supporting mechanisms for agricultural value chain finance
DESCRIPTION
Presentation Fin4Ag S10 by Massimo PeraTRANSCRIPT
www.fao.org/ag/ags
Supporting Mechanisms for
Agricultural Value Chain Finance
Building blocks for an effective support
Massimo Pera Presentation at the Fin4Ag International Conference
16 July 2014 | Nairobi, Kenya
outline
1. VC Finance: a comprehensive approach
2. Building blocks for making vc finance
effective
3. Major drivers for building an enable
environment
4. Supportive mechanisms and instruments
5. TA facilities and the work of FAO
A comprehensive approach of the
relationships among VC actors
3 building blocks
Increase financing to agriculture at all levels of the chain
Credit and financial
intermediation
Technical Assistance
And
Capacity Development
Government’s enabling
environment
Financial Services
Input
Suppliers Growers
Food
Processing
Industries
Food
Retail
Industries
Business Support Services
Production Agri-food Industries
Operating Environment
Transport Storage
Services
Logistics & VC Services
Input
Suppliers
Financial Services
Stakeholders Role in Agricultural VCs
Major drivers for building an enable
environment
• Standards and certification
• Regulations and
Enforcement
• Macro-economic
and Social context
Supportive mechanisms and
instruments
• Guarantee schemes
• Insurance
• Commodity Exchanges
• Facilitation of TA
Guarantee schemes
FACILITATE CREDIT ACCESS
COMPLEMENT FINANCIAL
INTERMEDIARIES’ GUARANTEES
PARTIAL BACKING OF INTERMEDIARIES IN LOAN COLLECTION
PROMOTE PARTICIPATION OF PRIVATE AGENTS
REDUCE CAPITALIZATION REQUIREMENTS
Insurance schemes
Farmers
Aggregators Consumer
Processors
Financial institution
Input suppliers
Government
Reinsurer
Insurance company
Wholesalers
Risk management model in AGVC
Risk management
in the AgVC
Agri-business segmentation
• Social vs. commercial
insurance
• Traditional farming sector
• Emerging farming sector
• Commercial farming
sector
Agricultural risk assessment
Risk identification
Risk quantification
Probabilistic agricultural risk
model
Agricultural risk financing
• Risk layering
• Traditional insurance
products and indexed
insurance
• Insurance pool
Institutional capacity building
• Data management
• Regulatory/supervisory
framework
• Information and education
• Technical expertise
• Programme administration
and monitoring
Agricultural commodities exchanges
Commodity exchanges gives rapid and accessible
prices and trade opportunities and facilitate
trade,
risk management
and opportunities
for use of new financial
instruments.
Facilitation of Technical Assistance
Investee companies
Existing TAF
$
Buyers
Investment funds
Producers
3ADI TAF: A MORE COMPREHENSIVE APPROACH
13
Investment funds
Post-investment support for
higher development
impact
Pre-investment support for potential investee SMEs
Enabling environment
Public investment
Policy advice and linkage with public investment
Access to finance
(MFIs and Banks)
$
Existing TAF
For more information
“Agricultural Value Chain Finance”
http://www.fao.org/docrep/017/i0846e/i0846e.
Rural Infrastructure and Agro-Industries Division
(AGS) Website www.fao.org/ag/ags
For additional questions, contact: Calvin Miller : [email protected]
Massimo Pera: [email protected]