Building inclusive value chains for smallholders: the role of finance

Alan de Brauw and Johan Swinnen

Chapter 11 in Handbook of Microfinance, Financial Inclusion and Development, 2023, pp 181-193 from Edward Elgar Publishing

Abstract: Smallholder farmers face numerous constraints that reduce their participation in high value agricultural markets. Two important constraints that can be lifted through financial access are limited access to liquidity to make required investment either directly or to put up as collateral, and risks associated with trying new types of production. Present opportunities, including changing transaction costs due to technology, suggest that agricultural value chain finance models, which relate farmers, finance, and another group of value chain actors in a threeway relationship, can potentially help deliver additional finance to smallholders. We describe the conditions under which agricultural value chain finance can potentially flourish, and broadly describe policy environments that can help foster agricultural value chain finance opportunities for smallholders.

Keywords: Development Studies; Economics and Finance (search for similar items in EconPapers)
Date: 2023
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