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Value Chain Connection






Value Chain
Final product does not just emerge as a manner from the sky but a product from series of activities which has undergone processes from its conception to the end user. A cocoa product like beverages has received one or two touches from the actors within the value chain for making it easy for consumption to the end user.
In the agriculture sector, I could say that value chain start from the farm where the farmer start the plantation of the goods through the period of harvests, trading the goods, processing to the end user for final consumption. Value chain can be said to be the entire and whole production of system of certain goods and services which comprises of chain actor and supporters to ensure quality production of goods and services.

Value Chain Actors and Supporters
In the value chain, there are various and categories of people, institutions, and organization involve in one or two activities at some point or the others. These categories of people, organization, and institutions are either chain actors or chain supporters.
Chain actors are the actors directly involve in the production of the product to be consume by the end users who actually own the good at some stage of the value chain. It could be individual or organization directly in charge of producing, buying and selling of the product while chain supporters are the individual, organization and institutions that are not directly involve with the production of goods but provide certain services to the chain actors. This could be inform of financial services from bank, microfinance institutions, money lenders, credit suppliers, input loan supplier, equity fund, dissemination of information to the chain actors on either to increase or produce quality goods from the respective institutional agency or extension worker, donor to support existing work or facilitating.

Value Chain Finance.
Since we have gain some knowledge about value chain and it process, the actors and the supporter of value chain, then we can proceed to understand how to finance the process or series of activities involve in the value chain. The entire system of production need the consumption of money before the good could be ready for end users consumption. At some point of the production there will be need for cash to get things done and do the necessary arrangement by the chain actors. Every chain actors involve in value chain needs access to financial services to accelerate expansion and productivity in order to meet the demand in the society and alleviate poverty in the economy.
The demand or need of chain actors varied from one actor to the other. According to Royal Tropical Institute on value chain: beyond microfinance for rural entrepreneur pointed out the various need of actors involved in value chain which ranges from input supplier, farmers, farmers organization, Traders, and the processors.
There are three type of financial services available to the actors in the value chain; chain liquidity simply based on the loan coming within the value chain. It is characterized on short term loan and this usually comes from the buyer or suppliers. Agricultural finance is the type of finance that comes from chain supporters which is usually from commercial bank, micro-finance institutions and other agency to promoting agriculture production to one of the actor within the value chain while value chain finance is a kind of financial service which linked different actors within the value chain which build relationship and enabling cooperation environment where access to financial services is very easy and erase the doubt of financial services provider on repayment of the debt given out to the small scale producers.


Importance of finance in value chain
It is very obvious that availability of financial services is very crucial to the entire production system or value chain if there would be production. Every aspect of production demand specific amount of cash to get certain thing done. In the process of production, there will be need for purchasing of material, processing, packaging, logistic, and marketing and payment of manpower etc to ensure the final product is ready for consumption. With this little point financial services is very mandatory in entire system production.

Challenges towards securing financial services for the small scale producers
It is very glaring and obvious what small holder producers or small scale business faced in securing financial service to better increase and enlarge their production. Financial institutions were not helping at all due to the high standards set in getting loan by the financial institutions which  the low or poor small scale producer do not have. The provision of collateral have hindered many to remain in small production and producing low quality of services. The lack of relevant information to the small holder producers to access financial service contributes to the poor access to financial service. Inadequate skills of the farmers to utilize the loan or credit received to increase production also contribute. I could point out the fear of repayment by the famers or small holder producers are one of the issues handicapping them venturing to seek loan from the financial institutions. 

Reference
Calving M. & Linda J. Agricultural Value chain finance: Tools and lessons
Global value chains: Concept and Tools. www.globalvaluechains.org/concepts.html
Value chain Finance: Beyond Microfinance for rural entrepreneur. Royal Tropical Institute

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