Agricultural value chain financing (VCF) is an emerging phenomenon in the region but it is not well studied. Historically, small- and medium-sized famers experience problems accessing formal finance. Participation in a well-structured and dynamic supply chain seems to improve chances of obtaining financing, either directly from larger more liquid agents in the same chain or indirectly from external formal lenders based on the type of relationships and degrees of connectedness in the chain (advance sale contracts, technical assistance agreements, length of transaction history, etc.). Four value chains were studied in Nicaragua (diary and plantains) and Honduras (plantains and horticulture, sweet peppers and tomatoes specifically) to discover how and under what terms and conditions financing was being provided and to understand the challenges in expanding the use of this type of financing.
Inter-American Development Bank