Short-term working capital
Production. These include seeds, chemicals fertilizers Mid-term financing (equipment
and equipment, as well as technical assistance. Input dealers)
suppliers often vary in size, and have different and Payments, transfers
individualized financial needs.
Producers/farmers All of those engaged on primary production including Short-term working capita!
farmers, their families and seasonal/part-time workers. Mid-term financing (equipment,
Many producers face significant risks associated with livestock)
agricultural production, such as predictable and Deposit accounts (value
stable income, and household and medical Expenses. storage, commitment savings)
Payments, transfers
Aggregators, service Buy produce from the farmers or co-ops and bulk it Short-term working capital
providers, traders 2 before selling it on. Their success hinges on making Mid-term financing (storage
their working capital flow as quickly as possible facilities, vehicles)
in buying and reselling produce. Every transaction Deposit account (checking)
offers an opportunity in make a profit (or incur a loss). Payments, transfers
Small rural traders have to stop buying when they
run out of cash, leaving farmers stranded with their
products.
Processors Add value to a raw product during the processing Short-term working capital
stage. Small-scale processors may lack the working Mid-term financing (equipment)
capital they need to buy products in bulk from a Deposit accounts (checking)
farmer group or trader. They often lack the money to Payments., transfers
invest in equipment, leading to losses, lower quality,
and higher processing costs.
Retailers, Sell the processed product to local and global retailers, Short-term working capital
wholesalers, supermarkets, and smaller storefront retailersr which Mid-term financing (equipment)
exporters in turn, sell to consumers. Wholesalers often manage Deposit accounts (checking)
credit relations in two directions: they provide Payments, transfers
funding to trusted traders so they can buy on their
behalf, and they may provide products to retailers on
credit, exploding to be paid after the retailer has sold
the goods. In this way, wholesalers often act as a de
facto bank Fur other actors in the chain. They often
need more capital than other traders in the
value chain.

42 | 2023 | JULY | BANKING FINANCE