Financing agricultural value chains: An overview of issues, lessons learnt, and policy implications
This chapter provides a brief overview of the key findings, lessons learnt, and policy implications from the presentations and discussions during the “National Seminar on Financing of Agriculture Value Chains: Challenges and Opportunities” organized jointly by the National Bank for Agriculture and Rural Development (NABARD) and the International Food Policy Research Institute (IFPRI) at the Bankers Institute of Rural Development, Lucknow, during November 29–30, 2015. The chapter sums up that both value chains and value chain financing are gaining ground in India and the value chain approach has considerable potential to (i) improve small farmers’ access to markets and financial resources, (ii) reduce transaction costs, (iii) mitigate supply and market risks, and (iv) build human and social capital. It has also been found that value chains have mostly been developed for commodities that have higher income potential and strong market demand, but these have remained localized. However, macroeconomic conditions and external environment in the form of policies, laws, standards, regulations, and institutional support services can have significant impact on the performance of value chains.