Presentation Fin4Ag S10 by Massimo Pera

1. 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

2. 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

3. A comprehensive approach of the
relationships among VC actors

4. 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

5. 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

6. Major drivers for building an enable
environment
• Standards and certification
• Regulations and
Enforcement
• Macro-economic
and Social context

7. Supportive mechanisms and
instruments
• Guarantee schemes
• Insurance
• Commodity Exchanges
• Facilitation of TA

8. Guarantee schemes
FACILITATE CREDIT
ACCESS
COMPLEMENT
FINANCIAL
INTERMEDIARIES’
GUARANTEES
PARTIAL BACKING OF
INTERMEDIARIES IN
LOAN COLLECTION
PROMOTE
PARTICIPATION OF
PRIVATE AGENTS
REDUCE
CAPITALIZATION
REQUIREMENTS

9. Insurance schemes
Farmers Aggregators
Consumer
Processors
Financial institution
Input suppliers
Government
Reinsurer
Insurance company
Wholesalers

10. 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

11. 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.

12. Facilitation of Technical Assistance
Investee companies
Existing
TAF
$
Buyers
Investment
funds
Producers

13. 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

14. For more information
“Agricultural Value Chain Finance”
http://www.fao.org/docrep/017/i0846e/i0846e.
pdf
Rural Infrastructure and Agro-Industries Division
(AGS) Website www.fao.org/ag/ags
For additional questions, contact:
Calvin Miller : Calvin.Miller@fao.org
Massimo Pera: massimo.pera@fao.org