Nigeria Finance Diagnostics Final2 0 PDF

WORKING PAPER
November 2010
Unleashing Agricultural Development in Nigeria

through Value Chain Financing
F. Hartwich
J. Devlin
P. Kormawa
I.D. Bisallah
B.O. Odufote
I.M. Polycarp
BANK OF INDUSTRY
CENTRAL BANK OF NIGERIA

7KLVGRFXPHQWKDVEHHQSUHSDUHGE\)+DUWZLFK-'HYOLQDQG3.RUPDZDRIWKH$JULEXVLQHVV
'HYHORSPHQW8QLW8QLWHG1DWLRQV,QGXVWULDO'HYHORSPHQW2UJDQL]DWLRQ81,'2,'%LVDOODK
RIWKH%DQNRI,QGXVWU\%2,1LJHULD%22GXIRWHDQG,03RO\FDUSERWKRIWKH'HYHORSPHQW
)LQDQFH'HSDUWPHQW&HQWUDO%DQNRI1LJHULD&%19DOXDEOHLQSXWVZHUHUHFHLYHGIURP81,'2
FROOHDJXHV $ *RRGZLQ )LVKHULHV DQG ' 7H]HUD )UXLWV )RU FRPPHQWV SOHDVH FRQWDFW
IKDUWZLFK#XQLGRRUJ

'LVFODLPHU7KH GRFXPHQW UHSUHVHQWVZRUN LQ SURJUHVV DQG LV LQWHQGHG WR JHQHUDWH FRPPHQWDQG
GLVFXVVLRQ ,W LV QRW D IXOO\ SROLVKHG SXEOLFDWLRQ 7KH YLHZV H[SUHVVHG KHUHLQ DUH WKRVH RI WKH
DXWKRUV DQG GR QRW QHFHVVDULO\ UHIOHFW WKH YLHZV RI WKH 8QLWHG 1DWLRQV ,QGXVWULDO 'HYHORSPHQW
2UJDQL]DWLRQ

7KHGRFXPHQWPD\EHIUHHO\TXRWHGRUUHSULQWHGEXWDFNQRZOHGJHPHQWLVUHTXHVWHG

5HIHUHQFH
81,'2 &%1 %2, 8QOHDVKLQJ $JULFXOWXUDO 'HYHORSPHQW LQ 1LJHULD
WKURXJK 9DOXH &KDLQ )LQDQFLQJ :RUNLQJ 3DSHU 1RYHPEHU 8QLWHG 1DWLRQV ,QGXVWULDO
'HYHORSPHQW2UJDQL]DWLRQ81,'29LHQQD$XVWULD
i
Unleashing Agricultural Development in Nigeria
through Value Chain Financing
Working Paper, November 2010
ii
ACRONYMS
$&*6) $JULFXOWXUDO&UHGLW*XDUDQWHH6FKHPH)XQG
$&3 $IULFDQ&DULEEHDQDQG3DFLILF&RXQWULHV
$*2$ $IULFD*URZWKDQG2SSRUWXQLWLHV$FW
$*5$ $OOLDQFHIRUD*UHHQ5HYROXWLRQLQ$IULFD
$&66 $JULFXOWXUDO&UHGLW6XSSRUW6FKHPH
$8 $IULFDQ8QLRQ
%2, %DQNRI,QGXVWU\
&$&6 &RPPHUFLDO$JULFXOWXUH&UHGLW6FKHPH
&$$'3 &RPSUHKHQVLYH$IULFD$JULFXOWXUH'HYHORSPHQW3URJUDPPH
&%1 &HQWUDO%DQNRI1LJHULD
&07 &XW0DNHDQG7ULP2SHUDWLRQLQDSSDUHOLQGXVWU\
&20)$5 &RPSXWHU0RGHOIRU)HDVLELOLW\$QDO\VLVDQG5HSRUWLQJ81,'26RIWZDUH
&2623 &RXQWU\6WUDWHJLF2SSRUWXQLWLHV3URJUDPPH
'), 'HYHORSPHQW)LQDQFH,QVWLWXWLRQ
'2& 'D\2OG&KLFNV
(&2:$6 (FRQRPLF&RPPXQLW\RI:HVW$IULFDQ6WDWHV
(0( (PHUJLQJ0DUNHW(FRQRPLHV
(3$V (FRQRPLF3DUWQHUVKLS$JUHHPHQWV
(8 (XURSHDQ8QLRQ
)$2 )RRGDQG$JULFXOWXUDO2UJDQL]DWLRQ
)&7 )HGHUDO&DSLWDO7HUULWRU\
))$ )UHH)DWW\$FLGV
),$6 )RUHLJQ,QYHVWPHQW$GYLVRU6HUYLFHVRIWKH:RUOGEDQN
*'3 *URVV'RPHVWLF3URGXFW
*21 *RYHUQPHQWRI1LJHULD
+3$, +LJK3DWRJHQLRXV$VLDQ,QIOXHQ]D
+4&) +LJK4XDOLW\&DVVDYD)ORXU
,$5 ,QVWLWXWHRI$JULFXOWXUDO5HVHDUFK
,&$ ,QYHVWPHQW&OLPDWH$VVHVVPHQW
,)$' ,QWHUQDWLRQDO)XQGIRU$JULFXOWXUDO'HYHORSPHQW
,)'& ,QWHUQDWLRQDO)HUWLOL]HU'HYHORSPHQW&RUSRUDWLRQ
,,7$ ,QWHUQDWLRQDO,QVWLWXWHRI7URSLFDO$JULFXOWXUH
/(('6 /RFDO*RYHUQPHQW(FRQRPLF(PSRZHUPHQWDQG'HYHORSPHQW6WUDWHJ\
0$1 0DQXIDFWXUHUV$VVRFLDWLRQRI1LJHULD
0$5.(76 0D[LPL]LQJ$JULFXOWXUDO5HVRXUFHVLQ.H\(QWHUSULVHVDQG7DUJHW6LWHV
0)% 0LFUR)LQDQFH%DQNV
1(('6 1DWLRQDO(FRQRPLF(PSRZHUPHQWDQG'HYHORSPHQW6WUDWHJ\
1$&5'% 1LJHULDQ$JULFXOWXUDO&UHGLWDQG5XUDO'HYHORSPHQW%DQN
1*2V 1RQ*RYHUQPHQWDO2UJDQL]DWLRQV
1,))5 1DWLRQDO)UHVKZDWHU)LVKHULHV5HVHDUFK,QVWLWXWH
1,205 1LJHULDQ,QVWLWXWHIRU2FHDQRJUDSK\DQG0DULQH5HVHDUFK
1,56$/ 1LJHULDQ,QFHQWLYHEDVHG5LVN6KDULQJ6\VWHPIRU$JULFXOWXUDO/HQGLQJ
133$1 1DWLRQDO3DOP3URGXFH$VVRFLDWLRQRI1LJHULD
160 1LJHULD6WDUFK0LOOV
170$ 1LJHULD7H[WLOH0DQXIDFWXULQJ$VVRFLDWLRQ
195,G 1DWLRQDO9HWHULQDU\5HVHDUFK,QVWLWXWH
3:& 3ULFHZDWHUKRXVH&RRSHUV
5H6$.66:$ 5HJLRQDO6WUDWHJLF$QDO\VLVDQG.QRZOHGJH6XSSRUW6\VWHP:HVW$IULFD
iii
505'& 5DZ0DWHULDOV5HVHDUFKDQG'HYHORSPHQW&RXQFLO
6(('6 6WDWH(FRQRPLF(PSRZHUPHQWDQG'HYHORSPHQW6WUDWHJ\
6,(3) 6DYDQQDK,QWHJUDWHG([SRUW3URFHVVLQJ)DUPV
60( 6PDOODQG0HGLXP6FDOH(QWHUSULVHV
60(&*6 6PDOODQG0HGLXP6L]HG(QWHUSULVHV&UHGLW*XDUDQWHH6FKHPH
81,'2 8QLWHG1DWLRQV,QGXVWULDO'HYHORSPHQW2UJDQL]DWLRQ
86 8QLWHG6WDWHV
86$,' 8QLWHG6WDWHV$JHQF\IRU,QWHUQDWLRQDO'HYHORSPHQW
:$5'$ :HVW$IULFDQ5LFH'HYHORSPHQW$VVRFLDWLRQ
:% :RUOG%DQN
iv
v
Table of Contents

(;(&87,9(6800$5<
,1752'8&7,21
678'<$3352$&+$1'0(7+2'2/2*<
(175<32,176,19$/8(&+$,1'(9(/230(17
63$7,$/',675,%87,212)9$/8(&+$,16
,'(17,)<,1*9$/8(&+$,1),1$1&,1*1(('6
6285&(62)9$/8(&+$,1),1$1&(
0(7+2'2/2*<$1''$7$&2//(&7,21
0(7+2'2/2*<
678'</2*,&
'$7$&2//(&7,21
$52$'0$3)259$/8(&+$,1),1$1&(
'(&,',1*:+(5(72,19(67
'HYHORSPHQW3RWHQWLDO
)LQDQFLDOQHHGV
7RZDUGVD)LQDQFLQJVWUDWHJ\
&5266&877,1*&+$//(1*(6$1'23325781,7,(6
3ULPDU\3URGXFWLRQDQG6RXUFLQJRI,QSXWV
3URFHVVLQJ&DSDFLW\DQG7HFKQRORJ\
(QG0DUNHWVDQG7UDGH
&KDLQ*RYHUQDQFHDQG/LQNDJHV
5HVRXUFHSURGXFWLYLW\DQG(QYLURQPHQWDO3HUIRUPDQFH
0DFUR(FRQRPLFDQG3ROLF\&RQWH[W
$YDLODELOLW\RI)LQDQFH
&21&/86,21$1'5(&200(1'$7,216
&+226,1*:+(5(72,19(67
$*5,&8/785$/9$/8(&+$,16$1'7+(,5),1$1&,$/1(('6
'(6,*1,1*9$/8(&+$,1),1$1&(6833257
$11(;',$*1267,&62)9$/8(&+$,16
$&DVVDYD
$&RWWRQ
$)LVKHULHV 46
$0DL]H
$)UXLWV
$3DOP2LO
$3RXOWU\
$5LFH
$6R\EHDQ
$7RPDWRHV
/,7(5$785(5()(5(1&(6
vi
Executive Summary
7KH &HQWUDO %DQN RI 1LJHULD LV SURSRVLQJ WKH 1LJHULDQ ,QFHQWLYHEDVHG 5LVN 6KDULQJ 6\VWHP IRU
$JULFXOWXUDO/HQGLQJ1,56$/LQUHVSRQVHWRFKDOOHQJHVZLWKDJULFXOWXUDOGHYHORSPHQWDQGODFNRI
ILQDQFHIRUDJULEXVLQHVVLQ1LJHULD
7KLV UHSRUW ORRNV DW WKH QHHGV IRU ILQDQFH LQ YDULRXV DJULFXOWXUDO YDOXH FKDLQV LQ WKH FRXQWU\ DQG
RSSRUWXQLWLHVIRUKRZEDQNVFDQUHDFWWRWKHVHOD\LQJRXWQHZDQGLQQRYDWLYHPHWKRGVWRLQFUHDVH
OHQGLQJWRWKHDJULFXOWXUDOVHFWRU
7KH ILQGLQJV SUHVHQWHG LQ WKLV UHSRUW DUH EDVHG RQ D VWXG\ RI VHOHFWHG DJULFXOWXUDO SURGXFW YDOXH
FKDLQV LQ 1LJHULD WHQ LQ WRWDO FDVVDYD FRWWRQ ILVKHULHV PDL]H IUXLWV SDOP RLO SRXOWU\ ULFH
VR\EHDQDQGWRPDWR7KHVWXG\ZDVFDUULHGRXWE\DWHDPRIH[SHUWVIURPWKH%DQNRI ,QGXVWU\
1LJHULD DQG WKH &HQWUDO %DQN RI 1LJHULD ZLWK WHFKQLFDO VXSSRUW IURP 81,'2·V $JULEXVLQHVV
'HYHORSPHQW %UDQFK 9LHQQD DQG IROORZHG 81,'2 PHWKRGRORJ\ IRU YDOXH FKDLQ GHYHORSPHQW
GLDJQRVWLFV
7KH UHSRUW SURYLGHV D GHWDLOHG DQDO\VLV RI HDFK YDOXH FKDLQ TXDOLILHG LQIRUPDWLRQ RQ ILQDQFLQJ
UHTXLUHPHQWV IRU HDFK VHJPHQW RI WKH YDOXH FKDLQV DQG LGHQWLILHV RSSRUWXQLWLHV WR ILQDQFH
RSHUDWLRQV DORQJ WKH FKDLQV ,W IXUWKHU SURYLGHV DFWLRQDEOH UHFRPPHQGDWLRQV IRU LPSURYLQJ
SURGXFWLYLW\LQFRPHDQGJURZWKLQWKHNH\YDOXHFKDLQVWKURXJKILQDQFLQJDQGWHFKQLFDODVVLVWDQFH
8OWLPDWHO\ WKH VHOHFWLRQ RI WDUJHW YDOXH FKDLQV FRXOG EH PDGH RQ WKH EDVLV RI GHYHORSPHQW
REMHFWLYHV DQG ILQDQFLQJ QHHGV RI WKH YDOXH FKDLQV $Q\ ILQDQFLDO VXSSRUW D YDOXH FKDLQ DQG LWV
LQGLYLGXDO DFWRUV ZLOO IXUWKHU GHSHQG RQ WKH ILQDQFLDO DWWUDFWLYHQHVV RI WKH YDOXH FKDLQ EXVLQHVV
RSSRUWXQLWLHVWRWKHILQDQFLQJLQVWLWXWLRQDQGWKHILQDQFLDOSURGXFWVDQGLQFHQWLYHVFKHPHVDYDLODEOH
WRWKHILQDQFLQJLQVWLWXWLRQV
7KHPDLQILQGLQJVRIWKHUHSRUWLQUHODWLRQWRYDOXHFKDLQVDQGWKHLUILQDQFLQJQHHGVDUH
• 7KHSRWHQWLDOIRUWKHGHYHORSPHQWRIDJULFXOWXUDOYDOXHFKDLQVLQ1LJHULDLVVXEVWDQWLDODQG
SURPLVLQJERWKIURP WKHVXSSO\VXIILFLHQWQDWXUDOUHVRXUFHVDQGGHPDQGODUJHGRPHVWLF
PDUNHWRSSRUWXQLWLHVIRUH[SRUWSHUVSHFWLYH
• 7KH YDOXH FKDLQV H[DPLQHG DUH FKDUDFWHULVHG E\ D SUHSRQGHUDQFH RI VPDOOKROGHUV DQG
UHODWLYHO\ IHZ SURFHVVRUV ZKR HQFRXQWHU VHYHUH FKDOOHQJHV LQ WKH DFTXLVLWLRQ RI VXIILFLHQW
TXDOLW\ UDZ PDWHULDOV WHFKQRORJ\ DQG PDUNHWLQJ 7KHUH DUH IHZ OHDG ILUPV WKDW SURPRWH
LPSURYLQJ WKH RSHUDWLRQV RI WKHLU EX\HUV DQG VXSSOLHUV 2WKHU IRUPV RI YDOXH FKDLQ
FRRUGLQDWLRQ DQG VHOIRUJDQL]DWLRQ RI DFWRUV DUH UDUH DQG OLPLWHG WR QHZ LQLWLDWLYHV OLNH WKH
&RPPHUFLDO $JULFXOWXUH 7KHUH LV YLUWXDOO\ QR JRYHUQPHQW VXSSRUW WR YDOXH FKDLQ
FRRUGLQDWLRQ
• 7KHUH DUH PDQ\ GHYHORSPHQW SURJUDPPHV WKDW VXSSRUW YDOXH FKDLQ GHYHORSPHQW ,Q SDUWV
WKH\ DOVR GHDO ZLWK WKH LVVXH RI ILQDQFH +RZHYHU WKH W\SH RI ILQDQFH WKH\ SURYLGH LV QRW
VXIILFLHQWWRFRYHUWKHQHHGVRIWKHHQWLUHYDOXHFKDLQ
• )LQDQFLDO QHHGV DUH SDUWLFXODUO\ DFXWH IRU IDUPHUV ZKR FDQ UDUHO\ DFFHVV D VXIILFLHQW
DPRXQWRIILQDQFHWRRSHUDWHWKHLUEXVLQHVVHVSURILWDEO\7KHUHPDQ\VPDOODJULEXVLQHVVHV
LQSULPDU\SURFHVVLQJZKLFKFDQLQFUHDVHSURILWDELOLW\WKURXJKWHFKQRORJLFDOXSJUDGLQJDQG
RUJDQL]DWLRQEXWDOVRILQGLWGLIILFXOWWRDFFHVVILQDQFHIRUWKLV
• 7KHILQDQFLDOQHHGVRIPHGLXPWRODUJHDJURSURFHVVLQJXQLWVUHODWHPDLQO\WRORQJWHUP
FUHGLW IRU HTXLSPHQW XSJUDGLQJ WHFKQRORJ\ DQG LPSURYLQJ TXDOLW\ DQG FUHGLW OLQHV WR SUH
ILQDQFHDJULFXOWXUDOSURGXFWLRQRIWKHLUVXSSOLHUV
• 7KH H[LVWLQJ ILQDQFLDO SURGXFWV DUH WDLORUHG WR QHHGV IRU HTXLSPHQW DQG VKRUWWHUPZRUNLQJ
FDSLWDO +RZHYHU WKH\ DUH LOOILWWHG WR SURYLGH PRQH\ WR DJULFXOWXUDO SURGXFHUV WKDW QHHG WR
ILQDQFH WKH HQWLUH F\FOH RI DJULFXOWXUH SURGXFWLRQ ZKLFK FDQ WDNH XS WR RQH \HDU IRU DQQXDO
vii
FURSV RU PRUH IRU SHUHQQLDOV DQG OLYHVWRFN )DUPHUV DQG WKLV LV QRW RQO\ QHZV IURP WKLV
UHSRUW KDYH WHUULEOH GLIILFXOWLHV LQ REWDLQLQJ FUHGLW DV WKH\ FDQQRW SURYLGH FROODWHUDOV WKDW
VDWLVI\IRUPDOILQDQFLDOLQVWLWXWLRQV
• )LQDQFLDO QHHGV LQ RWKHU SDUWV RI WKH YDOXH FKDLQ DUH OHVV DFXWH DQG GHSHQG RQ
UHODWLRQVKLSV DQG FKDLQ RUJDQL]DWLRQV ,Q JHQHUDO WKH LQSXW LQGXVWU\ DQG H[SRUWHUV DSSHDU WR
KDYHEHWWHUDFFHVVWRILQDQFHLQFOXGLQJWKURXJKLQWHUQDWLRQDOPDUNHWV
7KHNH\UHFRPPHQGDWLRQVWREHWDNHQLQWRDFFRXQWLQWKHGHVLJQRIDQ\YDOXHFKDLQILQDQFHVXSSRUW
VFKHPHLQFOXGLQJ1,56$/DUH
$ ZLGH UDQJH RI LQQRYDWLYH ILQDQFLDO SURGXFWV DQG VHUYLFHV VXFK DV LQVXUDQFH RYHUGUDIWV
IDFWRULQJ DQG OHDVLQJ DV ZHOO DV LQYHVWPHQW ORDQV JXDUDQWHHV HWF DUH UHTXLUHG WR PHHW WKH
GLYHUVLW\ RI QHHGV 7KLV DOVR LPSOLHV ZRUNLQJ ZLWK D FRPELQDWLRQ RI ILQDQFLDO VHUYLFH
SURYLGHUVQRWMXVWWKHIRUPDOEDQNLQJVHFWRUHJPLFURILQDQFHLQVWLWXWLRQVLQFOXGLQJEXLOGLQJ
YHUWLFDOOLQNDJHVLQWKHILQDQFLDOVHFWRU
/HQGLQJ WR DFWRUV LQ DJULFXOWXUDO YDOXH FKDLQV UHTXLUHV D WKRURXJK DVVHVVPHQW DQG
XQGHUVWDQGLQJRIWKHYDOXHFKDLQDQGFDUHIXOLGHQWLILFDWLRQRIQHHGVDQGRSSRUWXQLWLHVRQWKH
GLIIHUHQW OHYHOV RI WKH FKDLQ 3URYLGLQJ ODUJHVFDOH ORDQV WR D IHZ HYHQWXDOO\ SURPLVLQJ DJUR
SURFHVVLQJ XQLWV ZLOO QRW UHQGHU TXLFNZLQV LI WKH UHVW RI WKH YDOXH FKDLQ LV QRW UHFHLYLQJ
QHFHVVDU\ VXSSRUW DV ZHOO 3DUWLFXODUO\ SRVLWLYH HIIHFWV RQ LQFRPHV DQG SRYHUW\ FDQQRW EH
DFKLHYHGE\ORRNLQJDWSURFHVVLQJRSHUDWLRQDORQH
7KHUHLVDQHHGWREXLOGYHUWLFDOOLQNDJHVLQWKHILQDQFLDOVHFWRUDQGWROHYHUDJHWKHH[LVWLQJ
FKDLQOLQNDJHVWRSURYLGHVXIILFLHQWO\FRPSUHKHQVLYHILQDQFLDOVHUYLFHVWRYDOXHFKDLQV
6SHFLILF FRQVLGHUDWLRQV VKRXOG EH PDGH IRU DFFHVVLQJ YDOXH FKDLQ VHJPHQWV LQ UXUDO DUHDV
ZKLFKDUHQRWZHOOVHUYHGE\IRUPDOILQDQFLDOLQVWLWXWLRQVSDUWLFXODUO\FRPPHUFLDOEDQNV,QFDVH
FRPPHUFLDO EDQNV DUH QRW SUHVHQW DOWHUQDWLYH LQVWLWXWLRQV PXVW EH LGHQWLILHG HJ FRPPXQLW\
EDQNVFRRSHUDWLYHJURXSVUXUDOPLFURFUHGLWLQVWLWXWLRQVDQGRWKHUV
,QWKHGHVLJQRIDQ\YDOXHFKDLQILQDQFHVXSSRUWVFKHPHRQHQHHGVWREHDZDUHRIWKHH[LVWLQJ
IRUPVRIIRUPDODQGLQIRUPDOILQDQFHSURYLVLRQLQVSHFLILFYDOXHFKDLQV'HVSLWHWKHIDFWWKDW
ILQDQFH WR YDOXH FKDLQ DFWRUV LV FRPPRQO\ VFDUFH DQG LQVXIILFLHQW WKH H[LVWLQJ IRUPDO DQG
LQIRUPDOILQDQFLDOPHFKDQLVPVPD\FRPSOHPHQWDQ\DGGLWLRQDOVXSSRUWVFKHPH$WWLPHVWKH\
DOVRFDQFRQIOLFWZLWKWKHPZKHQLWFRPHVWRJXDUDQWHHVDQGFROODWHUDOV
)LQDQFH LV RQO\ RQH FRQGLWLRQ IRU EXVLQHVVHV LQ WKH YDOXH FKDLQ WR EH SURILWDEOH
&RPSOHPHQWDU\ FRQGLWLRQV DUH FUXFLDODQG KDYHWR EH DFFXUDWHO\ UHIOHFWHG LQ DQ\ DQDO\VLV RI
ILQDQFLDO DWWUDFWLYHQHVV 'HPDQG IRU QRQILQDQFLDO VHUYLFHV H[LVWV DW DOO SRLQWV DORQJ WKH
FKDLQ LPSURYHG WHFKQRORJLHV EXVLQHVV SODQQLQJ PDUNHWGHYHORSPHQW PDQDJHPHQW WHFKQLFDO
DVVLVWDQFH 3URYLGLQJ DGHTXDWH WHFKQLFDO DVVLVWDQFH DQG ILQDQFLDO VHUYLFHV WRJHWKHU LQ D
FRPPRGLW\FKDLQZLOOOHDGWRPRUHSURILWDEOHFRPSHWLWLYHEXVLQHVVHV
$Q\ VFKHPH VKRXOG EXLOG RQ H[LVWLQJ PRGHOV ZLWK SURYHQ WUDFN UHFRUG LQ YDOXH FKDLQ
ILQDQFH LQ WKH FRXQWU\ %DQNV FDQ FROODERUDWH ZLWK WKHVH SURJUDPPHV EHQHILWLQJ IURP WKHLU
NQRZOHGJHDQGH[SHUWLVHUHJDUGLQJWKHVLWXDWLRQLQSDUWLFXODUYDOXHFKDLQV7KLVPD\FRQVWLWXWHD
ILHOGIRUDFKLHYLQJ´TXLFNZLQVµ
0RVWRIWKHFRPPHUFLDOEDQNVDUHQRWHQJDJHGLQDJULFXOWXUDOOHQGLQJDQGH[LVWLQJVFKHPHVWR
HQFRXUDJH WKHP WR GR VR KDYH EHHQ OHVV HIIHFWLYH 7KLV UDLVHV WZR TXHVWLRQV ZKHWKHU RU QRW
FRPPHUFLDOEDQNVKDYHDFRPSDUDWLYHDGYDQWDJHRYHURWKHUILQDQFLDOLQVWLWXWLRQVVXFKDV
'),V1$&5'%%2,DQGZKLFKLQFHQWLYHVZRXOGEHUHTXLUHGDQGDWZKDWFRVWWRHQWLFH
FRPPHUFLDOEDQNVWRSDUWLFLSDWHLQDJULFXOWXUDOYDOXHFKDLQILQDQFLQJ"
viii
1. Introduction
,Q UHVSRQVH WR FKDOOHQJHVZLWKLQ WKH FXUUHQW VFKHPH RI DJULFXOWXUDO OHQGLQJ LQ WKH FRXQWU\ WKH
&HQWUDO %DQN RI 1LJHULD &%1 LV SURSRVLQJ D QHZ DSSURDFK WR ILQDQFH RI DJULFXOWXUH DQG
DJULEXVLQHVVHV ² WKH 1LJHULDQ ,QFHQWLYHEDVHG 5LVN 6KDULQJ 6\VWHP IRU $JULFXOWXUDO /HQGLQJ
1,56$/
7KLVV\VWHPLQWHQGVWRSURYLGHLQFHQWLYHVWRDVWLPXODWHLQQRYDWLRQVLQDJULFXOWXUDOOHQGLQJE
HQFRXUDJHEDQNVWKDWDUHOHQGLQJWRDJULFXOWXUDOVHFWRUFHOLPLQDWHVWDWHGHSHQGHQF\E\EDQNV
IRU GHSOR\LQJ ORDQDEOH IXQGV WR DJULFXOWXUH G OHYHUDJH FRPPHUFLDO EDQN EDODQFH VKHHWV IRU
OHQGLQJLQWRDJULFXOWXUHDQGPRVWLPSRUWDQWO\HHQVXUHULVNVKDULQJDSSURDFKHVWKDWZLOOEXLOGD
EXVLQHVV DSSURDFK ZKHUH EDQNV VKDUH LQ WKH ULVN WR OHQGLQJ WR WKH VHFWRU $*5$ DQG 3:&
9DOXHFKDLQILQDQFLQJLVRQHLQQRYDWLRQWKDWFRXOGHQFRXUDJHEDQNVDQGRWKHUILQDQFLQJ
LQVWLWXWLRQVWRLQFUHDVHOHQGLQJWRWKHDJULFXOWXUDOVHFWRU
7KH LQIRUPDWLRQ LQ WKLV UHSRUW KDV EHHQ SXW WRJHWKHU WR VXSSRUW WKH HIIRUWV RI WKH &%1 DQG
RWKHU ILQDQFLQJ LQVWLWXWLRQV LQWHUHVWHG LQ DJULFXOWXUDO OHQGLQJ WR GHVLJQ DSSURSULDWH YDOXH FKDLQ
ILQDQFLQJSURGXFWVLQ1LJHULD7KHPDLQRXWSXWVRIWKHVWXG\DUH
L $QRYHUYLHZRIGHYHORSPHQWLQPRVWLPSRUWDQWDJULFXOWXUDOYDOXHFKDLQV
LL )LQDQFLDO QHHGV LQ PRVW LPSRUWDQW DJULFXOWXUDO YDOXH FKDLQV LGHQWLILHG DW WKH OHYHO RI WKH
ZKROHFKDLQDVZHOODVLQHDFKRILWVVHJPHQWV
LLL $ VHW RI UHFRPPHQGDWLRQV IRU WKH GHYHORSPHQW RI ILQDQFLDO VWUDWHJLHV DQG SURGXFWV WR
VXSSRUWDJULFXOWXUDOYDOXHFKDLQGHYHORSPHQWLQ1LJHULD
9DOXH FKDLQ GHYHORSPHQW KDV DOPRVW EHFRPH D PDJLF IRUPXOD IRU VXVWDLQDEOH DJULFXOWXUDO
LQYHVWPHQWV$QDJULFXOWXUDOYDOXHFKDLQFRQVLVWVRIDVHULHVRIDFWLYLWLHVWKDWDGGYDOXHWRDILQDO
SURGXFW EHJLQQLQJ ZLWK SURGXFWLRQ OLQNLQJ ZLWK SURFHVVLQJ JHWWLQJ WKH ILQDO SURGXFW DQG
PDUNHWLQJ VDOH WR WKH HQG XVHU RU FRQVXPHU DQG GLVSRVDO DIWHU XVH ,W LV EHFDXVH RI WKH
LQWHUGHSHQGHQFH DQG OLQNDJHV EHWZHHQ WKH DFWLYLWLHV WKDW D FOHDU XQGHUVWDQGLQJ RI WKH FKDLQ
PDUNHW IRU WKH ILQDO SURGXFW DQG WKH YDULRXV DFWRUV RI WKH FKDLQ LV LPSRUWDQW QRW RQO\ IRU
ILQDQFLQJRULQYHVWPHQWGHFLVLRQVEXWIRUGHYHORSLQJWKHHQWLUHFKDLQ,QYDOXHFKDLQILQDQFLQJ
DQDVVXUHGDQGSURILWDEOHPDUNHWLVUHTXLUHGIRUWKHSURGXFHUVDQGSURFHVVRUVIRUWKHLUSURGXFWV
$QDVVXUHGPDUNHWUHGXFHVILQDQFLDOULVNWKXVPDNLQJLWHDVLHUWRREWDLQILQDQFLQJDWORZHUFRVW
IURP EDQNV DQG RWKHU ILQDQFLHUV 7KHUHIRUH EDQNV DQG RWKHU ILQDQFLQJ LQVWLWXWLRQV QHHG WR
XQGHUVWDQGLQYHVWPHQWRSSRUWXQLWLHVDWYDULRXVVHJPHQWVRIYDOXHFKDLQVWREHWWHUGHYHORSDQG
SURYLGHGLIIHUHQWILQDQFLDOSURGXFWVWKDWVXLWWKHYDULRXVDFWRUVDQGVHJPHQWVRIWKHFKDLQ
9DOXHFKDLQILQDQFHDVDFRQFHSWUHIHUVWRILQDQFLDOSURGXFWVDQGVHUYLFHVWKDWIORZWRRUWKURXJK
DQ\ SRLQW LQ D YDOXH FKDLQ LQ RUGHU WR LQFUHDVH UHWXUQV RQ LQYHVWPHQW JURZWK DQG
FRPSHWLWLYHQHVVRIWKDWFKDLQ7KHSURYLVLRQRIILQDQFLQJDPRQJYDOXHFKDLQDFWRUVIRULQVWDQFH
SURFHVVRUV JLYLQJ FUHGLW WR IDUPHUV WR HQDEOH WKHP WR DFTXLUH LQSXWV LV DOUHDG\ DQ HVWDEOLVKHG
SUDFWLFHLQPDQ\FKDLQVDOWKRXJKLWPD\QRWEHFRQFHLYHGRILQVXFKWHUPV
1RQHWKHOHVV D WKRURXJK XQGHUVWDQGLQJ RI YDOXH FKDLQ ILQDQFH LV LPSRUWDQW WR DGGUHVV WKH
FRQVWUDLQWV WKDW OLPLW SURGXFWLYLW\ DQG GHYHORSPHQW RI YDOXH FKDLQV LQ 1LJHULD )LQDQFLDO
FRQVWUDLQWVDWRQHSRLQWLQDFKDLQFDQLPSDFWRWKHUSRLQWVDQGVROYLQJDFUHGLWSUREOHPLQRQH
VHJPHQW FDQ KDYH NQRFNRQ HIIHFWV IRU WKH UHVW RI WKH FKDLQ (TXDOO\ ORJLVWLFDO RU RWKHU QRQ
ILQDQFLDOSUREOHPVLQRQHSDUWRIDFKDLQFDQRIWHQPDQLIHVWWKHPVHOYHVDV ILQDQFLDOSUREOHPV
VXFKDVXQUHOLDEOHLQSXWVXSSO\OHDGLQJWRKLJKHUQHHGIRUZRUNLQJFDSLWDO7KXVILQDQFLDOQHHGV
RIFKDLQDFWRUVVKRXOGEHYLHZHGLQFRPELQDWLRQZLWKRWKHULQWHUYHQWLRQVDORQJWKHYDOXHFKDLQ
)URP D YDOXH FKDLQ ILQDQFH SHUVSHFWLYH WKH ULVNV DQG UHWXUQV RI WKH ILQDQFH SURYLGHU DUH
FRQVLGHUHGDORQJZLWKWKHULVNVDQGUHWXUQVWRYDOXHFKDLQDFWRUV)LQDQFHSURYLGHUVWRDFKDLQ
UDQJHIURPEDQNVRYHUPLFURILQDQFHLQVWLWXWLRQVWRRWKHUQRQEDQNILQDQFLDOLQVWLWXWLRQV
1
,Q JHQHUDO WKHVH SURYLGH ILQDQFH DQG VHUYLFHV WR YDOXH FKDLQ DFWRUV GLUHFWO\ LQYROYHG LQ
SURGXFWLRQ SURFHVVLQJ RU PDUNHWLQJ RI SURGXFWV (DFK RI WKHVH KDYH GLIIHUHQW LQFHQWLYHV IRU
ILQDQFLQJ WKH YDOXH FKDLQ KDYH GLIIHUHQW UHWXUQ H[SHFWDWLRQV DQG GLIIHUHQW DELOLWLHV WR PDQDJH
ULVN 7KLV UHSRUW KDV EHHQ SXW WRJHWKHU WR SURYLGH D FOHDU XQGHUVWDQGLQJ RI VRPH PDMRU
DJULFXOWXUDOYDOXHFKDLQVLQ1LJHULDDVZHOODVWKHLUIXQGLQJQHHGVDQGWRJXLGHGHFLVLRQVLQWKH
LPSOHPHQWDWLRQRIWKH1,56$/
$ PDMRU K\SRWKHVLV LQ WKLV UHSRUW LV WKDW DQ\ LQWHJUDWHG VXSSRUW VFKHPH IRU DJULFXOWXUDO YDOXH
FKDLQILQDQFLQJUHTXLUHVDPRUHSURIRXQGXQGHUVWDQGLQJRIWKHXQGHUO\LQJFRQGLWLRQVIRUYDOXH
FKDLQ GHYHORSPHQW 6XFK XQGHUVWDQGLQJ LV UHTXLUHG IRU WZR UHDVRQV D WR GHVLJQ WKH ILQDQFLDO
SURGXFWVWKDWILQDQFLQJLQVWLWXWLRQVFDQOD\RXWWRUHVSRQGWRWKHILQDQFLDOQHHGVRIYDOXHFKDLQ
DFWRUV DQG E WR HYDOXDWH WKH ILQDQFLQJ QHHGV RI LQGLYLGXDO YDOXH FKDLQ DFWRUV EH\RQG WKH
WUDGLWLRQDOFULWHULD
7KLVUHSRUWLVEDVHGRQDVWXG\FRQGXFWHGZLWKLQWKHIUDPHZRUNRIVXSSRUWLQJWKH&HQWUDO%DQN
RI1LJHULDLQFUDIWLQJDEOXHSULQWIRUVWLPXODWLQJEDQNDQGRWKHUILQDQFLQJLQVWLWXWLRQVOHQGLQJWR
DJULFXOWXUHWKURXJKYDOXHFKDLQILQDQFLQJ
7KHVWXG\H[DPLQHVYDULRXVVHJPHQWVRIWKHPRVWSURPLVLQJDJULFXOWXUDOSURGXFWYDOXHFKDLQV
LQ1LJHULDLQFOXGLQJFDVVDYDULFHPDL]HVR\EHDQFRWWRQYHJHWDEOHVWRPDWRILVKHULHVSDOPRLO
SRXOWU\DQGIUXLWVDQGSURYLGHVTXDOLILHGLQIRUPDWLRQRQIXQGLQJUHTXLUHPHQWVIRUHDFKVHJPHQW
RI WKH YDOXH FKDLQ ZKLFK WRJHWKHU ZRXOG HQDEOH DFFHOHUDWHG YDOXH FKDLQ GHYHORSPHQW ,W
LGHQWLILHV RSSRUWXQLWLHV WR ILQDQFH DJULEXVLQHVVHV DORQJ VHOHFWHG YDOXH FKDLQV ,W SURYLGHV
LQIRUPDWLRQ WR VXSSRUW GHFLVLRQV RI ILQDQFLDO LQVWLWXWLRQV DV ZHOO DV GHYHORSPHQW DJHQFLHV
LQWHUHVWHGLQYDOXHFKDLQGHYHORSPHQWLQ1LJHULD
7KHVWXG\KDVEHHQFDUULHGRXWE\DWHDPRIH[SHUWVIURPWKH%DQNRI,QGXVWU\1LJHULDDQGWKH
&HQWUDO %DQN RI 1LJHULD ZLWK WHFKQLFDO VXSSRUW IURP 81,'2·V $JULEXVLQHVV 'HYHORSPHQW
%UDQFK9LHQQD7KLVUHSRUWSURYLGHVDQRYHUYLHZRIPDMRUDJULFXOWXUDOYDOXHFKDLQVLQ1LJHULD
DQG VXIILFLHQW LQIRUPDWLRQ WR HOLFLW DFWLRQDEOH UHFRPPHQGDWLRQV IRU LPSURYLQJ SURGXFWLYLW\
LQFRPHDQGJURZWKLQWKHNH\YDOXHFKDLQVWKURXJKILQDQFLQJDQGWHFKQLFDODVVLVWDQFH
7KH UHSRUW LV RUJDQL]HG DV IROORZV )ROORZLQJ WKH LQWURGXFWLRQ &KDSWHU LQWURGXFHV WKH
DSSURDFKRIWKHVWXG\PDNLQJUHIHUHQFHDOVRWRWKHFRQFHSWRIYDOXHFKDLQGHYHORSPHQWVSDWLDO
VHJPHQWDWLRQ DQG YDOXH FKDLQ ILQDQFH &KDSWHU LQWURGXFHV WKH PHWKRGRORJ\ XVHG IRU GDWD
FROOHFWLRQ DQG DQDO\VLV &KDSWHU GHYHORSV PDLQ LQURDGV LQWR YDOXH FKDLQ GHYHORSPHQW
RSSRUWXQLWLHV YLD ILQDQFH RQ WKH EDVLV RI LQIRUPDWLRQ JDWKHUHG RQ YDOXH FKDLQV GHWDLOHG
GLVFXVVLRQ RI WKRVH YDOXH FKDLQV LV SURYLGHG LQ WKH $QQH[ &KDSWHU SURYLGHV D VHW RI
UHFRPPHQGDWLRQV WR VXSSRUW WKH SXEOLF DQG SULYDWH VHFWRUV LQVWLWXWLRQV DQG SDUWLFXODUO\ WKH
EDQNLQJ DQG RWKHU ILQDQFLDO VHFWRUV LQ WKHLU SXUVXLW WR VWLPXODWH DQG VXSSRUW DJULFXOWXUDO YDOXH
FKDLQGHYHORSPHQWLQ1LJHULD
2
2. Study approach and methodology
2.1 Entry Points in Value Chain Development
7KLVVWXG\LVJURXQGHGLQWKHFRQFHSWRIYDOXHFKDLQGHYHORSPHQW9DOXHFKDLQVDUHPHFKDQLVPV
WKDWDOORZSURGXFHUVSURFHVVRUVEX\HUVDQGVHOOHUV³VHSDUDWHGE\WLPHDQGVSDFH³WRDGG
YDOXHWRSURGXFWVDQGVHUYLFHVDVWKH\SDVVIURPRQHVHJPHQWRIWKHFKDLQWRWKHQH[WXQWLOWKH
SURGXFWJHWVWRWKHILQDOFRQVXPHUVHH)LJXUH
)LJXUH*HQHULF9DOXH&KDLQZLWK3XEOLFDQG3ULYDWH6XSSRUW6HUYLFHV
Private Finance and Insurance Services
Private Services (Transport, Warehousing, Certification, etc..)
Public Services & Development Support (Policies, Regulations, Incentives, etc.. )
Available margin: Available margin: Available margin: Available margin: Available margin:
depending on depending on depending on depending on depending on
resources, resources, resources, resources,
resources,
organization, organization, organization, organization, organization,

knowledge, knowledge, knowledge, knowledge, knowledge,
technology and technology and technology and technology and technology and
private/public private/public private/public private/public private/public
services. services. services. services. services.
6RXUFH81,'2
$FWRUVLQDYDOXHFKDLQRSHUDWHXQGHUFHUWDLQFRQVWUDLQWVZLWKUHJDUGWRWKHDYDLODELOLW\DQGDFFHVV
WRUHVRXUFHVLQWUDDQGLQWHUILUPRUJDQL]DWLRQDYDLODELOLW\DQGXVHRINQRZOHGJHDQGWHFKQRORJ\
PDUNHWV DQG WKH DYDLODELOLW\ DQG TXDOLW\ RI SXEOLF DQG SULYDWH VXSSRUW VHUYLFHV LQ WUDQVSRUW
VWRUDJHDQGILQDQFH
$OORIWKHVHGHWHUPLQHFRVWVDQGUHWXUQVDWHDFKVHJPHQWDQGXOWLPDWHO\GHILQHVWKHDFWRUV·SURILW
PDUJLQVDVWKHSURGXFWPRYHVDORQJWKHFKDLQ,IWKHLUPDUJLQVWXUQQHJDWLYHWKHDFWRUVVRRQHU
RUODWHUPD\GURSRXWRIWKHYDOXHFKDLQ,IDZKROHVHJPHQWRIWKHYDOXHFKDLQIDFHVQHJDWLYH
PDUJLQVWKHQWKHGHYHORSPHQWRIWKHYDOXHFKDLQLVVHULRXVO\FRQVWUDLQHG
,QVXFKVLWXDWLRQVSROLF\PDNHUVDQGDJHQFLHVFRQFHUQHGZLWKWKHGHYHORSPHQWRIYDOXHFKDLQV
PXVW FRQVLGHU PHDVXUHV WKDW KHOS DFWRUV LQYDOXH FKDLQ VHJPHQWV WR UHVWUXFWXUH WKHLU FRVW EDVH
DQGLPSURYHSURILWDELOLW\7KLVFDQEHDFKLHYHGIRUH[DPSOHWKURXJKLQWURGXFLQJWHFKQRORJLFDO
LQQRYDWLRQVRUPRUHHIILFLHQWRUJDQL]DWLRQRIVXSSOLHUEX\HUUHODWLRQVKLSV
9DOXH FKDLQ GHYHORSPHQW FDQ EH VXSSRUWHG DQG DFFHOHUDWHG WKURXJK D YDULHW\ RI VHUYLFHV WKDW
KHOSWRLQFUHDVHSHUIRUPDQFHRIDFWRUVLQWKHFKDLQVXFKDVSURGXFHUVDQGSURFHVVRUV7KLVFDQ
EH DFKLHYHG IRU H[DPSOH WKURXJK LPSURYHG EXVLQHVV SODQQLQJ DQG DFFHVV WR NQRZOHGJH DQG
WHFKQRORJ\ RU WKURXJK SURYLGLQJ VXSSRUW VHUYLFHV LQ WKH ILHOGV RI PDUNHW LQWHOOLJHQFH
DGPLQLVWUDWLYHVXSSRUWLQLWLDWLRQRIEXVLQHVVUHODWLRQVKLSVFRQWUDFWLQJWUDQVSRUWHQHUJ\VXSSO\
WHOHFRPPXQLFDWLRQVLQIUDVWUXFWXUHILQDQFHHWF
9DOXHFKDLQGHYHORSPHQWFDQQRWFRPHIURPRXWVLGHWKHFKDLQEXWUDWKHUUHTXLUHVWKHLQLWLDWLYH
RISULYDWHHQWUHSUHQHXUVZKRWDNHDFWLRQLQWKHEXVLQHVVSURFHVVHVLQWKHYDULRXVVHJPHQWVRIWKH
FKDLQDQGDOVRLQWKHFRRUGLQDWLRQEHWZHHQWKRVHSURFHVVHV
3
7KHUHLVDVWURQJLQWHUGHSHQGHQFHEHWZHHQWKHSURFHVVHVLQWKHYDULRXVVHJPHQWVRIWKHFKDLQ
)RU LQVWDQFH LI RQH VHJPHQW LV XQSURILWDEOH RU LV JHQHUDWLQJ LQDGHTXDWH RU LQVXIILFLHQW RXWSXW
RWKHUVHJPHQWVDUHOLNHO\WREHQHJDWLYHO\DIIHFWHG)RUH[DPSOHLIWKHTXDOLW\RIDSURGXFWVXFK
DVSLQHDSSOHVLVQRWDSSURSULDWHFRQVXPHUVZLOOUHIXVHEX\LQJSLQHDSSOHMXLFHPDGHIURPWKHP
RU LI WKH VXSSO\ RI SLQHDSSOHV LV QRW VXIILFLHQW SLQHDSSOH MXLFH SURGXFHUV FDQQRW IXOILO PDUNHW
GHPDQGVDQGPD\UHVRUWWRLPSRUWRISLQHDSSOHFRQFHQWUDWHVDVLWLVWKHFDVHLQ1LJHULD
2.2 Spatial distribution of value chains

9DOXHFKDLQVFXWDFURVVUHJLRQV)RUH[DPSOHWKHSDOPRLODQGFRFRDYDOXHFKDLQVDUHURRWHGLQ
1LJHULD·V6RXWKHUQUHJLRQZKHUHRLOSDOPVDQGFRFRDDUHJURZQ/RFDWLRQVSHFLILFLW\KRZHYHU
PXVW QRW H[WHQG RYHU WKH HQWLUH FKDLQ 5DWKHU WKH JRRG LI QRW RSWLPDO ORFDWLRQ RI VSHFLILF
WUDQVIRUPDWLRQ DQG YDOXH DGGLWLRQ SURFHVVHV GHSHQGV RQ WKH EXONLQHVV RI WKH SURGXFW WKH
DYDLODELOLW\RIODERXUDQGYDULRXVUHVRXUFHVDQGFRVWVRIWUDQVSRUWDQGGLVWULEXWLRQWRWKHPDUNHW
DQGFRQVXPHUV%\QRPHDQVWKHORFDWLRQRIEXVLQHVVHVRIRQHYDOXHFKDLQLVERXQGHGWRRQH
JHRJUDSKLFDO UHJLRQ RU VWDWH :KLOH SURGXFWLRQ PD\ RFFXU LQ RQH UHJLRQ SURFHVVLQJ IXUWKHU
WUDQVIRUPDWLRQZKROHVDOHDQGFRQVXPSWLRQVPD\RFFXULQRWKHUVVHHH[DPSOHRIWKH/HDWKHU
YDOXH FKDLQ LQ %R[ )RU WKLV UHDVRQ WKH YDOXH FKDLQ DSSURDFK LV VRPHWLPHV OHVV FRPSDWLEOH
ZLWKDSSURDFKHVWKDWSXWJHRJUDSKLFOLPLWVVXFKDVJHRJUDSKLFFOXVWHUGHYHORSPHQWJURZWKSROH
GHYHORSPHQWRUWKHEUHDGEDVNHWDSSURDFK
%R[6SDWLDOORFDWLRQRIEXVLQHVVHVDFURVV1LJHULD·VOHDWKHUYDOXHFKDLQ
+LGHVIRUOHDWKHUSURGXFWLRQDUHVRXUFHGLQWKH1RUWKHUQSDUWVRI1LJHULDDQGHYHQDFURVVWKH1RUWKHUQ
ERUGHU ZKHUH FDWWOH SURGXFWLRQ LV SUHYDOHQW 0HDQZKLOH WKH WUHDWPHQW RI WKH KLGHV DQG WKHLU
WUDQVIRUPDWLRQWROHDWKHUFDQEHSHUIRUPHGLQ.DQRZKLFKLVDOVRWKHFHQWUHRIWUDGLQJIRUKLGHV)XUWKHU
WUDQVIRUPDWLRQRIOHDWKHULQWRSURGXFWVWKDWDUHXVHGIRUIXUQLWXUHJDUPHQWVDQGVKRHVKRZHYHUPD\EH
ORFDWHGLQ/DJRVZKHUHWKHUHLVDPSOHDFFHVVWRVHPLVNLOOHGODERXUDQGZKHUHWKHGLVWULEXWLRQWRUHWDLOHUV
DQG VKRSV FDQ EH RUJDQL]HG LQ D PRUH GLUHFW ZD\ 7KLV ODVW SDUW RI WKH YDOXH FKDLQ KRZHYHU LV RQO\
UXGLPHQWDULO\GHYHORSHG
6RXUFH7KHDXWKRUV
%RXQGLQJ YDOXH FKDLQ VXSSRUW WR EXVLQHVVHV RI RQO\ RQH SDUWLFXODU JHRJUDSKLFDO UHJLRQ FDQ
QHJDWLYHO\DIIHFWGHYHORSPHQWRSSRUWXQLWLHVLQWKHFKDLQ,QGHHGYDOXHFKDLQVFDQEXLOGSDUWRI
WKHLU FRPSHWLWLYH VWUHQJWK IURP WKH FRPELQDWLRQ RI FRPSDUDWLYH DGYDQWDJHV WKDW YDULRXV
ORFDWLRQV RIIHU WR RSHUDWH LQ LWV GLIIHUHQW VHJPHQWV 7KH FRPELQDWLRQ RI ORFDWLRQV PDNHV WKH
YDOXHFKDLQFRPSHWLWLYH
3DUWRIWKHQHHGIRUDFFHOHUDWHGYDOXHFKDLQGHYHORSPHQWLQ1LJHULDPD\RULJLQDWHIURPWKHIDFW
WKDWPRVWRIWKHFRXQWU\·VYDOXHFKDLQVVWLOOGRQRWPDNHWKHEHVWRIWKHRSSRUWXQLWLHVIRUVSDWLDO
VHJPHQWDWLRQ RI EXVLQHVVHV DORQJ WKH YDOXH FKDLQ 2U ZRUVH VRPH YDOXH FKDLQV KDYH QRW
VXFFHHGHGWRDOORFDWHSURFHVVLQJDQGIXUWKHUWUDQVIRUPDWLRQLQGXVWULHVDWVXLWDEOHORFDWLRQV
)LJXUH SURYLGHV LQIRUPDWLRQ UHJDUGLQJ WKH VSDWLDO GLVWULEXWLRQ RI EXVLQHVVHV LQ SULPDU\
DJULFXOWXUDO SURGXFWLRQ DV ZHOO DV SURFHVVLQJ 3URGXFWLRQ LV PHDVXUHG WKURXJK YDOXH RI
DJULFXOWXUDO SURGXFWLRQ LQ DOORZLQJ D FRPSDULVRQ RI WKH PRVW LPSRUWDQW FURSV 1ZDIRU
'LDR DQG $OSXHUWR 2QO\ WKH PRVW LPSRUWDQW SURGXFWV SHU VWDWH DUH GHSLFWHG 1R
GLVWLQFWLRQ LV PDGH EHWZHHQ WKH GLIIHUHQW W\SHV RI SURFHVVLQJ 6LPSO\ WKH H[LVWHQFH RI D
SURFHVVLQJSODQWZDVHQRXJKWRLQGLFDWHWKDWSURFHVVLQJLVWDNLQJSODFHLQDUHJLRQ'HVSLWHWKH
OLPLWHGLQIRUPDWLRQEDVHWKHILJXUHSURYLGHVDFOHDULQGLFDWLRQWKDWSURFHVVLQJLVQRWQHFHVVDULO\
ORFDWHG LQ WKH VDPH UHJLRQV DV SURGXFWLRQ ,W IXUWKHU VKRZV WKDW SURFHVVLQJ LQGXVWULHV DUH QRW
DEXQGDQW DQG DUH RIWHQ ORFDWHG DURXQG XUEDQ DJJORPHUDWLRQV VXFK DV /DJRV DQG .DQR
3URFHVVLQJRIPRUHEXON\SURGXFWVLVPRUHGLVSHUVHGDQGRULHQWHGWRZDUGVWKHVLWHVRISULPDU\
SURGXFWLRQ
4
)LJXUH/RFDWLRQRISURGXFWLRQDQGSURFHVVLQJRIPDLQDJULFXOWXUDOFRPPRGLWLHV

6RXUFH3UHSDUHGE\,,7$*HRVSDWLDOODE1LJHULD
,Q FRQFOXVLRQ YDOXH FKDLQ GHYHORSPHQW FDQ EH LQLWLDWHG WKURXJK WKH EXLOGLQJ RI FRPSHWLWLYH
EXVLQHVVHV LQ DQ\ JLYHQ VHJPHQW RI WKH FKDLQ 7KH H[LVWHQFH RI VXFK FRPSHWLWLYH DQG JURZLQJ
EXVLQHVVHV FRQVWLWXWHV D NLQG RI ´VHJPHQWDO JURZWK SROHµ +RZHYHU GHYHORSPHQW LQ RQH
VHJPHQWPD\QRWEHHQRXJKLILWGRHVQRWVSLOORYHULQWRWKHRWKHUVHJPHQWVRIWKHYDOXHFKDLQ
RYHUDOOGHYHORSPHQWRIWKHFKDLQLVOLPLWHGWRLWVZHDNHVWSDUWV)RUSROLF\PDNHUVDQGLQYHVWRUV
LWLVWKHUHIRUHLPSRUWDQWWRLGHQWLI\JURZWKSROHVLQYDOXHFKDLQVEXWDOVRWRIRFXVRQWKHZHDNHU
VHJPHQWVRIWKHYDOXHFKDLQDQGWRGHILQHPHDVXUHVWRVWUHQJWKHQWKRVHDQGUHPRYHERWWOHQHFNV
5
2.3 Identifying value chain financing needs
$FWRUVLQWKHYDULRXVVHJPHQWVRIDYDOXHFKDLQUHTXLUHILQDQFHWREX\DQGWUDQVIRUPSURGXFWV
WRH[SDQGRSHUDWLRQVRUWRXSJUDGHDQGH[SORUHQHZPDUNHWV)LQDQFLQJQHHGVYDU\DFURVVDQG
ZLWKLQYDOXHFKDLQV,QWKLVUHVSHFWWKHVWDUWLQJSRLQWIRUDQDO\VLVIRUWKHGHVLJQRIDSSURSULDWH
ILQDQFLDOSURGXFWVLVWRUHFRJQL]HWKHFHQWUDOLW\RIF\FOLFDOWUHQGVZKLFKDIIHFWDJULFXOWXUDOYDOXH
FKDLQV
7KHDSSURSULDWHQHVVRIGLIIHUHQWW\SHVRIILQDQFHSURGXFWVZLOOYDU\GHSHQGLQJRQWKHVHJPHQW
RIWKHFKDLQDQGRQWKHSXUSRVHRIWKHFUHGLWQHHG(DFKVHJPHQWRIWKHFKDLQPD\UHTXLUHD
GLIIHUHQWPL[RIVKRUWPHGLXPDQGORQJWHUPILQDQFH+DYLQJHVWDEOLVKHGWKHILQDQFLDOQHHGD
PDWFK FDQ EH PDGH WR WKH DSSURSULDWH ILQDQFLDO SURGXFW RQ WKH EDVLV RI FRUUHVSRQGLQJ WHQRU
GXUDWLRQDQGRQWKHXQGHUO\LQJULVNRIWKHLQYHVWPHQWWREHILQDQFHG
,QSUDFWLFHVKRUWWHUPFUHGLWQHHGVVXFKDVZRUNLQJFDSLWDOFDQEHILQDQFHGE\DQRYHUGUDIWRU
UHYROYLQJFUHGLWOLQHRURQWKHEDVLVRIDVVHWVDYDLODEOHWREXVLQHVV6LPLODUO\IL[HGDVVHWVFDQEH
ILQDQFHG E\ WHUP ORDQV PRYHDEOH DVVHWV E\ YHKLFOH DVVHW ILQDQFH DQG DJULFXOWXUDO LQSXWV E\
DJULFXOWXUDO SURGXFWLRQ ORDQV VKRUWWHUP FUHGLW UHSDLG LQ IXOO DW HQG RI HDFK VHDVRQ )LJXUH
VKRZWKHYDULDWLRQLQERWKWKHSXUSRVHRIILQDQFHDQGWKHW\SHRIILQDQFHDORQJVHJPHQWVRIWKH
FKDLQ
)LJXUH(QWU\SRLQWVIRUYDOXHFKDLQILQDQFLQJ

6RXUFH81,'2
7DEOH VKRZV WKH YDULDWLRQ LQ ERWK WKH SXUSRVH RI ILQDQFH DQG WKH W\SH RI ILQDQFH DORQJ
VHJPHQWV RI WKH FKDLQ ,W LOOXVWUDWHV WKDW YDULRXV VHJPHQWV RI DJULFXOWXUDO YDOXH FKDLQV UHTXLUH
GLIIHUHQWW\SHVRIILQDQFHDQGGLIIHUHQWPL[HVRIVKRUWPHGLXPDQGORQJWHUPFUHGLWDVZHOODV
RWKHUVHUYLFHV
,Q RUGHU WR EHWWHU XQGHUVWDQG WKH ILQDQFLDO QHHGV LQ GLIIHUHQW VHJPHQWV RI D YDOXH FKDLQ LW LV
ZRUWKKLJKOLJKWLQJVRPHJHQHUDOFRQVLGHUDWLRQVIRUDVVHVVLQJRSSRUWXQLWLHVIRUDJULFXOWXUDOYDOXH
FKDLQILQDQFH)LUVWO\DVZLWKDQ\ERUURZHUILQDQFHSURYLGHUVWRDQ\YDOXHFKDLQDFWRUQHHGWR
DVVHVVULVNVRIOHQGLQJWRWKHVHFWRUSURGXFWLRQ\LHOGSULFHPDUNHWDQGGLYHUVLILFDWLRQ
6HFRQGO\ ILQDQFH SURYLGHUV QHHG WR DVVHVV WKH LQGLYLGXDO FUHGLWZRUWKLQHVV RI WKH ERUURZHU
ZKLFK HQWDLOV D SURFHVV RI VFUHHQLQJ DQG FRQWUDFW HQIRUFHPHQW &UHGLWZRUWKLQHVV GHSHQGV RQ
ERUURZHUV· DELOLW\ DQG ZLOOLQJQHVV WR UHSD\ )URP D YDOXH FKDLQ SHUVSHFWLYH WKHVH DUH ERWK
FRUUHODWHG ZLWK D GHVLUH WR SUHVHUYH D UHODWLRQVKLS ZLWK D ILQDQFH SURYLGHU EH LW D ILQDQFLDO
LQVWLWXWLRQ D EX\HU RU D VXSSOLHU 2QH RSWLRQ IRU OHQGHUV LV WR HYDOXDWH WKH ´VWLFNLQHVVµ RI
UHODWLRQVKLSV WR DVVHVV ZKHWKHU GLUHFW ILQDQFLQJ RI SURGXFHUV RU LQGLUHFW ILQDQFLQJ RI WKHLU
VXSSOLHUVRUEX\HUVLVPRUHDSSURSULDWH
6
7DEOHD)LQDQFLQJQHHGVDQGFRUUHVSRQGLQJW\SHVRIILQDQFH
LQYDOXHFKDLQVHJPHQWV
Need/ purpose Type of finance
Input Working capital (including • Overdraft
Industry credit to customers) • revolving credit line
• Asset-based finance – factoring (accounts receivable),
inventories etc
Fixed assets (plant, • Term loan
property) • Commercial property finance
Primary Inputs/land preparation • Short-term agricultural production loan
Production • Revolving credit line
• Supplier credit (from input industry)
• Advance payment (from processors)
Operating expenses • Short-term agricultural production loan
• Revolving credit line
• Supplier credit
• Advance payment
• Warehouse receipt system
Equipment • Term loan
• Vehicle& asset finance (leasing, rental, instalment sales)
1st/2nd Level Working Capital • Overdraft
Processing (including advance • Revolving credit line
payments to suppliers) • Asset-based finance – factoring (accounts receivable),
inventories etc
Fixed Assets (plant, • Asset finance (leasing, rental, installment sales)
property) • Commercial property finance (warehouses, factories,
industrial premises)
Equipment (machinery, • Term loan
capital equipment) • Vehicle & asset finance (leasing, rental, installment sales)
Wholesale, Working capital • Overdraft
Retail & • Revolving credit line
Marketing Fixed Assets (incl. • Term loan
wholesale warehouses, • Commercial property finance
transport vehicles etc.) • Vehicle & asset finance
Export Working capital (pre- and • Export credit line
post-shipment) • Letter of credit/forfaiting
• Bills of exchange
• Factoring

7DEOHE&URVVFXWWLQJILQDQFLQJQHHGV
DQGFRUUHVSRQGLQJW\SHVRIILQDQFHLQYDOXHFKDLQV
Need/ purpose Type of finance
Storage Working capital • Overdraft
• Asset-based finance – factoring (accounts receivable),
inventories etc
Fixed Assets • Commercial property finance
• Term loan
Trading Working capital • Overdraft
Transport Working capital • Vehicle & asset finance
Vehicles • Overdraft
6RXUFH7KHDXWKRUV
7
7KLUGO\WKHLVVXHRIFROODWHUDOLVFUXFLDOIRUWKHGHVLJQRIDSSURSULDWHILQDQFLDOSURGXFWV/DQGLV
XVXDOO\ D SUHIHUUHG VHFXULW\ DV LW LV LPPRYDEOH KRZHYHU WKH DEVHQFH RI IXQFWLRQLQJ UXUDO ODQG
PDUNHWV LV VWLOO D FRQVWUDLQW DQG WKH FRVWV RI HQIRUFHPHQW IRU ERWK PRYHDEOH DQG LPPRYDEOH
DVVHWVFDQEHKLJK
$IRXUWKIDFWRULVWKHKLJKFRVWVRISURYLGLQJILQDQFHWRDJULFXOWXUDOYDOXHFKDLQ7KHERUURZHUV
JHQHUDOO\ODFNFUHGLWKLVWRU\PD\QRWKDYHUHFRUGVRIWKHLUEXVLQHVVDQGDUHGLVSHUVHGRYHUODUJH
DUHDV 7KHLU GHPDQG IRU ILQDQFH LV ODUJHO\ VHDVRQDO QHFHVVLWDWLQJ D TXLFN WXUQDURXQG WLPH RI
DSSOLFDWLRQV %RUURZHUV WKHPVHOYHV DUH DOVR VHQVLWLYH WR WUDQVDFWLRQV FRVWV WUDYHOOLQJ WR EDQN
RIILFHV HQWDLOV PRQHWDU\ FRVWV DV ZHOO DV RSSRUWXQLW\ FRVWV IRU WKHLU ODERXU LQ WLPHV RI SHDN
DFWLYLW\6WUDWHJLHVWRUHGXFHFRVWVFDQEHDGRSWHGVXFKDVVWUHDPOLQLQJRISURFHGXUHVVWDQGDUG
ORDQ DSSUDLVDO LQGLFDWRUV GHFHQWUDOL]DWLRQ RI DSSURYDOV WR EUDQFKHV DQG DSSURSULDWH URXWH
SODQQLQJ )LQDOO\ WKH GHJUHH RI IRUPDOLW\ RU LQIRUPDOLW\ LQ WKH YDOXH FKDLQ LV LPSRUWDQW LQ
GHWHUPLQLQJ DFFHVV WR ILQDQFH DV LQIRUPDO HQWHUSULVHV WHQG WR EH VPDOOHU OHVV WUDQVSDUHQW DQG
KDYHPXFKJUHDWHUGLIILFXOWLHVLQDFFHVVLQJILQDQFH
7KH IROORZLQJ SDUDJUDSKV SURYLGH IXUWKHU LQIRUPDWLRQ RQ WKH W\SH RI ILQDQFLDO VHUYLFHV WKDW
FHUWDLQVHJPHQWVRIWKHYDOXHFKDLQUHTXLUH
,QSXW LQGXVWU\ ,QSXW SURYLGHUV XVXDOO\ UHTXLUH ILQDQFH WR LQYHVW LQ IL[HG DVVHWV VXFK DV
SODQW DQG SURSHUW\ HTXLSPHQW PDFKLQHULHV HWF DQG IRU ZRUNLQJ FDSLWDO $V WKH\ DOVR
H[WHQGFUHGLWWRGHDOHUVPLGGOHPHQDQGIDUPHUVZKRSXUFKDVHWKHLUSURGXFWVWKHLUZRUNLQJ
FDSLWDO UHTXLUHPHQWV DUH VXEVWDQWLDO DQG KLJKO\ F\FOLFDO $V IHUWLOL]HUV DQG SHVWLFLGHV DUH
XVXDOO\ LPSRUWHG WKH IXQGLQJ QHHGV RI LPSRUWHUV DUH OLPLWHGDQG FDQ HDVLO\ EH PHW E\ WKH
LQGXVWU\WKURXJKILQDQFHDYDLODEOHRQLQWHUQDWLRQDOILQDQFLDOPDUNHWV
+RZHYHU RWKHU DFWLYLWLHV UHTXLUH VSHFLILF ILQDQFLQJ IURP GRPHVWLF SURYLGHUV $QLPDO
EUHHGLQJ YDULHWDO LPSURYHPHQW PXOWLSOLFDWLRQ RI VHHGV DQG WUHH QXUVHULHV DUH FUXFLDO
DFWLYLWLHVIRUWKHSURGXFWLYLW\RIWKHVHFWRUDQGDUHWLHGWRORFDODJURHFRORJLFDOFRQGLWLRQV
WKXV FDQQRW JHQHUDOO\ EH OHIW WR FRPSDQLHV DEURDG 8VXDOO\ WKH QXPEHU RI SURYLGHUV RI
WKHVH DFWLYLWLHV LV UHODWLYHO\ VPDOO LQ UHODWLRQ WR WKH QXPEHU RI DJULFXOWXUDO SURGXFHUV
KRZHYHU WKH\ SOD\ D SLYRWDO UROH LQ HQVXULQJ UHOLDEOH DGHTXDWH DQG VXIILFLHQW SURGXFWLRQ
7KXV WKHLU DELOLW\ WR REWDLQ QHFHVVDU\ ILQDQFH IRU WKHLU RSHUDWLRQV LPSDFWV VLJQLILFDQWO\ RQ
WKHYDOXHFKDLQDFWRUVIXUWKHUGRZQWKHYDOXHFKDLQ)LQDQFLQJRIVHHGPXOWLSOLHUVDQGRWKHU
LQSXW SURGXFHUV UHTXLUHV SURGXFWV WKDW DUH DGDSWHG WR WKH EXVLQHVV F\FOH RI WKH RSHUDWLRQ
LHVHDVRQDOGHPDQG%UHHGLQJDQGSODQWYDULHWDOLPSURYHPHQWDUHXVXDOO\SURYLGHGE\WKH
SXEOLF VHFWRU DQG LQWHUQDWLRQDO GHYHORSPHQW DJHQFLHV DQG WKHUH DUH D ODUJH QXPEHU RI
VLJQLILFDQW VHHGV DQG EUHHGV RQZKLFK QR UR\DOWLHV IRU LQWHOOHFWXDO SURSHUW\ ULJKWV PXVW EH
SDLG KHQFH ILQDQFLQJ KHUH LV QRW DV SUHVVLQJ ,Q WKH VHHG VHFWRU WKHUH DUH VWURQJ JOREDOO\
RSHUDWLQJ FRPSDQLHV DFWLYH 7KHVH XVXDOO\ SURYLGH K\EULG VHHGV ZKLFK FDQQRW EH IXUWKHU
ORFDOO\PXOWLSOLHGHJPDL]HRLOSDOPRUSODQWLQJPDWHULDOVIRUZKLFKIDUPHUVZRXOGQHHG
WRSD\UR\DOWLHVLIWKH\IXUWKHUPXOWLSO\WKHP
3URGXFHUV ,Q DJULFXOWXUDO SURGXFWLRQ GXH WR WKH FURSSLQJ F\FOH ZRUNLQJ FDSLWDO
UHTXLUHPHQWV DUH RI D GLIIHUHQW QDWXUH WKDQ LQ FRQYHQWLRQDO SURGXFWLRQ SURFHVVHV DQG
EXVLQHVVHV )DUPLQJ RI DQQXDO FURSV UHTXLUHV ILQDQFH DW GLIIHUHQW SRLQWV RI WKH FURSSLQJ
F\FOH IRU DFTXLVLWLRQV DQG DFWLYLWLHV VXFK DV WKH FXOWLYDWLRQ RI ODQG WKH VHHGLQJ IHUWLOL]LQJ
ZHHGLQJ SUXQLQJ SHVW DQG GLVHDVH FRQWURO DQG GHSHQGLQJ RQ WKH FURS SRVW KDUYHVW
KDQGOLQJDQGSULPDU\SURFHVVLQJ6RPHRIWKHVHDFWLYLWLHVVLPSO\UHTXLUHODERXUZKLOHRWKHUV
LPSO\WKHSXUFKDVHRILQSXWVVXFKDVIDUPLPSOHPHQWVVHHGVIHUWLOL]HUVPDQXUHSHVWLFLGHV
DQG KDUYHVWLQJ HTXLSPHQW ,QSXWV DUH VRPHWLPHV DYDLODEOH LQ VXEVLGL]HG IRUP IURP
JRYHUQPHQWDQGGRQRU1*2VSRQVRUHGSURJUDPPHV+RZHYHUVXFKSURJUDPPHVXVXDOO\
GRQRWFRYHUWKHIXOOGHPDQGRISURGXFHUV·ILQDQFLDOQHHGV6KRUWWHUPFUHGLWLQWKHIRUPRI
DJULFXOWXUDO SURGXFWLRQ ORDQV DUH DQ RSWLRQ IRU ILQDQFLQJ LQSXW DFTXLVLWLRQ DV ZHOO DV
8
RSHUDWLQJ H[SHQVHV WKURXJKRXW WKH FURSSLQJ F\FOH 2WKHU IDFLOLWLHV VXFK DV RYHUGUDIWV RU
UHYROYLQJFUHGLWPD\DOVREHDSSURSULDWHGHSHQGLQJRQWKHULVNSURILOHRIWKHSURGXFHU
,Q SHUHQQLDO FURS SURGXFWLRQ DGGLWLRQDO ILQDQFLDO UHTXLUHPHQWV RFFXU IURP FOHDULQJ ODQG
SODQWLQJWUHHVDQGZDLWLQJXQWLOWKHIUXLWVFDQEHKDUYHVWHGZKLFKVRPHWLPHVLVRQO\SRVVLEOH
VHYHUDO \HDUV DIWHU SODQWLQJ 7KLV LV WKH FDVH IRU IUXLW WUHHV DQG RLO SDOP 6XFK ORQJWHUP
LQYHVWPHQWFDUULHVVLJQLILFDQWULVNIRUILQDQFLDOLQVWLWXWLRQVDVOHQGHUVDQGKLJKFRVWVHJIRU
DVVHVVLQJFUHGLWZRUWKLQHVV/RQJWHUPILQDQFHLQWKLVFDVHPD\EHPRUHHIILFLHQWO\SURYLGHG
E\ SURFHVVRUV RU RWKHU YDOXH FKDLQ DFWRUV ZKR XQGHUVWDQG WKH QDWXUH RI WKH EXVLQHVV DQG
PD\ KDYH D FRQWUDFWXDO RU ORQJVWDQGLQJ UHODWLRQVKLS ZLWK D SURGXFHU WKDW UHGXFHV WKHLU
VFUHHQLQJ FRVWV FRPSDUHG WR EDQNV 6LPLODUO\ IRU PHFKDQL]HG SURGXFWLRQ ORQJWHUP
LQYHVWPHQWLQIDUPPDFKLQHU\VXFKDVWUDFWRUVPDFKLQHULHVDQGRWKHUVLVUHTXLUHG7KLVFDQ
FRPHIURPYDULRXVSURYLGHUVLQWKHIRUPRIWHUPORDQVRUWKURXJKDVVHWILQDQFHOHDVLQJ
UHQWDO HWF /LYHVWRFN SURGXFWLRQ UHTXLUHV DQRWKHU VHW RI LQYHVWPHQWV VWDUWLQJ ZLWK WKH
DFTXLVLWLRQ RI DQLPDOV KHUG PDQDJHPHQW IHHGLQJDFFRUGLQJ WR WKH IHHGLQJF\FOHVDQG WKH
FROOHFWLRQ RI DQLPDO SURGXFWV VXFK DV PHDW DQG PLON +HQFH DJULFXOWXUDO SURGXFWLRQ
GHSHQGLQJRQWKHSURGXFWUHTXLUHVDVHTXHQFHRIILQDQFLDOFRPPLWPHQWVZKLFKGHSHQGLQJ
RQWKHSURGXFHU·VGLVSRVLWLRQRYHUUHVRXUFHV QHHGWREHPHWE\DPL[RI VKRUWPHGLXP
DQGORQJWHUPFUHGLWV
/DUJHSURGXFHUVZKRKDYHDFTXLUHGQHZSRUWLRQVRIODQGDOVRQHHGILQDQFHIRUFOHDULQJRU
UHFODPDWLRQRIODQG:KHQSURGXFHUVDUHQRWDEOHWRDFFHVVWKHYDULRXVHOHPHQWVRIWKDWPL[
RI ILQDQFH WKH\ DUH QRW DEOH WR H[SDQG DFFHVV WHFKQRORJLHV LQQRYDWH RU HYHQ EULQJ WKHLU
SURGXFW WR WKH PDUNHW LQ WLPH ,Q VXFK FDVHV ODFN RI DSSURSULDWH ILQDQFH DQG ILQDQFLDO
SURGXFWVFDQUHQGHUDJULFXOWXUDOSURGXFWLRQLQHIILFLHQWDQGFRQILQHLWWRDVPDOOVFDOH2QH
FDQ HYHQ DUJXH WKDW ODFN RI ILQDQFH DQG DSSURSULDWH ILQDQFLDO SURGXFWV LV RQH RI WKH PDLQ
UHDVRQVZK\DJULFXOWXUHLQ1LJHULDDVDZKROHKDVUHPDLQHGXQGHUGHYHORSHG
)LUVW /HYHO 3URFHVVRUV 7KHVH UHTXLUH ORQJWHUP ILQDQFH IRU LQYHVWLQJ LQ H[SHQVLYH
HTXLSPHQW DV ZHOO DV EXVLQHVV H[SDQVLRQ 7KHLU VKRUWWHUP ILQDQFH UHTXLUHPHQWV DUH IRU
ZRUNLQJ FDSLWDO WKLV LQFOXGHV LQGLUHFW VXSSOLHU ILQDQFLQJ ZKHUHE\ SURFHVVRUV UHFHLYH
ILQDQFHLQRUGHUWRSURYLGHDGYDQFHVWRSULPDU\SURGXFHUVWRHQVXUHDUHOLDEOHVXSSO\RIUDZ
PDWHULDOV$VVHWEDVHGILQDQFLQJRQDFFRXQWVUHFHLYDEOHLQYHQWRULHVLVDQRSWLRQWRPHHW
ZRUNLQJFDSLWDOQHHGV7KLVUHTXLUHVDQXQGHUVWDQGLQJRQEHKDOIRIWKHILQDQFHSURYLGHUWKDW
DFFHVV WR UDZ PDWHULDOV LV FUXFLDO IRU WKH SURFHVVRU DQG SURGXFHUV FDQQRW ILQDQFH
SURGXFWLRQ RWKHUZLVH ,Q WKLV FDVH SURFHVVRUV DUH EHWWHU DEOH WR PDQDJH WKH ULVN RI WKH
SURGXFHUVWKDQDILQDQFHSURYLGHUGLUHFWO\'LUHFWVXSSOLHUILQDQFLQJPD\DOVREHDQRSWLRQ
ZKHUH DQ XQGHUVWDQGLQJ RI ORQJVWDQGLQJ EXVLQHVV UHODWLRQVKLSV DPRQJ SURGXFHUV DQG
SURFHVVRUVUHGXFHVWKHULVNIRUILQDQFHSURYLGHUVWRGLUHFWILQDQFHVXSSOLHUV+RZHYHULWLV
KLJKO\ GHSHQGHQW RQ WKH TXDOLW\ DQG UHOLDELOLW\ RI UHODWLRQVKLSV LQ WKH FKDLQ /RQJWHUP
LQYHVWPHQWLQWRLQGXVWULDOSUHPLVHVFDQEHPHWWKURXJKFRPPHUFLDOSURSHUW\ILQDQFH
6HFRQG /HYHO 3URFHVVRUV 7KHVH SURFHVVRUV JHQHUDOO\ KDYH VLPLODU QHHGV DV ILUVWOHYHO
SURFHVVRUVLQWHUPVRIZRUNLQJFDSLWDODQGIL[HGLQYHVWPHQW+RZHYHUWKH\WHQGWRHQJDJH
OHVVLQILQDQFLQJRIVXSSOLHUVDQGWKH\RIWHQUHTXLUHPRUHVRSKLVWLFDWHGDQGPRUHH[SHQVLYH
PDFKLQHU\ 7KLV JHQHUDWHV QHHG IRU ORQJWHUP ILQDQFLQJ SRVVLEO\ WKURXJK WHUP ORDQV RU
DVVHW ILQDQFH VXFK DV ILQDQFLDO OHDVLQJ VHULHV RI SD\PHQWV ZLWK XVH RI PDFKLQHU\ RYHU
GHILQHG SHULRG RZQHUVKLS SDVVHV RQ ILQDOOXPSVXPSD\PHQW UHQWDO VHULHV RI SD\PHQWV
ZLWK XVH RI PDFKLQHU\ RYHU GHILQHG SHULRGZLWK RSWLRQ WR SXUFKDVH DW HQG RI SHULRG RU
LQVWDOPHQW VDOHV VHULHV RI VPDOO SD\PHQWV LQ RUGHU WR JDLQ RZQHUVKLS 7KH FRVW RI
PDLQWHQDQFHRIPDFKLQHULHVDQGHTXLSPHQWYDULHVDQGDGGVWRILQDQFLQJUHTXLUHPHQWVRYHU
WKHOLIHRIWKHDVVHWVUHYROYLQJFUHGLWOLQNHGWRPDLQWHQDQFHDQGLQVXUDQFHPD\EHEXQGOHG
ZLWKORQJWHUPFUHGLWIRUDFTXLULQJPDFKLQHULHV
9
5HWDLO DQG 0DUNHWLQJ (QWHUSULVHV LQ WKLV VHJPHQW IDFH IHZHU FRQVWUDLQWV LQ DFFHVVLQJ
ILQDQFH7KHLUZRUNLQJFDSLWDOQHHGVDUHJHQHUDOO\ORZHUDVWXUQRYHULVOHVVF\FOLFDODQGWKH\
DUH FORVHVW WR PDUNHWV IRU UHDOL]LQJ FDVK IURP LQYHQWRULHV 7KHLU QHHGV IRU IL[HG DVVHWV LQ
WHUPVRISURSHUW\DQGRWKHUIL[HGDVVHWVDOVRWHQGWREHORZHUWKDQSURFHVVRUVDQGFDQEH
PHWWKURXJKFRPPHUFLDOSURSHUW\RUWHUPORDQV:KROHVDOHUVPD\KDYHPRUHVSHFLILFQHHGV
LQ WHUPV RI WUDQVSRUW YHKLFOHV IRU ZKLFK YHKLFOH DVVHW ILQDQFH LV DSSURSULDWH LQFOXGLQJ
IOHHWPDQDJHPHQWIRUODUJHUHWDLOHUV)RUVPDOOUHWDLOHUVZRUNLQJFDSLWDOVWLOOLVDFRQVWUDLQ
6PDOOVKRSVRIWHQQHHGWRGHIHUUHSD\PHQWRQVKRUWWHUPFUHGLWXQWLOWKH\KDYHFOHDUHGWKHLU
LQYHQWRULHV DQG UHDOL]HG FDVK IURP WUDQVDFWLRQV LH SURGXFWV KDYH EHHQ VROG WR HQG
FRQVXPHUV$FFHVVWRILQDQFHLVOHDVWSUREOHPDWLFIRUH[SRUWHUVDVWKHVHRIWHQLQWHUDFWZLWK
OXFUDWLYHH[SRUWPDUNHWVDQGDUHWKHFORVHVWWRUHDOL]LQJKDUGFXUUHQF\IURPWKHLURSHUDWLRQV
7UDGHILQDQFHLQWKHIRUPRIOHWWHUVRIFUHGLWIRUIHLWLQJSXUFKDVLQJWKHUHFHLYDEOHVRIWKH
H[SRUWHU DQG ELOOV RI H[FKDQJH FDQ PHHW WKHLU QHHGV 0DQDJLQJ H[FKDQJH UDWH DQG
FRQYHUWLELOLW\ULVNDUHRIVSHFLILFFRQFHUQWRH[SRUWHUVDQGILQDQFLDOVHUYLFHVFDQEHWDLORUHG
WRPHHWWKLVQHHGVXFKDVKHGJLQJSURGXFWV
6WRUDJH7KHUHDUHIHZRSHUDWRUVRIVWRUDJHVSDFHDQGZDUHKRXVHVLQWKHFRXQWU\$VWKH\
XVXDOO\ RSHUDWH XQGHU VWDWH SURJUDPPHV WKH\ GR QRW UHTXLUH ILQDQFH 7KH ZDUHKRXVH
UHFHLSWVV\VWHPLVDVSHFLDOVFKHPHWKDWDOORZVILQDQFH:DUHKRXVH5HFHLSWVDUHGRFXPHQWV
WKDWSURYLGHHYLGHQFHWKDWVSHFLILHGFRPPRGLWLHV RIVWDWHGTXDQWLW\DQGTXDOLW\KDYHEHHQ
GHSRVLWHG DW D SDUWLFXODU ORFDWLRQ E\ D QDPHG GHSRVLWRU HJ SURGXFHUV IDUPHU JURXSV
WUDGHUVH[SRUWHUVRUSURFHVVRUV7KHLVVXHURIWKHUHFHLSWKROGVWKHVWRUHGFRPPRGLW\E\
ZD\ RI VDIH FXVWRG\7KH LVVXHU LV OHJDOO\ OLDEOH LIJRRGV DUH ORVW RU GDPDJHG HJ WKURXJK
WKHIWILUHDQGLQFLGHQFHV7KHGHSRVLWRUFDQXVHWKHUHFHLSWWRJHWDFUHGLWIURPDILQDQFLDO
LQVWLWXWLRQ WKDW DFFHSWV WKH UHFHLSW DV FROODWHUDO ,Q FDVH WKH ILQDQFH LQVWLWXWLRQ GRHV QRW
UHFHLYHSD\EDFNLWJHWVDFFHVVWRWKHGHSRVLWHGJRRGVYLDPHDQVRIWKHUHFHLSW,QFDVHRI
SUREOHPV DW WKH ZDUHKRXVH FUHGLWRUV RI WKH LVVXHU ZLOO QRW EH DEOH WR DFFHVV WKH VWRUHG
JRRGV EHFDXVH WKH OHJDO WLWOH UHPDLQV ZLWK WKH GHSRVLWRU RU ERQD ILGH KROGHU RI WKH
ZDUHKRXVHUHFHLSW
7UDQVSRUW7UDGH0LGGOHPHQ 7KHVH UROHV DUH RIWHQ SHUIRUPHG E\ RWKHU DFWRUV HJ
SURGXFHUVWUDGHUVRUSURFHVVRUVZKRRUJDQL]HRZQWUDQVSRUWDVZHOODVSXUFKDVHDQGVDOHV
7KLVLVXVXDOO\WKHFDVHZKHUHSURFHVVRUVGRQRWQHHGWRHPSOR\WKHVHUYLFHVRIWUDGHUVDQG
PLGGOHPHQWRSURFXUHSURGXFWV+RZHYHUWKHUHDUHFDVHVZKHQVSHFLDOL]HGRSHUDWRUVIXOILOO
WUDQVSRUW DQG WUDGLQJ IXQFWLRQV ,Q FDVHV ZKHUH WUDQVSRUWHUV DQG WUDGHUV DUH LQGHSHQGHQW
ILQDQFLDO UHVRXUFHV DUH UHTXLUHG DV ZRUNLQJ FDSLWDO DQG IRU WKH SXUFKDVH RI PHDQV RI
WUDQVSRUWYHKLFOH DVVHWILQDQFH
7KHUHDUHDOVRFRPSOHPHQWDU\ILQDQFLDOSURGXFWVDQGVHUYLFHVZKLFKSOD\DQLPSRUWDQWUROHLQ
UDLVLQJORQJWHUPSURGXFWLYLW\DQGHQFRXUDJHLQYHVWPHQW,QVXUDQFHDQGVDYLQJVERWKUHGXFHWKH
YXOQHUDELOLW\RISURGXFHUVDQGVPDOOVFDOHEXVLQHVVHVHQDEOLQJWKHPWRFRSHZLWKVKRFNVDULVLQJ
IURP LOOQHVV RU XQIDYRXUDEOH ZHDWKHU +DYLQJ VDYLQJV SURWHFWV EXVLQHVVHV HVSHFLDOO\
VPDOOKROGHUV DQG SURYLGHV DQ DOWHUQDWLYH WR VHOOLQJ RII SURGXFWLYH DVVHWV LQ WLPHV RI FULVLV
,QVXUDQFH SURGXFWV DOORZ SURGXFHUV DQG DJULEXVLQHVV WR EHWWHU RSWLPL]H LQYHVWPHQW GHFLVLRQV
DQGSURWHFWWKHPIURPORVVHVLQWKHIDFHRISRWHQWLDOO\FDWDVWURSKLFHYHQWVVXFKDVGURXJKWRU
IORRGLQJHJLVLQGH[HGEDVHGZHDWKHULQVXUDQFH
$V LV FOHDU IURP WKH DERYH GLVFXVVLRQ DFWRUV LQ WKH YDULRXV VHJPHQWV RI WKH YDOXH FKDLQ KDYH
GLIIHUHQW FDSDFLWLHV WR DFFHVV ILQDQFH $FFHVV WR ILQDQFH GHSHQGV RQ WKH W\SH RI FRQWUDFWXDO
UHODWLRQVKLSV WKDW DFWRUV PDLQWDLQ ZLWK EX\HUV DQG VHOOHUV DV ZHOO DV FRQWDFWV WR IRUPDO ILQDQFH
LQVWLWXWLRQVDQGWKHFDSDFLW\WRSURYLGHWKHUHTXLUHGGRFXPHQWDWLRQDQGFROODWHUDOVIRUORDQV7KH
LQFDSDFLW\ RI FHUWDLQFKDLQ DFWRUV WR DFFHVV ILQDQFH DQG FUHGLWV MHRSDUGL]HV WKH GHYHORSPHQW RI
WKH HQWLUH FKDLQ 2Q WKH RWKHU VLGH SURSHU DFFHVV WR ILQDQFH FDQ KHOS FKDLQ DFWRUV UDLVH WKHLU
VKDUHLQYDOXHDGGHGDQGVXSSRUWPDUJLQDOL]HGDFWRUVWRHIIHFWLYHO\SDUWLFLSDWHLQYDOXHFKDLQV
10
2.4 Sources of value chain finance
6RXUFHV RI ILQDQFH FDQ EH IRUPDO ILQDQFLDO LQVWLWXWLRQV UDQJLQJ IURP FRPPHUFLDO EDQNV WR
PRQH\OHQGHUV DQG JURXSEDVHG VDYLQJV RUJDQL]DWLRQV )LQDQFH FDQ DOVR EH REWDLQHG IURP
LQIRUPDO DJHQWV LQ WKH YDOXH FKDLQ HJ EX\HUV SURYLGLQJ DGYDQFHG SD\PHQW RU VXSSOLHUV
DFFHSWLQJGHOD\HGSD\PHQW)RUH[DPSOHDYHJHWDEOHIDUPHUPD\QHJRWLDWHDIRUZDUGFRQWUDFW
ZLWKDWUDGHURUUHWDLOHUDQGDGYDQFHGSD\PHQWIRUIDUPLQSXWVE\WKHWUDGHUZKRLVWKHQSDLG
EDFNDIWHUWKHKDUYHVWKDVEHHQVROG2IWHQLWLVWKHDFWRUZLWKWKHHDVLHVWDFFHVVWRILQDQFHWKDW
SURYLGHVRWKHUSDUWVRIWKHYDOXHFKDLQZLWKILQDQFH
$WWLPHVWKLVFDQEHRIEHQHILWWRWKHYDOXHFKDLQDWWLPHVLWDOVROHDGVWRWKHDFFXPXODWLRQRI
UHQWVLQWKHKDQGVRIWKHFUHGLWJDWHNHHSHUMHRSDUGL]LQJWKHJHQHUDWLRQRISURILWVLQRWKHUSDUWVRI
WKHFKDLQ
)LQDQFLQJRQHSDUWRIWKHYDOXHFKDLQPD\RIWHQEHLQHIIHFWLYHDQGULVN\LILWLVQRWDVVXUHGWKDW
RWKHUSDUWVRIWKHYDOXHFKDLQUHFHLYHILQDQFLQJDVZHOO7KHUHDUHYDULRXVZD\VWRDFKLHYHWKLV
,QWKHFDVHWKDWDEDQNRQO\PDLQWDLQEXVLQHVVUHODWLRQVKLSVZLWKRQHDFWRUHJDODUJH
SURFHVVRU LW ZRXOG QHHG WR DVVXUH WKDW WKH SURFHVVRU YLD HIIHFWLYH FRQWUDFWXDO
DUUDQJHPHQWVZLWKVXSSOLHUVDQGEX\HUVLVDEOHWRILQDQFHRSHUDWLRQVLQRWKHUVHJPHQWV
RI WKHYDOXHFKDLQ7KLV LV RIWHQ WKH FDVHZKHQ SURFHVVRUV SURFXUH SULPDU\ DJULFXOWXUDO
SURGXFWVIURPVPDOOIDUPHUVZKRGRQRWKDYHDFFHVVWRIRUPDOFUHGLW7KLVLVWKHPRGHO
WKDWIRUH[DPSOH2/$0KDVH[SHULHQFHGZLWKULFHIDUPHUV6HH%R[
$ FUHGLWZRUWK\ SURFHVVRU FDQ SURYLGH JXDUDQWHHV IRU ORDQV WKDW WKH EDQN KDQGV RXW WR
VXSSOLHUVRIWKHVDPHSURFHVVRU7KHULVNRIGHIDXOWLVORZDVORQJDVWKHSURFHVVRUKDVD
PRQRSROLVWLF SRVLWLRQ LQ WKH VXSSO\ PDUNHW 7KH VDPH DUUDQJHPHQWV FDQ ZRUN ZKHUH
SURGXFHUV DUH ZHOORUJDQLVHG LQWR JURXSV RU FRRSHUDWLYHV ZKHUHE\ WKH JURXS SURYLGHV
WKHJXDUDQWHHRQEHKDOIRILWVPHPEHUV
&DVFDGH ILQDQFLQJ LV DQ DSSURDFK ZKHUH RQH EDQN VLPXOWDQHRXVO\ ILQDQFHV VXSSOLHUV
SURGXFHUVDQGSURFHVVRUVZKLFKPDLQWDLQEXVLQHVVUHODWLRQVKLSVLQWKHYDOXHFKDLQVHH
%R[ 7KLV HQWDLOV D JUHDWHU GHJUHH RI VSHFLDOL]DWLRQ E\ EDQNV DQGFDQ OHDG WR QRQ
ILQDQFLDOVHUYLFHVVXFKDVUHVHDUFKDQGPDUNHWDQDO\VLVGXHWRWKHGHJUHHRINQRZOHGJH
JHQHUDWHGIURPSURYLVLRQRIILQDQFLDOVHUYLFHVWRWKHFKDLQ

%R[5DEREDQN·VFRQFHSWRIFDVFDGHILQDQFLQJLQWKHIORZHUVHFWRU
$OO DFWRUV LQ D IORZHU YDOXH FKDLQ LQFOXGLQJ EXOE VXSSOLHUV JUHHQ KRXVH PDQXIDFWXUHUV IHUWLOL]HU
SURYLGHUV IORZHU SURGXFHUV WUDQVSRUWHUV WUDGHUV ZKROHVDOHUV DQG UHWDLOHUV PDLQWDLQ D FUHGLW OLQH ZLWK
5DEREDQN 7KH EDQN KDV DFFXPXODWHG LQWLPDWH LQKRXVH NQRZOHGJH RI SURGXFWLRQ IDFWRUV HTXLSPHQW
VXSSOLHUVDQGHTXLSPHQWEX\HUVLQRUGHUWRHYDOXDWHWKHFUHGLWZRUWKLQHVVRIEXVLQHVVHV$OODFWRUVUHFHLYH
WKHLUPRQH\DQGGHSRVLWLWLQD5DEREDQNDFFRXQWVRWKDWWKH%DQNFDQODWHUGHELWWKHLUDFFRXQWVIRUORDQ
SD\PHQWV )XUWKHU WR WKH SURYLVLRQ RI FUHGLW WKH %DQN LQYHVWV LQ PDUNHW DQDO\VLV DQG WHFKQRORJLFDO
IRUHVLJKW DV D VHUYLFH WR UHQGHU EXVLQHVVHV LQ WKH YDOXH FKDLQ PRUH SURILWDEOH LQ WKH IXWXUH ,Q HIIHFW
5DEREDQNKDVORFNHGXSWKHILQDQFLQJIRUWKHHQWLUHFKDLQDQGDVVXFKLVLQYHVWHGLQLWVVXFFHVV
6RXUFH&RRQ&DPSLRQDQG:HQQHU
11
3. Methodology and data collection
3.1 Methodology
7KHVWXG\XVHGWKH81,'2PHWKRGRORJ\DQGDSSURDFK´KROLVWLFGLDJQRVWLFVRIDJURLQGXVWULDO
YDOXHFKDLQVµ+DUWZLFKDQG.RUPDZD,QWKLVDSSURDFKWKHLQLWLDOPDSSLQJRIWKHYDOXH
FKDLQ LV IROORZHG E\ D ULJRURXV VLWXDWLRQ DQDO\VLV RI YDULRXV VHJPHQWV RI WKH YDOXH FKDLQ ZLWK
UHJDUGWRSULPDU\SURGXFWLRQDQGVRXUFLQJRILQSXWVSURFHVVLQJFDSDFLW\DQGWHFKQRORJ\
HQG PDUNHWV DQG WUDGH JRYHUQDQFH DQG OLQNDJHV ILQDQFH DQG VHUYLFH SURYLVLRQ
UHVRXUFHSURGXFWLYLW\DQGHQYLURQPHQWDOSHUIRUPDQFHDQGDQGPDFURHFRQRPLFDQGSROLF\
FRQWH[WVHH7DEOH2QWKHEDVLVRIWKLVVLWXDWLRQDODQDO\VLVWKHVWXG\LGHQWLILHGKLJKSRWHQWLDO
RSSRUWXQLWLHVIRULQYHVWPHQWDQGILQDQFLQJLQWKHYDULRXVVHJPHQWVRIWKHYDOXHFKDLQV
7DEOH+ROLVWLF9DOXH&KDLQ'LDJQRVWLF$SSURDFK
Diagnostic Dimensions Parameters
Mapping 0.1 Product
0.2 Value chain actors and their functions
0.3 Flow of product and end-markets
0.4 Business interactions
0.5 Service provision
0.6 Distribution of value added
Dimension 1: Sourcing of 1.1 Primary product characteristics
Inputs and Supplies 1.2 Characteristics of primary producers and input providers
1.3 Contractual arrangements
1.4 Logistics
1.5 Infrastructure and transport facilities
1.6 Communication
Dimension 2: Production 2.1 Production capacity
Capacity and Technology 2.2 Technology
2.3 Knowledge use
2.4 Innovation
Dimension 3: End-Markets 3.1 End-product characteristics
and Trade 3.2 Consumer demand
3.3 End-buyer perspectives
3.4 Marketing and trade capacities
3.5 Competitors
3.6 Standards
Dimension 4: Value Chain 4.1 Actor domination
Governance 4.2 Participation in value added activities
4.3 Cluster concentration
4.4 Type of governance
Dimension 5: Sustainable 5.1 Use of materials
Production and Energy Use 5.2 Energy use
5.3 Use of water
5.4 Effects on bio-diversity
5.5 Emissions
5.6 Waste management
Dimension 6: Value Chain 6.1 Financial attractiveness
Finance 6.2 Financial risks
6.3 Norms and practices
6.4 Availability of finance
6.5 Financing gaps
Dimension 7: Business 7.1 Business environment
environment and socio- 7.2 Product and trade regulations
political conditions 7.3 Public and private service provision
7.4 Social and cultural context
6RXUFH81,'2IRUWKFRPLQJ
12
,Q OLJKW RI WKH VWXG\ REMHFWLYHV WKUHH NH\ FULWHULD ZHUH FRQVLGHUHG LQ WKH GDWD DQDO\VLV ²
GHYHORSPHQW SRWHQWLDO ILQDQFLDO QHHGV DQG ILQDQFLDO DWWUDFWLYHQHVV RI D YDOXH FKDLQ 7KHVH DUH
GLVFXVVHGLQWKHIROORZLQJSDUDJUDSKV
D 7KHGHYHORSPHQWSRWHQWLDO RI DYDOXH FKDLQ LQ JHQHUDO LV GHILQHG E\ WKH H[WHQW LW LV DEOH WR
FRQWULEXWH WR LQFUHDVHG LQFRPH HPSOR\PHQW DQG SRYHUW\ UHGXFWLRQ DV ZHOO DV WKH IRRG VHFXULW\ DW
KRXVHKROG OHYHO )ROORZLQJ WKH DERYH PHQWLRQHG 81,'2 DSSURDFK WKH VWXG\ FROOHFWHG
SULPDU\ DQG VHFRQGDU\ GDWD RQ WKH VSHFLILF YDOXH FKDLQV LQFOXGLQJ WKH DFWRUV HQJDJHG
WKHOHYHORIGHYHORSPHQWDQGFULWLFDOLVVXHVVHH&KDSWHU7KHVWXG\DOVRYHULILHGWKHVH
UHVXOWVZLWKLQIRUPDWLRQRQH[LVWLQJSULRULWLHVRIWKHJRYHUQPHQW
E )LQDQFLDO QHHGV DUH GHILQHG E\ WKH VKRUW PHGLXP DQG ORQJWHUP ILQDQFLQJ UHTXLUHPHQWV
WKDWH[LVWLQWKHYDULRXVVHJPHQWVRIDYDOXHFKDLQDQGWKHVRXUFHVRIILQDQFHFXUUHQWO\
DYDLODEOH WR UHVSRQG WR WKRVH QHHGV $V ZLWK D WKLV LQIRUPDWLRQ ZDV GUDZQ IURP WKH
VLWXDWLRQDO DQDO\VLV RI WKH VSHFLILF YDOXH FKDLQV GUDZLQJ IURP LQWHUYLHZV DQG VHFRQGDU\
LQIRUPDWLRQ EDVHG RQ GHVN VWXG\7KH LQIRUPDWLRQ LV SUHVHQWHG LQ IRUP RI D WDEOH WKDW
GHSLFWV ILQDQFLDO QHHGV LQ HDFK RI WKH VHJPHQWV RI WKH YDOXH FKDLQ $ UDWLQJ RI KLJK
PHGLXPRUORZLVDSSOLHGZKLFKH[SUHVVHVLQUHODWLYHWHUPVZKHWKHUFHUWDLQVHJPHQWVLQ
WKH YDOXH FKDLQ UHTXLUH PRUH RU OHVV IXQGLQJ QR WKUHVKROG YDOXH LV DWWDFKHG WR KLJK
PHGLXPDQGORZ/LNHZLVHWKHHVWLPDWLRQRIULVNLVUHODWLYHWRWKHRWKHUVHJPHQWVLQWKH
FKDLQ GHSHQGLQJ RQ WKH W\SHV RI FROODWHUDOV WKDW DFWRUV LQ WKH YDULRXV VHJPHQWV RI WKH
YDOXHFKDLQFDQSURYLGHDQGKRZULVN\WKHLUEXVLQHVVHVPD\EH
F 7KHILQDQFLDODWWUDFWLYHQHVVRIDVHJPHQWRUDVHWRIVHJPHQWVRIDYDOXHFKDLQDQGILUPVWKDW
HQJDJH LQ LW )LQDQFLDO DWWUDFWLYHQHVV GHSHQGV RQ WKH RYHUDOO DWWUDFWLYHQHVV RI WKH FKDLQ
PDUNHW VL]H HWF WKH EXVLQHVV DWWUDFWLYHQHVV RI SDUWLFXODU VHJPHQWV DQG DFWRUV ,W LV
HVVHQWLDOO\ D FDOFXODWLRQ EDVHG RQ SHUFHSWLRQV RI ULVNFUHGLWZRUWKLQHVVRIWKHSRWHQWLDO
UHFLSLHQWV DQG UHWXUQ SURILWDELOLW\ RI WKH ORDQV LQWHUHVW UDWH DQG IHHV FKDUJHG ,W LV
LPSRUWDQWWRHPSKDVL]HWKDWSHUFHLYHGUDWKHUWKDQDFWXDOULVNDQGUHWXUQDUHZKDWDIIHFW
EDQNV·OHQGLQJDQGSULFLQJGHFLVLRQV7KXVSHUFHLYHGILQDQFLDODWWUDFWLYHQHVVGHSHQGVRQ
WKHGHJUHHWRZKLFKDEDQNLVDEOHWRXQGHUVWDQGDQGHYDOXDWHEXVLQHVVHVLQDYDOXHFKDLQ
7KHWHQRURIILQDQFLQJLVDOVRLPSRUWDQWDVSURYLGLQJORQJHUWHUPORDQVUHTXLUHVEDQNV
WRKDYHDFFHVVWRORQJWHUPIXQGLQJZKLFKFDQEHSUREOHPDWLF$OVRWKHUHILQDQFLQJUDWH
EDQNV IDFH IRU IXQGLQJ LV DIIHFWHG E\ PDFURHFRQRPLF IDFWRUV DQG GR LQIOXHQFH WKHLU
GHFLVLRQWROHQGDWFHUWDLQUDWHV3UHIHUHQWLDODQGORZLQWHUHVWORDQVFKHPHVVHWXSE\WKH
JRYHUQPHQWRUFHQWUDOEDQNVFDQDOWHUWKHULVNUHWXUQFDOFXODWLRQVIRUOHQGHUVDQGKHQFH
WKHILQDQFLDODWWUDFWLYHQHVVRIDFKDLQRUVHJPHQW
)RUPDOO\ ILQDQFLDO DWWUDFWLYHQHVV LV RIWHQ DSSURDFKHG YLD WKH GLVFRXQWHG FDVK IORZ
PHWKRGPHDVXULQJUHWXUQVRQLQYHVWPHQWVRUQHWSUHVHQWYDOXHV81,'2·VPHWKRGRORJ\
DQGWRRO&20)$5LVDEOHWRGHULYHVXFKPHDVXUHVIRUHQWHUSULVHVRUILUPVWKDWHQJDJH
LQGLIIHUHQWSDUWVRIWKHYDOXHFKDLQDVZHOODVLQWKHDJURLQGXVWULDOVHFWRUV$WWKHHQG
WKH WDVN RI HYDOXDWLQJ ILQDQFLDO DWWUDFWLYHQHVV LQFOXGLQJ DSSUDLVDO RI ORDQV LV WKH GDLO\
EXVLQHVV RI FRPPHUFLDO EDQNV $GDSWLQJ RU GHYLVLQJ DFFXUDWH DSSUDLVDO PHWKRGV IRU
DJULFXOWXUDO YDOXH FKDLQV PD\ SRVH FKDOOHQJHV WR WKRVH EDQNV WKDW DUH OHVV IDPLOLDU ZLWK
OHQGLQJWRDJULFXOWXUDOEXVLQHVVHV
13
3.2 Study logic
7KHORJLFRILQIRUPDWLRQSURYLGHGE\WKLVVWXG\LVVXPPDUL]HGLQWKHIORZGLDJUDP)LJXUH
7KHUHSRUWLVJHQHUDWLQJWKUHHW\SHVRIRXWSXWVDQDQDO\VLVRIWKHGHYHORSPHQWSRWHQWLDORI
YDOXH FKDLQV DQ DQDO\VLV RI WKH ILQDQFLDO QHHGV LQ YDOXH FKDLQV ZLWK UHJDUG WR SDUWLFXODU
VHJPHQWV LQ WKH FKDLQ DQG D UDWKHU JHQHUDO VHW RI UHFRPPHQGDWLRQV IRU ILQDQFLDO SURGXFW
GHVLJQDQGZLOOEHDEOHWRFRQWULEXWHWRWKHVHOHFWLRQRIYDOXHFKDLQVIRUZKLFKILQDQFLDO
VXSSRUW VKRXOG EH PDGH DYDLODEOH DOVR FRQWULEXWHV WR NQRZOHGJH RQ KRZ YDOXH FKDLQV
IXQFWLRQDQGKRZWKH\FDQEHVXSSRUWHGWKURXJKILQDQFLQJPHFKDQLVPV7KLVNQRZOHGJHFRXOG
WKHQ EH XVHG LQ WKH GHVLJQ RI FUHDWLYH QHZ IXQGLQJ SURGXFWV WR SURPRWH YDOXH FKDLQ
GHYHORSPHQWDQGWKHGHVLJQRIDILQDQFLQJVXSSRUWVFKHPHVXFKDVWKH1,56$/
7KURXJKWKHLQIRUPDWLRQPDGHDYDLODEOHLQWKLVVWXG\SROLF\PDNHUVPD\ILQGVXSSRUWLQPDNLQJ
PRUHEDODQFHGDQGHYLGHQFHEDVHGGHFLVLRQVLQZKLFKYDOXHFKDLQVWRLQYHVWDQGKRZWRLQYHVW
,WLVWKHQXSWRWKHSROLF\HQYLURQPHQWDQGWKHEDQNLQJV\VWHPWRGHYHORSPHDVXUHVWKDWKHOSWR
LPSURYH WKH ILQDQFLDO DWWUDFWLYHQHVV RI OHQGLQJ WR DFWRUV LQ DJULFXOWXUDO YDOXH FKDLQV DQG WR
VXSSRUW EDQNV LQ WKH GHYHORSPHQW RI ILQDQFLDO SURGXFWV WKDW DGGUHVV WKH SDUWLFXODU QHHGV RI
VHJPHQWVLQVSHFLILFFKDLQV

)LJXUH6WXG\/RJLF&RQWULEXWLRQVWR9DOXH&KDLQ)LQDQFHLQ1LJHULD

14
3.3 Data collection
7KH LQIRUPDWLRQ IRU WKLV UHSRUW KDV EHHQ JDWKHUHG E\ D WHDP RI ILYH H[SHUWV IURP WKH &HQWUDO
%DQN RI 1LJHULD &%1 WKH %DQN RI ,QGXVWU\ %2, DQG WKH 8QLWHG 1DWLRQV ,QGXVWULDO
'HYHORSPHQW2UJDQL]DWLRQ81,'27KHWHDPJDWKHUHGLQIRUPDWLRQIURPDYDLODEOHOLWHUDWXUH
7KH OLVW RI FRQVXOWHG OLWHUDWXUH LV JLYHQ LQ WKH /LWHUDWXUH 5HIHUHQFHV DW WKH HQG RI WKH UHSRUW
)XUWKHU WKH WHDP FRQGXFWHG TXDOLILHG SHUVRQDO DQG SKRQH LQWHUYLHZV ZLWK D UDQJH RI
UHSUHVHQWDWLYHVRINH\VWDNHKROGHUVLQDJULFXOWXUHDQGDJURLQGXVWU\GHYHORSPHQW,QSDUWLFXODU
WKHWHDPRUJDQL]HGWKHIROORZLQJ
• $YLVLWWRWKH,QWHUQDWLRQDO,QVWLWXWH IRU7URSLFDO$JULFXOWXUH,,7$DW,EDGDQZKHUHLW
VSHQWIRXUGD\VFRQVXOWLQJUHVHDUFKHUVDQGDYDLODEOHGRFXPHQWDWLRQRQWHFKQRORJLFDODQG
PDUNHWRSSRUWXQLWLHVDQGFRQVWUDLQWVLQPDLQDJULFXOWXUDOYDOXHFKDLQV6SHFLDOHPSKDVLV
ZDVSXWRQFRQGLWLRQVRISULPDU\DJULFXOWXUDOSURGXFWLRQDQGPLFURSURFHVVLQJ
• $PHHWLQJZLWKWKH0DQXIDFWXUHUV$VVRFLDWLRQRI1LJHULD0$16SHFLDOHPSKDVLVKHUH

ZDV SXW RQ GLVFXVVLQJ WKH ORFDWLRQ RI DJURLQGXVWULDO EXVLQHVVHV RSSRUWXQLWLHV DQG
FRQVWUDLQWVIRUWKHGHYHORSPHQWRIDJURLQGXVWU\DFFHVVWRIXQGLQJDQGUHTXLUHPHQWVLQ
WHUPVRIILQDQFLDOSURGXFWV
• ,QWHUYLHZV ZLWK VHOHFWHG DJULEXVLQHVVHV LQ NH\ LQGXVWULHV VXFK DV FDVVDYD IHHGVWXII RLO
PLOOLQJIRRGSURFHVVLQJDQGELRIXHOV
• ,QWHUYLHZV ZLWK VHOHFWHG FRPPRGLW\ DVVRFLDWLRQV DQG IDUPHUV JURXSV WKDW KDYH EHHQ
SDUWLFLSDWLQJLQVFKHPHVWKDWSURYLGHDFFHVVWRILQDQFH
• ,QWHUYLHZV ZLWK GHYHORSPHQW DJHQFLHV WKDW SURPRWH YDOXH FKDLQ GHYHORSPHQW LQ NH\
LQGXVWULHV LQFOXGLQJ DJHQFLHV VXFK DV '),' 86$,':RUOG %DQN DQG WKH&RPPHUFLDO
$JULFXOWXUH3URMHFW
• 'LVFXVVLRQV ZLWK PHPEHUV RI WKH FRPPLWWHH WKDW RYHUVHHV WKH FRQGXFW RI WKLV VWXG\
UHSUHVHQWDWLYHVRI%2,WKH%DQNHUV&RPPLWWHHDQGWKH&HQWUDO%DQNRI1LJHULDDERXW
WKH VFRSH DQG RULHQWDWLRQ RI WKH VWXG\ SUHOLPLQDU\ ILQGLQJV DQG WKH UHFRPPHQGDWLRQV
WKDWLWVKRXOGEHDEOHWRSURYLGH
15
4. A Roadmap for Value Chain Finance
7KH QH[W VWHS LQ WKH DQDO\VLV LV WR XVH WKH LQIRUPDWLRQ WKH VWXG\ JDWKHUHG RQ UHVSHFWLYH YDOXH
FKDLQVVHH$QQH[WRGUDZFRQFOXVLRQVRQKRZYDOXHFKDLQVFDQEHVXSSRUWHGYLDILQDQFH7KH
UHIOHFWLRQV RQ SRVVLEOH HOHPHQWV RI FRQFHUWHG DFWLRQV WRZDUGV YDOXH FKDLQ GHYHORSPHQW YLD
ILQDQFHDUHODEHOOHGÚRDGPDSµ
4.1 Deciding where to invest

7KLVUHSRUWGRHVQRWSUHHPSWGHFLVLRQVRQZKHWKHUDYDOXHFKDLQVKRXOGEHVXEMHFWWRILQDQFLDO
DQG RWKHU GHYHORSPHQW VXSSRUW RU QRW EXW LW DLPV DW LQIRUPLQJ WKH SURFHVV RI PDNLQJ WKHVH
GHFLVLRQV 7ZR PHDVXUHV DUH LQWURGXFHG IRU WKDW SXUSRVH WKH YDOXH FKDLQV· GHYHORSPHQW
SRWHQWLDODQGWKHLUILQDQFLDOQHHGV
4.1.1 Development Potential

'HYHORSPHQW SRWHQWLDO KDV WR GR ZLWK WKH RSSRUWXQLW\ WR PHHW GHYHORSPHQW JRDOV DQG WKH
OLNHOLQHVVWRDFKLHYHWKHP*RYHUQPHQWGHYHORSPHQWSROLFLHVDWWKHIHGHUDOOHYHOKDYHEHHQVHW
E\ WKH 1DWLRQDO (FRQRPLF (PSRZHUPHQW DQG 'HYHORSPHQW 6WUDWHJ\ ² 1(('6
1DWLRQDO 3ODQQLQJ &RPPLVVLRQ ZKLFK LV FRPSOHPHQWHG E\ DQ HTXLYDOHQW SROLF\ RQ WKH
OHYHO RI WKH VWDWH 6(('6 DQG ORFDO JRYHUQPHQWV /(('6 7KH SROLF\ HPSKDVL]HV DPRQJ
RWKHUV WKH FUHDWLRQ RI PRUH DJULFXOWXUDO DQG UXUDO HPSOR\PHQW RSSRUWXQLWLHV WKH LQFUHDVH RI
LQFRPHRIIDUPHUVDQGUXUDOGZHOOHUVDQGLPSURYHGIRRGVHFXULW\DOVRUHYHUVLQJWKHWUHQGRI
LQFUHDVHGLPSRUWRIIRRGZKLFKVWRRGDWRIWRWDOLPSRUWVLQ
,WDLPVWRDFKLHYHWKLVYLDDVHWRIPHDVXUHVLQFOXGLQJDWKHVWUHQJWKHQLQJRIUHVHDUFKH[WHQVLRQ
WUDLQLQJ DQG FDSDFLW\ EXLOGLQJ E WKH UHRULHQWDWLRQ RI WKH DJULFXOWXUDO LQSXW VXSSO\ DQG
GLVWULEXWLRQV\VWHPFWKHSURYLVLRQRISK\VLFDOLQIUDVWUXFWXUHVXFKDVIHHGHUURDGVUXUDOZDWHU
VXSSO\UXUDOFRPPXQLFDWLRQVHWFGWKHVHWWLQJXSRIDPXOWLFRPPRGLW\PDUNHWLQJSURPRWLRQ
ERDUG H WKH SURYLVLRQ RI VRIW DJULFXOWXUDO FUHGLW DQG UXUDO ILQDQFH WKURXJK WKH 1LJHULDQ
$JULFXOWXUDO &RRSHUDWLYH DQG 5XUDO 'HYHORSPHQW %DQN 1$&5'% DQG I WKH IRVWHULQJ RI
HIIHFWLYH OLQNDJH ZLWK LQGXVWU\ WR DFKLHYH PD[LPXP YDOXH DGGLWLRQSURFHVVLQJ IRU LQWHUQDO
PDUNHWLQJDQGH[SRUWDPRQJRWKHUV
$V1(('6JRHVLQLWVVHFRQGURXQGWKHJRYHUQPHQWKDVDOVRGHYHORSHGD9LVLRQZKLFK
HQYLVDJHVWKHFRXQWU\WREHDPRQJWKHILUVWFRXQWULHVZRUOGZLGHLQWHUPVRILQGXVWULDOL]DWLRQ
GHPRFUDF\ KXPDQ UHVRXUFHV LQ WKH QH[W \HDUV :LWK UHJDUG WR DJULFXOWXUH WKH YLVLRQ
SURSDJDWHV ´D PRGHUQ WHFKQRORJLFDOO\HQDEOHG DJULFXOWXUDO VHFWRU WKDW IXOO\ H[SORLWV WKH YDVW
DJULFXOWXUDO UHVRXUFHV RI WKH FRXQWU\ HQVXUHV QDWLRQDO IRRG VHFXULW\ DQG FRQWULEXWHV
VLJQLILFDQWO\WRIRUHLJQH[FKDQJHHDUQLQJVµ7KHWKUHHSLOODUVRIWKHYLVLRQDUH*XDUDQWHHLQJ
WKH SURGXFWLYLW\ DQG ZHOOEHLQJ RI WKH SHRSOH RSWLPLVLQJ WKH NH\ VRXUFHV RI HFRQRPLF
JURZWKDQGIRVWHULQJVXVWDLQDEOHVRFLDODQGHFRQRPLFGHYHORSPHQW
2Q WKH EDVLV RI WKHVH SROLFLHV WKH IROORZLQJ SDUDPHWHUV KDYH EHHQ XVHG WR GHVFULEH WKH
GHYHORSPHQWSRWHQWLDORIDYDOXHFKDLQ,PSDFWRQLQFRPHHPSOR\PHQWSRYHUW\UHGXFWLRQIRRG
VHFXULW\ DQG H[SRUW HDUQLQJVLPSRUW VXEVWLWXWLRQ &HUWDLQO\ WKHUH DUH RWKHU GHYHORSPHQW
SULRULWLHVVXFKDVHQYLURQPHQWDOVDIHW\VXVWDLQDEOHXVHRIQDWXUDOUHVRXUFHVDQGDWWDLQLQJJHQGHU
EDODQFH+RZHYHUWKHVHDUHQRWJHQHUDOO\DSSOLFDEOHWRDYDOXHFKDLQ)RUH[DPSOHDYDOXHFKDLQ
LVQRWQHFHVVDULO\´HQYLURQPHQWDOO\VDIHUµWKDQDQRWKHUYDOXHFKDLQ5DWKHULWGHSHQGVRQKRZLW
LVGHYHORSHGLILWEHFRPHVHQYLURQPHQWDOO\VDIHRUQRW7KHVDPHDUJXPHQWDSSOLHVWRJRDOVVXFK
DVVXVWDLQDEOHUHVRXUFHXVHDQGJHQGHUHTXLW\
7KHOLNHOLQHVVRIDFKLHYLQJGHYHORSPHQWJRDOVLVWKHVHFRQGLPSRUWDQWSDUDPHWHUDSSOLHGKHUHWR
GHFLGH RQ WKH GHYHORSPHQW SRWHQWLDO RI D YDOXH FKDLQ 7KLV FDQ EH DSSUR[LPDWHG WKURXJK WKH
SRWHQWLDO IRU LQFUHDVHG SURGXFW RXWSXW WKDW GHSHQGV SUHGRPLQDQWO\ RQ WKH H[LVWLQJ UHVRXUFH
16
HQGRZPHQW DQG WKH H[LVWLQJ SURGXFWLYH FDSDFLWLHV NQRZOHGJH DQG VNLOOV $JDLQ WKH LQGLFDWRUV
UHIOHFWWKHYLVLRQDUJXPHQWVLQWKLVFDVHRQUHVRXUFHH[SORLWDWLRQDQGSURGXFWLYLW\
:LWKDQLQWHQVLYHDQDO\VLVRIWKHLQIRUPDWLRQJDWKHUHGIRUHDFKRIWKHYDOXHFKDLQVUHJDUGLQJWKH
DERYH FULWHULD D VLPSOH UDWLQJ H[HUFLVH ZDV FRQGXFWHG VHH 7DEOH 6FRUHV RI KLJK
PHGLXP DQG ORZ ZHUH DSSOLHG 7KHVH VFRUHV UHIOHFW WKH TXDOLWDWLYH LQWHUSUHWDWLRQ RI WKH
DYDLODEOHLQIRUPDWLRQ´+LJKµVLJQLILHVWKDWWKHGHYHORSPHQWSRWHQWLDORIWKHYDOXHFKDLQKLJKO\
SRVLWLYHDIIHFWHGÓRZµPHDQVLWLVRQO\PDUJLQDOO\DIIHFWHG%\FRPELQLQJWKHDYHUDJHVRIERWK
SDUDPHWHUV²GHYHORSPHQWLPSDFWSRWHQWLDODVZHOODVSRWHQWLDOIRULQFUHDVHGRXWSXW²WKHILQDO
VFRUHLVFDOFXODWHG
7DEOH5DWLQJRIGHYHORSPHQWSRWHQWLDORIDJULFXOWXUDOYDOXHFKDLQVLQ1LJHULD
'HYHORSPHQWLPSDFWSRWHQWLDO 3RWHQWLDOIRULQFUHDVHG 7RWDO
SURGXFWRXWSXW VFRUH
,PSDFW ,PSDFWRQ ,PSDFWRQ ,PSDFW ,PSDFWRQ $YHUDJH 5HVRXUFH &XUUHQW $YHUDJH
RQ HPSOR\PHQW SRYHUW\ RQIRRG H[SRUW HQGRZPHQW SURGXFWLYH
LQFRPHV UHGXFWLRQ VHFXULW\ HDUQLQJV FDSDFLWLHV
LPSRUW NQRZOHGJH
VXEVWLWXWLRQ DQGVNLOOV
FDVVDYD

FRFRD
FRWWRQ
GDLU\
ILVKHULHV
IUXLWV
PDL]H
PHDW
OHDWKHU
SDOPRLO
SRXOWU\
ULFH
VR\EHDQ
WRPDWRHV
6RXUFH7KHDXWKRUV

,W UHVXOWV WKDW WKH YDOXH FKDLQV ZLWK WKH KLJKHVW GHYHORSPHQW SRWHQWLDO LQFOXGH FDVVDYD ULFH
PHDWOHDWKHUVR\EHDQDQGILVKHULHV
&RWWRQ PDL]H SDOP RLO SRXOWU\ DQG WRPDWRHV DOVR WHQG WR EH SURPLVLQJ FDQGLGDWHV IRU YDOXH
FKDLQGHYHORSPHQW
7KHDERYHUHVXOWVDUHFRQVLVWHQWZLWKVRPHRIWKHVWXGLHVFRQGXFWHGWRVXSSRUWGHFLVLRQPDNLQJ
LQDJULFXOWXUDODQGYDOXHFKDLQGHYHORSPHQWLQ1LJHULDRYHUWKHODVW\HDUV
• 7KH JRYHUQPHQW LQ LWV DLP WR LPSOHPHQW WKH 1(('6 VWUDWHJ\ LGHQWLILHG D QXPEHU RI
SULRULW\ VHFWRUV ZKHUH LW ZDQWHG WR FRQFHQWUDWH LQYHVWPHQWV 3ULRULW\ VHFWRUV ZKHUH WKH
*RYHUQPHQWHQJDJHGLQWKHYLJRURXVLPSOHPHQWDWLRQRIVRFDOOHG3UHVLGHQWLDO,QLWLDWLYHV
LQFOXGHFDVVDYDULFHYHJHWDEOHRLOVXJDUOLYHVWRFNWUHHFURSVDQGFHUHDOV
• ,QWKH,)35,OHG5HJLRQDO6WUDWHJLF$QDO\VLVDQG.QRZOHGJH6XSSRUW6\VWHP:HVW
$IULFD5H6$.66:$LQFROODERUDWLRQZLWKWKHFRXQWU\·V&$''$3EXUHDXFDOFXODWHG
WKH FRQWULEXWLRQ RI DJULFXOWXUDO VXEVHFWRUV LQFOXGLQJ FHUHDOV URRW FURSV H[SRUW FURSV
OLYHVWRFNILVKHU\DQGIRUHVWU\WRDJULFXOWXUDO*'3JURZWK(&2:$6)HGHUDO5HSXEOLF
17
RI 1LJHULD DQG $IULFDQ 8QLRQ QR GDWH ,W IRXQG WKDW FHUHDOV DQG URRW FURSV H[KLELW WKH
KLJKHVW OHYHOV RI FRQWULEXWLRQ WR DJULFXOWXUDO LQFRPHV HDFK DURXQG RI DJULFXOWXUDO
JURZWK XQGHU WKH FXUUHQW JRYHUQPHQW·V VWUDWHJ\ 7KH FRQWULEXWLRQ RI WKH RWKHU
VXEVHFWRUVWRJURZWKDUHHVWLPDWHGWREHDURXQGIRUH[SRUWFURSVIRUILVKHULHV
DQGEHORZIRU/LYHVWRFNDQG)RUHVWU\)XUWKHULWZDVIRXQGWKDWDLQFUHDVHLQSHU
FDSLWDLQFRPHDULVLQJIURPFHUHDOVDQGURRWFURSVVWUDWHJ\ZRXOGOHDGWRDDQG
GURSLQSRYHUW\UHVSHFWLYHO\
• ,)$'·V &RXQWU\ 6WUDWHJLF 2SSRUWXQLWLHV 3URJUDPPH &2623 IRU 1LJHULD XQGHU LWV
9DOXH &KDLQ 'HYHORSPHQW 6XSSRUW 3URJUDP KDV LGHQWLILHG D QXPEHU RI FRPPRGLW\
YDOXHFKDLQVWKDWFRXQWZLWKFRPSDUDWLYHDGYDQWDJHVDQGZKLFKDUHLPSRUWDQWIRUIRRG
VHFXULW\DWERWKWKHUXUDOKRXVHKROGDQGQDWLRQDOOHYHOV7KHVHLQFOXGHDFHUHDOVPDL]H
ULFHVRUJKXPDQGPLOOHWESXOVHVJURXQGQXWVFRZSHDVFRLOVHHGVRLOSDOPFRWWRQ
G URRWV DQG WXEHUV FDVVDYD SRWDWRHV DQG \DP H IUXLWV DQG YHJHWDEOHV RQLRQV
WRPDWRHV SODQWDLQ DQG EDQDQDV I OLYHVWRFN SRXOWU\ DQG VPDOO UXPLQDQWV DQG J
ILVKHULHV
$VWXG\LQLWLDWHGE\'),'DQGWKH:RUOG%DQN(0(IRFXVVHGRQYDOXHFKDLQVLQ
DQ LQWHJUDWHG PDQQHU LQFOXGLQJ ERWK DJULFXOWXUDO DQG QRQDJULFXOWXUDO SURGXFWV 7KH
DQDO\VLV FHQWUHG RQ JURZWK SROHV PHDQLQJ WKH ORFDWLRQVSHFLILF VXEVHFWRUV WKDW
H[SHULHQFHG DFFHOHUDWHG JURZWK LQ WKH SDVW LQ IRXU VWDWHV RI 1LJHULD /DJRV .DQR
.DGXQD DQG &URVV 5LYHU 7KH IROORZLQJ DJULFXOWXUDO VHFWRUV ZHUH FRQVLGHUHG WR FRXQW
ZLWKWKHKLJKHVWSRWHQWLDOIRUXSVLGHGHILQHGWKURXJKSRWHQWLDOIRUJURZWKHPSOR\PHQW
DQGVSLOORYHUVDVZHOODVIHDVLELOLW\GHILQHGE\DFWXDOFRPSHWLWLYHQHVVVFRSHIRUSROLF\
UHIRUP DQG H[LVWLQJ SULYDWH VHFWRU FDSDELOLWLHV ,Q .DQR IRRG SURFHVVLQJ PHDW DQG
SRXOWU\DQGOHDWKHULQ.DGXQDIRRGSURFHVVLQJPHDWDQGSRXOWU\DQGULFHDQGLQ&URVV
5LYHUFRFRDDQGRLOSDOP7KHGDLU\VHFWRULQ.DQRDQG.DGXQDDQGWKHULFHVHFWRULQ
.DQRZHUHQRWFRQVLGHUHGEHFDXVHWKH\GRQRWFRXQWZLWKVXIILFLHQWXSVLGHSRWHQWLDODQG
IHDVLELOLW\
&DXWLRQ PD\ EH DSSOLHG LQ WKH EODQN DSSOLFDWLRQ RI UHFRPPHQGDWLRQV IURP WKH DERYH SROLF\
VWXGLHV :LWK H[FHSWLRQ RI WKH '),':RUOG %DQN H[HUFLVH WKH\ RQO\ IRFXV RQ GHYHORSPHQW
SRWHQWLDOV DW WKH OHYHO RI SULPDU\ DJULFXOWXUDO SURGXFWLRQ QRW WDNLQJ LQWR DFFRXQW LQFRPH DQG
HPSOR\PHQWLQRWKHUVHJPHQWVRIWKHYDOXHFKDLQDQGWKHHIIHFWVWKDWH[WHQGHGSURFHVVLQJDQG
WUDQVIRUPDWLRQZRXOGKDYHRQSULPDU\SURGXFWLRQ
&DUHIXOLQWHUSUHWDWLRQRIWKHDERYHWDEOHLVWREHDSSOLHGDVRWKHUDJULFXOWXUDOYDOXHFKDLQVPD\
KDYHGHYHORSPHQWSRWHQWLDODVZHOO(YHQWXDOO\WKHLUJHRJUDSKLFH[WHQVLRQLVOLPLWHGWKH\GRQRW
UHDFKDVPDQ\EHQHILFLDULHVRUWKH\IRFXVRQQLFKHPDUNHWV
,Q DQ\ FDVH GHYHORSPHQW RI VXFK YDOXH FKDLQV PD\ VWLOO PDNH VHQVH LQ D ORFDO GHYHORSPHQW
FRQWH[WDQGLQYLHZRISRVLWLYHFRVWEHQHILWUDWLRV7KHLGHDKHUHZDVWRIRFXVLQDILUVWVWHSRQ
WKH PRVW REYLRXV YDOXH FKDLQV ZKLOH HYHQWXDOO\ FRQGXFWLQJ IXUWKHU GLDJQRVWLFV IRU RWKHU YDOXH
FKDLQVDSSO\LQJWKHVDPHPHWKRGRORJ\ZKHQDGGLWLRQDOWLPHDQGUHVRXUFHVDUHDYDLODEOH
0RVWLPSRUWDQWO\WRQRWHLVWKDW7DEOHLVRQO\RQHRIWKHWZRSLHFHVRILQIRUPDWLRQWRGHFLGH
RQDYDOXHFKDLQ7KHRWKHUSDUDPHWHULVILQDQFLDOQHHGV
18
4.1.2 Financial needs
)LQDQFLDO QHHGV LQ DJULFXOWXUDO YDOXH FKDLQV LQ 1LJHULD WHQG WR EH KLJK LQ JHQHUDO 7KLV UHIOHFWV
FHUWDLQGHILFLHQFLHVRIWKHFXUUHQWEDQNLQJDQGOHQGLQJVFKHPH
7KH VWXG\ PDNHV DQ HIIRUW KRZHYHU WR GLVWLQJXLVK EHWZHHQ ILQDQFLDO QHHGV LQ GLIIHUHQW YDOXH
FKDLQV6RPHYDOXHFKDLQVPD\UHTXLUHPRUHVKRUWWRPHGLXPWHUPILQDQFHHJWRHQDEOHFHUHDO
SURGXFWLRQRWKHUVPD\UHTXLUHLQSDUWLFXODUORQJWHUPILQDQFHIRUHTXLSPHQW
,QWKHVWXG\ILQDQFLDOQHHGVDUHGHILQHGDVWKHUDWLREHWZHHQWKHDPRXQWRIDYDLODEOHIXQGLQJDQG
WKHDPRXQWRIIXQGLQJUHTXLUHGIRUVXFFHVVIXORSHUDWLRQRIWKHYDOXHFKDLQDVDZKROH
7DEOH5DWLQJRIILQDQFLDOQHHGVRIDJULFXOWXUDOYDOXHFKDLQVLQ1LJHULD

,QSXW 3ULPDU\ VW/HYHO QG/HYHO 5HWDLODQG 7RWDO
LQGXVWU\ SURGXFWLRQ 3URFHVVLQJ 3URFHVVLQJ 0DUNHWLQJ VFRUH
FDVVDYD
FRFRD
FRWWRQ
GDLU\
ILVKHULHV
IUXLWV
PDL]H
PHDWOHDWKHU
SDOPRLO
SRXOWU\
ULFH
VR\EHDQ
WRPDWRHV
6RXUFH7KHDXWKRUV
7KH DERYH7DEOH LV DQDJJUHJDWLRQ RI WKH H[LVWLQJ ILQDQFLDO QHHGV JDWKHUHG IURP WKH GHWDLOHG
GLVFXVVLRQVRIWKHYDOXHFKDLQVLQWKH$QQH[
7KHGDWDLVTXDOLWDWLYHLQGLFDWLQJORZILQDQFLDOQHHGVZKLOHLQGLFDWLQJKLJKILQDQFLDOQHHGV,Q
VRPH YDOXH FKDLQV WKH SURFHVVLQJ VHJPHQW UHTXLUHV PRUH IXQGLQJ LQ RWKHUV LW LV SULPDU\
SURGXFWLRQRUWKHWUDQVSRUWDWLRQDQGFROOHFWLRQVHJPHQWZKLFKQHHGVILQDQFH
7KH WRWDO VFRUHV LQGLFDWH ILQDQFLDO QHHGV LQ HDFK YDOXH FKDLQ D KLJKHU VFRUH UHIOHFWV D KLJKHU
ILQDQFLDOQHHG
4.1.3 Towards a Financing strategy

%ULQJLQJWKHWZRDUJXPHQWVGHYHORSPHQWSRWHQWLDODQGILQDQFLDOQHHGVWRJHWKHUDOORZVVWUDWHJLF
DVVHVVPHQWRQWKHYDOXHFKDLQLQZKLFKWRLQYHVW,QYHVWLQJLQWKRVHYDOXHFKDLQVZLWKWKHKLJKHVW
GHYHORSPHQW SRWHQWLDO ZRXOG PDNH VHQVH IURP D GHYHORSPHQW SHUVSHFWLYH +RZHYHU LW LV
SRVVLEOH WKDW WKH YDOXH FKDLQ GRHV QRW KDYH KLJK GHPDQGV LQ ILQDQFH WR IXUWKHU GHYHORS
7KHUHIRUH WKH VHFRQG GLPHQVLRQ ÍLQDQFLDO QHHGVµ ORRNV LQWR WKH LVVXH ZKHUH PRVW ILQDQFH LV
UHTXLUHG)LJXUHFRPELQHVWKHWZRGDWDVHWVRQ´GHYHORSPHQWSRWHQWLDOµDQGÍLQDQFLDOQHHGVµ
WKHODVWFROXPQVRI7DEOHVDQG
19
)LJXUH6WUDWHJLFGHFLVLRQPDWUL[IRUILQDQFLQJRIYDOXHFKDLQVLQ1LJHULD
6RXUFH7KHDXWKRUV
9DULRXV LQWHUSUHWDWLRQV FDQ EH PDGH IURP WKH DERYH ILJXUH 'HFLVLRQ PDNHUV LQ YDOXH FKDLQ
ILQDQFHPD\FHUWDLQO\EHLQWHUHVWHGLQWKHYDOXHFKDLQVWKDWKDYHKLJKHUGHYHORSPHQWSRWHQWLDO
+RZHYHUWKHUHDUHYDOXHFKDLQVZKLFKQHHGOHVVILQDQFHHJWRPDWRHVPDL]HRUFRWWRQ²WKH
ODWWHUKDVDOUHDG\UHFHLYHGVSHFLDOILQDQFHVXSSRUW
3URYLGLQJPRGHVWOHYHOVRIILQDQFHWRWKRVHVHFWRUVPD\EHDQHIILFLHQWVWUDWHJ\WREULQJDERXW
GHYHORSPHQW2WKHUYDOXHFKDLQVZLWKKLJKGHYHORSPHQWSRWHQWLDOPD\UHTXLUHPRUHVXEVWDQWLDO
DPRXQWV RI IXQGLQJ HJ FDVVDYD SRXOWU\ VR\EHDQ ILVKHULHV DQG ULFH )RU WKRVH YDOXH FKDLQV
ILQDQFHVXSSRUWVKRXOGEHSURYLGHGLQIRUPRIODUJHUVFDOHSURJUDPPHVWKDWUHDFKDOODFWRUVLQ
WKHYDOXHFKDLQHIILFLHQWO\
)LJXUH KRZHYHU VKRXOG QRW EH LQWHUSUHWHG LQ VXFK ZD\ WKDW YDOXH FKDLQV ZLWK ORZHU
GHYHORSPHQWSRWHQWLDODQGOHVVLPSRUWDQWILQDQFLDOQHHGVVKRXOGQRWUHFHLYHDQ\ILQDQFH5DWKHU
WKHUHVKRXOGEHIXQGLQJVFKHPHVDYDLODEOHWKDWHYHU\FRPSDQ\DQGIDUPLQWKHDJULFXOWXUDOVHFWRU
HQJDJLQJLQHIILFLHQWEXVLQHVVHVFDQDFFHVVHDVLO\
20
4.2 Crosscutting Challenges and Opportunities
&RPSDULQJ WKH LQIRUPDWLRQ IURP WKH YDOXH FKDLQV UHYLHZHG GHVSLWH WKH VSHFLILFLWLHV RI HDFK
FKDLQDQXPEHURIFRPPRQIHDWXUHVLQDQGFURVVFXWWLQJFKDOOHQJHVIRUYDOXHFKDLQGHYHORSPHQW
EHFRPHDSSDUHQW7KHVHDUHGLVFXVVHGEHORZIROORZLQJWKHVWUXFWXUHRIYDOXHFKDLQGLDJQRVWLFV
DSSOLHGLQHDFKRIWKHFDVHVGHVFULEHGLQWKH$QQH[
4.2.1 Primary Production and Sourcing of Inputs

$JULFXOWXUH LQ 1LJHULD FRQWULEXWHV DERXW RI *'3 DQG RYHU RI HPSOR\PHQW 7KHVH
ILJXUHV UHODWH WR SULPDU\ SURGXFWLRQ DQG GR QRW LQFOXGH RWKHU VHJPHQWV RI DJULFXOWXUDO YDOXH
FKDLQVVXFKDVDJURSURFHVVLQJWUDQVSRUWDQGWUDGLQJ)URPWRDJULFXOWXUHJUHZDW
DQQXDOO\DQGLWLVWDUJHWHGWRJURZLQWKHRUGHURILQWKHFXUUHQWSHULRG
+RZHYHU WKH VHFWRU FRQWLQXHV WR IDFH PD\RU VWUXFWXUDO FKDOOHQJHV DV LW UHPDLQV GRPLQDWHG E\
VHPLVXEVLVWHQFHIDUPHUVZKRSXWOLWWOHHPSKDVLVRQFRPPHUFLDOIDUPLQJ)RUH[DPSOHDYHUDJH
\LHOGV LQ PDL]H ULFH DQG FRZSHD RQO\ UHDFK DQG RI WKHLU SRWHQWLDO UHDOL]HG RQ
PRGHOIDUPVDQGUHVHDUFKVWDWLRQV
7KHSUHGRPLQDQFHRIWKHVHPLVXEVLVWHQFHIDUPLQJSDUWO\JRHVEDFNWRFRORQLDOWLPHVZKHQWKH
%ULWLVKSURSDJDWHGWKHFRQWLQXDWLRQRIWUDGLWLRQDO$IULFDQODQGWHQXUHV\VWHPVWRDYRLGSUREOHPV
ZLWKVRFLDOXSKHDYDOVVXFKDVFDXVHGE\HFRQRPLFVKRFNVWRSODQWDWLRQDJULFXOWXUHLQ(DVW$IULFD
,MHUH
7RGD\PRUHWKDQSHUFHQWRIWKHWRWDOIDUPKROGLQJVDUHEHORZKHFWDUHV5LVNPLQLPL]DWLRQ
VWUDWHJLHV RI SRRU IDUPHUV DQG WKH IDFW WKDW PDQ\D ELJ DPRXQW RI WKH SURGXFWV DUH XVHG IRU
KRPHFRQVXPSWLRQKDYHIUXVWUDWHGPDQ\HIIRUWVWRLQWURGXFHPRUHSURILWRULHQWHGPRGHOV
,Q FRQVHTXHQFH IDUPHUV VWD\ ZLWK WKH WUDGLWLRQDO SURGXFWLRQ V\VWHP ZKLFK SURYLGHV OLPLWHG
SRWHQWLDO IRU LQFRPH DQG H[SDQVLRQ RI SURGXFWLRQ 0DLQ FKDOOHQJHV LQ SULPDU\ DJULFXOWXUDO
SURGXFWLRQLQ1LJHULDWRGD\LQFOXGH
• 7KH QRQDIIRUGDELOLW\ DQG QRQDYDLODELOLW\ RI IDUP LQSXWV VXFK DV IHUWLOL]HU LPSURYHG
VHHGVDQGPHDQVRISHVWPDQDJHPHQWWKDWUHQGHUSURGXFWLRQPRUHSURILWDEOH
• /DFN RI PHFKDQL]DWLRQ DQG XVH RI LPSURYHG NQRZOHGJH DQG WHFKQRORJ\ LQ SURGXFWLRQ
DQG SRVW KDUYHVW KDQGOLQJ 7KH H[LVWLQJ SURJUDPPHV WR GLIIXVH XVHIXO NQRZOHGJH DQG
WHFKQRORJ\DUHLQHIILFLHQW
• &RQVLGHUDEOHSRVWKDUYHVWORVVHVRIIDUPSURGXFHGXHWRSRRUSRVWKDUYHVWKDQGOLQJDQG
LQDGHTXDWH DJURSURFHVVLQJ DQG UXUDO LQIUDVWUXFWXUH SHUFHQW RI JUDLQV DQG RYHU
SHUFHQWRIDOOIUXLWVDQGYHJHWDEOHVPD\EHORVWWKLVZD\
• ,QDGHTXDWH WUDQVSRUW DQG PDUNHWLQJ V\VWHPV ZLWK OLWWOH YHUWLFDO LQWHJUDWLRQ LQ WKH YDOXH
FKDLQV DQG IHZ SULFH LQFHQWLYHV DQG VDOHV RSSRUWXQLWLHV WKDW ZRXOG WULJJHU H[WHQGHG
SURGXFWLRQ
• ,QVXIILFLHQWXVHRILUULJDWLRQ/HVVWKDQRQHSHUFHQWRIDUDEOHODQGLVLUULJDWHG6FDOLQJXS
RILUULJDWLRQLVSDUWLFXODUO\LPSRUWDQWLQWKHFULWLFDO¶IRRGEHOW¶DUHDV
• /DFNRISXEOLFVHUYLFHVVXFKDVURDGHQHUJ\DQGZDWHUVXSSO\
• 3ROLF\ UHODWHG FKDOOHQJHV :KLOH WKH DEROLWLRQ RI WKH 1LJHULDQ JRYHUQPHQWLQVWLWXWHG
FRPPRGLW\ PDUNHWLQJ ERDUGV PD\ KDYH KDG VRPH SRVLWLYH HIIHFW ZLWK UHJDUG WR
WUDQVSDUHQWXVHRI IXQGV DQGEHWWHUUHDFWLRQWRSULFHVLJQDOVWKHUHLVVWLOOPXFKVXSSRUW
UHTXLUHG WLOO HDFK RI WKH YDOXH FKDLQV ZRXOG UHDFK FRPSHWLWLYHQHVV EH\RQG QDWLRQDO
ERUGHUV
21
• /DFNRIILQDQFH:LWKRXWPRQH\WRSXUFKDVHLQSXWVDQGODERXUIDUPSURILWDELOLW\FDQQRW
EHLPSURYHG,QIDFWWKHILQDQFHLQWHQVLW\LQWKHVPDOOKROGHUVHFWRULVVXEVWDQWLDOO\ORZHU
WKDQLQWKHFRPPHUFLDOIDUPLQJVHFWRUVHHDOVRVHFWLRQ
$OOWKHVHIDFWRUVLQFRPELQDWLRQZLWKUDSLGO\FKDQJLQJGHPRJUDSKLFVKDYHOHDGWRDVLWXDWLRQLQ
ZKLFK1LJHULDLVREOLJHGWRLPSRUWVXEVWDQWLDODPRXQWVRIIRRG1LJHULDFXUUHQWO\LPSRUWVODUJH
TXDQWLWLHV RI JUDLQV PLOOLRQ WRQV RI ULFH LQ ² DV ZHOO DV VLJQLILFDQW DPRXQWV RI
OLYHVWRFNDQGOLYHVWRFNSURGXFWVPRVWO\WKURXJKXQUHFRUGHGLQIRUPDOERUGHUWUDGH,QWKHRIILFLDO
VWDWLVWLFV DW )$2 ZZZIDRVWDWRUJ WKH LPSRUWV RI ZKHDW DQG VXJDU LQ WKH RUGHU RI 86'
0LOOLRQDQG86'0LOOLRQUHVSHFWLYHO\UDQNKLJKHVW
&RPPHUFLDODQGH[SRUWDJULFXOWXUHSOD\VDOLPLWHGUROHLQ1LJHULD/DUJHIDUPKROGHUVDFFRXQWIRU
DERXWSHUFHQWRIDOOIDUPKROGLQJV6RPHFRPPHUFLDODJULFXOWXUHGDWHVEDFNWRFRORQLDOWLPHV
ZKHQGHVSLWHWKH%ULWLVKTXHVWWROHDYH´SHDVDQWµDJULFXOWXUHLQWDFWSODQWDWLRQFURSVVXFKDVRLO
SDOPJURXQGQXWDQGFRFRDZHUHSURSDJDWHGIRUH[SRUW0RUHUHFHQWO\FRPPHUFLDOIDUPLQJKDV
VSUXQJXSLQUHVSRQVHWRH[LVWLQJPDUNHWRSSRUWXQLWLHVVXFKDVLQJUDLQDQGVWDUFKDQLPDOIHHG
SRXOWU\ ILVK IUXLW DQG YHJHWDEOHV DQG RWKHUV DQG WKH PHUH QHFHVVLW\ RI DJULFXOWXUDO SURFHVVLQJ
FRPSDQLHV WR VRXUFH SULPDU\ SURGXFWLRQ ZKLFK RWKHUZLVH WKH\ FDQQRW DFTXLUH LQ VXIILFLHQW
TXDQWLW\DQGTXDOLW\IURPWKHWUDGLWLRQDOVHFWRU
+RZHYHU PRVW RI WKH PHGLXP WR ODUJHVFDOH DJULFXOWXUDO HQWHUSULVH LQLWLDWLYHV GR QRW RULJLQDWH
IURP HQWUHSUHQHXUV RI WKH WUDGLWLRQDO VHFWRUV EXW UHIOHFW WKH LQYHVWPHQW VWUDWHJ\ RI DOUHDG\
HVWDEOLVKHGEXVLQHVVRZQHUVIURPRWKHUVHFWRUVDQGWKHXUJHRIFHUWDLQSURFHVVRUVWRDVVXUHWKH
TXDOLW\DQGTXDQWLW\RISULPDU\PDWHULDOVWKURXJKYHUWLFDOLQWHJUDWLRQ
)LJXUH1LJHULD·VPDLQDJULFXOWXUDOH[SRUWV

6RXUFH)$267$7

6XSSO\ DQG GLVWULEXWLRQ RI VHHGV LV ODUJHO\ SURSDJDWHG E\ SXEOLF DQG GHYHORSPHQW DJHQFLHV
9DULRXV1*2VUHVHDUFKLQVWLWXWHVDQGH[WHQVLRQVHUYLFHSURYLGHUVDUHXVHGWREULQJLQJVHHGVWR
WKH IDUPHUV ZKLOH SULYDWH PXOWLSOLFDWLRQ DQG GLVWULEXWLRQ PDLQWDLQV D VRPHZKDW OHVV SURPLQHQW
SURILOHJLYHQWKHGRPLQDQFHRIWKHSXEOLFDQGGHYHORSPHQWVHFWRUDVZHOODVWKHOLPLWHGFDSDFLW\
RI IDUPHUV WR UHFHLYH FUHGLWV DQG SXUFKDVH LPSURYHG VHHGV 7KH IHZ SULYDWH VHHG SURGXFHUV
DPRQJWKRVH3UHPLHU$JUR$OKHUL6HHGVDQG2ED6XSHU)DUPVXVHDFKDLQRIZKROHVDOHUVDQG
UHWDLOHUVWRUHDFKWKHIDUPHUV
22
&KHPLFDO IHUWLOL]HUV DUH PDLQO\ LPSRUWHG WR 1LJHULD 7KH HVWDEOLVKPHQW RI IHUWLOL]HU IDFWRULHV LQ
.DGXQD DQG 3RUW +DUFRXUW E\ WKH )HGHUDO *RYHUQPHQWLQ WKH VZDV PHDQW WR UHGXFH WKH
FRXQWU\·VGHSHQGHQFHRQIHUWLOL]HULPSRUWVEXWWXUQHGRXWWREHDIDLOXUH)XUWKHUQLQHSULYDWHO\
RZQHG IHUWLOL]HUEOHQGLQJ SODQWV DURXQG WKH FRXQWU\ KDYH HLWKHU EHHQ FORVHG RU RSHUDWH ODUJHO\
EHORZ LQVWDOOHG FDSDFLWLHV 0DLQ UHDVRQV IRU WKH IDLOXUH RI WKH SULYDWH IHUWLOL]HU SURGXFWLRQ DQG
GLVWULEXWLRQ V\VWHP LQFOXGH WKH ODFN RI ILQDQFH DQG LQVXIILFLHQW FDSDFLW\ WR UHDFK VPDOOVFDOH
IDUPHUV7KHJRYHUQPHQWSURFXUHVDQGGLVWULEXWHVYLDSULYDWHFRQWUDFWRUVIHUWLOL]HUVWRIDUPHUV
DWVXEVLGL]HGSULFHVRQDQDQQXDOEDVLV
7KH DLP RI WKLV JRYHUQPHQW DFWLRQ LV RIWHQ SROLWLFDO DQG LWV HIIHFWLYHQHVV LV LQ PDQ\ FDVHV
TXHVWLRQDEOH 1RWZLWKVWDQGLQJ WKH VXEVLG\ IHUWLOL]HU XVH KDV UHPDLQHG ODUJHO\ LQDGHTXDWH DQG
RXW RI UHDFK IRU VPDOOVFDOH IDUPHUV .RUPDZD HW DO 6RPH SRVLWLYH UHVXOWV KDYH EHHQ
DFKLHYHGLQWKHSURYLVLRQRIVXEVLGLHVWKURXJKDYRXFKHUV\VWHP+RZHYHUVXFKV\VWHPVXVXDOO\
UHTXLUHVXEVWDQWLDODGGLWLRQDOVXSSRUWVXFKDVSURYLGHGLQWKHSDVWWKURXJK86$,'DQG,)'&,Q
DQ\ FDVH VPDOOVFDOH IDUPHUV LQ 1LJHULD KDYH FRQWLQXHG WR KDUQHVV DQG DSSO\ ORFDO RUJDQLF
PDQXUHRQWKHLUIDUPV,QVRPHUHJLRQVORFDORUJDQLFPDQXUHHVSHFLDOO\IDUPODQGPDQXUHLVWKH
PRVWFRPPRQIRUPRIVRLOIHUWLOL]DWLRQ2WKHUIRUPVRIRUJDQLFIHUWLOLW\LPSURYHPHQWVVXFKDV
JUHHQPDQXUHDQGFRPSRVWDUHXQFRPPRQ
*RYHUQPHQW SURJUDPPHV IRU SHVW DQG GLVHDVH FRQWURO WR VXSSRUW VPDOO VFDOH IDUPHUV KDYH
DOUHDG\EHHQHVWDEOLVKHGLQWKHVEXWFXUUHQWO\RQO\UHDFKPDUJLQDOOHYHOVRIRSHUDWLRQ7KH
ORFDO SURGXFWLRQ RI SHVWLFLGHV DQG RWKHU DJURFKHPLFDOV LV FDUULHG RXW E\ D QXPEHU RI ORFDO
FRPSDQLHV XVLQJ LPSRUWHG LQSXWV 7KH UHVW LV LPSRUWHG GLUHFWO\ DQG GLVWULEXWHG E\ ORFDO
GLVWULEXWRUV DQGRU LQWHUQDWLRQDO DJURFKHPLFDO FRPSDQLHV $V D UHVXOW WKHVH DJURFKHPLFDOV DUH
WRRH[SHQVLYHWRWKHVPDOOIDUPHU
&XUUHQWO\ WKH 1DWLRQDO 9HWHULQDU\ 5HVHDUFK ,QVWLWXWH LQ -RV LV WKH RQO\ SUHPLHU LQVWLWXWH IRU
DQLPDO YDFFLQH SURGXFWLRQ 7KHUH DSSHDUV QR YHWHULQDU\ GUXJ PDQXIDFWXULQJ RXWILW LQ WKH
FRXQWU\7KXV DOO GUXJV DUH LPSRUWHG 8VH RIYDFFLQHV DQGYHWHULQDU\ GUXJVLV VSRUDGLF DPRQJ
VPDOO KHUGHUV DQG DQLPDO UHDUHUV 8VH RI GUXJV LV VRPHZKDW PRUH SURQRXQFHG LQ WKH SRXOWU\
SURGXFWLRQ LQGXVWU\ ZKHUH PDQ\ VPDOO WR ODUJH SRXOWU\ IDUPV XVH GUXJV DQG DGGLWLYHV 7KHVH
SURGXFWVWHQGWREHPRUHHIIHFWLYHO\GLVWULEXWHGE\WKHLPSRUWHUVWKDQRWKHUYHWHULQDU\GUXJV
3URGXFHUV DQG GLVWULEXWRUV RI DJULFXOWXUDO LQSXWV RIWHQ HQJDJH LQ VFKHPHV ZKHUH WKH\ SURYLGH
WHFKQLFDO DVVLVWDQFH WR WKHLU IDUPHU FOLHQWVDVZHOODV DOORZ WKHP GHOD\HG SD\PHQW HJ WLOO DIWHU
VHOOLQJ WKH KDUYHVW :KLOH EUDQFKHV RI LQWHUQDWLRQDO DJURFKHPLFDO FRPSDQLHV PD\ EH DEOH WR
UHILQDQFH WKHVH DFWLYLWLHVWKURXJK WKHLU PRWKHU FRPSDQLHV ORFDO EXVLQHVV DQG SDUWLFXODUO\ VPDOO
LQSXWWUDGHUVDQGUHWDLOHUVPD\UHTXLUHDFFHVVWRZRUNLQJFDSLWDODQGVKRUWWRPHGLXPORDQVWKDW
KHOSWREULGJHWKHWLPHXQWLOIDUPLQJKDVJRQHWKURXJKLWVVHDVRQDOF\FOH
4.2.2 Processing Capacity and Technology

:KLOH DJULFXOWXUH HPSOR\V RI WKH QDWLRQDOZRUNIRUFH IRUPDO DFWLYLWLHV LQ DQ DJURLQGXVWU\
PRVWO\IRRGWREDFFRDQGEHYHUDJHVHPSOR\RIWKHWRWDOIRUPDODQGLQIRUPDOZRUNIRUFH
ZKLOHLQIRUPDODJURLQGXVWU\PD\HPSOR\DQRWKHURIWKHWRWDOZRUNIRUFH3$.3URJUDPPH
,QGXVWU\ SXUFKDVHV IURP IDUPHUV DUH OLNHZLVH ORZ DW OHVV WKDQ RI RXWSXW ,QGHHG
PDQ\ DJULFXOWXUDO SURGXFWV DUH VROG LQ ORFDO RU H[SRUW PDUNHWV ZLWK OLWWOH RU QR YDOXH DGGHG
WKURXJK SURFHVVLQJ 7KH DERYH SURYLGHV VRPH HYLGHQFH IRU WKH VWDWHPHQW WKDW WKHUH LV D ODUJH
XQWDSSHG RSSRUWXQLW\ IRU ORFDO UHJLRQDO DQG LQWHUQDWLRQDO PDUNHWV IRU SURFHVVHG DJULFXOWXUDO
SURGXFWVIURP1LJHULD
1
A study of USAID (2000) revealed the negative impact of government subsidies on the development of
competitive agri-markets. It argues that the procurement and distribution of fertilizer through public sector
agencies was inefficient and ineffective and that the government’s role in the inputs markets essentially limited
private sector participation.
23
+RZHYHU WKH 1LJHULDQ DJURSURFHVVLQJ VHFWRU IDFHV VXEVWDQWLDO FKDOOHQJHV )RU H[DPSOH VRPH
GRPHVWLFDOO\SURFHVVHGFURSVVXFKDVULFHDQGSDOPRLODUHSURGXFHGDWWZLFHWKHZRUOGSULFH
3RVWKDUYHVWWHFKQRORJ\VWRUDJHSURFHVVLQJDQGGLVWULEXWLRQLVLQDSRRUVWDWHDQGWKHQXPEHU
RISURFHVVHGSURGXFWVLVYHU\OLPLWHG)RUH[DPSOHFDVVDYDFRXOGEHZLGHO\XVHGLQWKHDJULIRRG
LQGXVWU\EDNHU\FRQIHFWLRQHULHVFDQQHGIUXLWVDQGMDPVHWFDQGLQGXVWULDOUDZPDWHULDOVWDUFK
FKLSV DGKHVLYHV DQLPDO IHHGV HWKDQRO DQG SKDUPDFHXWLFDOV 5LFH FDQ EH SURFHVVHG LQWR IORXU
FULVSV IODNHV SXIIHG ULFH ULFH SXGGLQJ ODXQGU\ VWDUFK FRVPHWLFV ULFH ZLQH EHHU DQG VSLULWV
3ODQWDLQ DQG EDQDQD DUH DOVR SRWHQWLDO VRXUFHV RI IORXU FKLSV IODNHV IODYRXULQJ DQG ZLQH EXW
PRVW RI SODQWDLQ DQG EDQDQD WRGD\ LV PHUHO\ KDUYHVWHG DQG HDWHQ 7KH XVH RI E\SURGXFWV LQ
SURFHVVLQJHJIRUHQHUJ\SURGXFWLRQRUDQLPDOIHHGDZD\WRUHGXFHSURGXFWLRQFRVWVIDOOVIDU
VKRUW
,Q JHQHUDO RQH QHHGV WR GLVWLQJXLVK EHWZHHQ WKH DUWLVDQDO SURFHVVLQJ VHFWRU DQG WKH LQGXVWULDO
SURFHVVLQJVHFWRUERWKRIZKLFKEHDUODUJHSRWHQWLDOVIRULPSURYHPHQW
• 7KHDUWLVDQDOSURFHVVLQJVHFWRULVFKDUDFWHUL]HGWKURXJKUXGLPHQWDU\RULQWHUPHGLDWHOHYHO
KRXVHKROG WHFKQRORJLFDO SUDFWLFHV DV ZHOO DV SULYDWHO\ RZQHG VPDOOVFDOH FRPPHUFLDO
PLOOLQJ EDNLQJ SURGXFWLRQ DQG WUDQVIRUPDWLRQ WHFKQRORJLHV )LQLVKHG SURGXFWV IURP
WKHVH DUH XVHG LQ KRXVHKROG UHFLSHV DQG RIWHQ GR QRW OHDYH WKH YLOODJH 2QO\ ZKHQ
IDUPHUVSURGXFHDVXUSOXVWKHSURGXFWJHWVVROGWKRXJKPRVWO\LQLWVUDZXQSURFHVVHG
VWDWXV OHDYLQJ OLWWOH VFRSH IRU ORFDO SURFHVVRUV WR JURZ *HQHUDOO\ DGRSWLRQ DQG XVH RI
LPSURYHG SRVWKDUYHVW WHFKQRORJLHV DUH HYLGHQW EXW LQDGHTXDWH 7KH LQWHUDFWLRQ RI
UHVHDUFK ORFDO NQRZOHGJH DQG H[WHQVLRQ DQG GHYHORSPHQW DJHQFLHV KDV OHG WR WKH
DYDLODELOLW\ RI D ODUJH QXPEHU RI DUWLVDQDO SRVWKDUYHVW WHFKQRORJLHV DQG SUDFWLFHV 7KH
H[WHQWWRZKLFKWKHVHDFWXDOO\UHDFKIDUPKRXVHKROGVDQGORFDOSURFHVVRUVDQGEHFRPH
DFFHSWHG DGRSWHG DQG XWLOL]HG LV FHUWDLQO\ OLPLWHG (YHQ WKH LQLWLDO SURFHVVLQJ DFWLYLWLHV
VXFKDVGU\LQJRIKDUYHVWHGFURSVDQGSURFHVVLQJIRULQGLYLGXDOKRXVHKROGFRQVXPSWLRQ
FDQEHWLPHFRQVXPLQJDQGLQHIILFLHQW7KLVSXWVDVHULRXVEXUGHQRQUXUDOKRXVHKROGV
HVSHFLDOO\RQZRPHQZKRGRPRVWRIWKHVPDOOVFDOHSURFHVVLQJ$VLJQLILFDQWTXDQWLW\RI
IDUPHUV·KDUYHVWURWEHFDXVHRIODFNRIVWRUDJHDQGSURFHVVLQJIDFLOLWLHVEXWTXLWHRIWHQ
IDUPHUVDUHIRUFHGWRVHOOWKHLUFURSVZKHQSULFHVDUHORZHVWEHFDXVHRIDFRPELQDWLRQRI
SUREOHPVRISUHVHUYDWLRQSURFHVVLQJDQGILQDQFLDOOHYHUDJH

• 3URFHVVLQJ RI DJULFXOWXUDO SURGXFWV RQ D ODUJHU VFDOH LV ORFDWLRQ VSHFLILF 'HSHQGLQJ RQ
WKHEXONLQHVVRUSHULVKDELOLW\RIWKHSURGXFWFHUWDLQLQGXVWULHVZLOOORFDWHUDWKHUFORVHWR
WKHRULJLQRISURGXFWLRQHJRLOSDOPFDVVDYDVR\EHDQRUPLONRUFORVHUWRWKHFHQWUH
RI WUDGH GLVWULEXWLRQ RU H[SRUW HJ PHDW FRFRD /DUJHU JUDLQ DQG RLO PLOOV DUH IRU
H[DPSOHORFDWHGLQ3RUW+DUFRXUW(QXJX$ED,EDGDQ.DQR.DGXQDDQG/DJRVZKHUH
ILQLVKHG HQG SURGXFWV VXFK DV IORXU FRQIHFWLRQHULHV PLON EHYHUDJH EDE\ IRRGV RLOV
SRXOWU\ DQG OLYHVWRFN IHHGV DUH SURGXFHG +RZHYHU WKH LQGXVWU\ LV ODUJHO\
XQGHUGHYHORSHG SDUWLFXODUO\ ZKHQ FRQVLGHULQJ WKH KXJH GRPHVWLF DQG UHJLRQDO PDUNHW
SRWHQWLDOV6RPHRIWKHPDLQFRQVWUDLQWVRIDJURSURFHVVRUVLQ1LJHULDLQFOXGH

o &RPSHWLWLRQIURPFKHDSHUSURGXFWVDEURDGDQGODFNRIFRPSHWLWLYHQHVV
o 8QIDYRXUDEOH FRVW VWUXFWXUHV GXH WR LQDSSURSULDWH WHFKQRORJ\ ODFN RI NQRZKRZ
DQGXQVNLOOHGZRUNIRUFH
o /DFN RI FRQVWDQW VXSSO\ RI SULPDU\ SURGXFWV RI VXIILFLHQW TXDOLW\ 3DUWLFXODUO\
SURGXFHUV RI VWDSOH FURSV PD\ FKRRVH WR QRW GHOLYHU ZKHQ WKH\ VHH RWKHU
RSSRUWXQLWLHVIRUORFDOVDOHVDQGFRQVXPSWLRQ
o ,QVXIILFLHQW DSSOLFDWLRQ RI TXDOLW\ VWDQGDUGV LQ FRQVHTXHQFH QRW PHHWLQJ WKH
GHPDQGVRIFRQVXPHUVDQGLQWHUQDWLRQDOEX\HUV
24
o ,QVXIILFLHQW GHYHORSPHQW RI WUDQVSRUW DQG VWRUDJH IDFLOLWLHV WKDW DYRLG GDPDJH
FRQWDPLQDWLRQRUSHULVKDELOLW\RISURGXFWV
o &RQVWUDLQWV EHFDXVH RI SRRU URDG HQHUJ\ ZDWHU VXSSO\ DQG WHOHFRPPXQLFDWLRQ
LQIUDVWUXFWXUHJRYHUQPHQWEXUHDXFUDF\DQGODFNRIEXVLQHVVVXSSRUWVHUYLFHV
,WLVLPSRUWDQWWRQRWHWKDWSURFHVVRUVGRQRWRQO\UHTXLUHDFFHVVWRILQDQFHIRUHTXLSPHQWDQG
PDFKLQHU\DVZHOODVZRUNLQJFDSLWDO7KH\DOVRUHTXLUHDFHUWDLQDPRXQWRIIXQGLQJWKDWHQDEOHV
WKHP DGYDQFHG SD\PHQW WR VXSSOLHUV D FDWHJRU\ IRU ZKLFK EDQNV DQG PLFURFUHGLW VFKHPHV
XVXDOO\GRQRWKDYHDQ\SURGXFWRQRIIHU2QWKHOHYHORIVPDOOWRPHGLXPDVZHOODVDUWLVDQDO
SURFHVVRUV IXQGLQJ VRXUFHV DUH H[WUHPHO\ OLPLWHG IRU DOO VRUWV RI ORDQV /DUJHU SURFHVVRUV PD\
KDYH DFFHVV WR H[SHQVLYHZRUNLQJ FDSLWDO ORDQV EXWORQJWHUP ILQDQFLQJ IRUHTXLSPHQW LV RIWHQ
H[WUHPHO\ GLIILFXOW WR JHW )LQDOO\ DQ\ FUHGLW SURGXFW RI 1LJHULDQ EDQNV LV PHHWLQJ WKH
UHTXLUHPHQWVIRUDGYDQFHGSD\PHQWRIVXSSOLHUVXSWRD\HDU
4.2.3 End Markets and Trade

7KH FXUUHQW PDUNHWLQJ V\VWHP IRU DJULFXOWXUDO SURGXFWV LQ 1LJHULD LV ODUJHO\ GHYRLG RI DQ\
JRYHUQPHQW LQWHUYHQWLRQV 7KH PDUNHWV IRU WUDGLWLRQDO IRRG SURGXFWV DUH FKDUDFWHUL]HG E\
IOXFWXDWLRQVLQVXSSO\VXSSO\DQGGHPDQGGHWHUPLQHSURGXFWSULFHV,QGLYLGXDOWUDGHUVFDUU\RXW
PDUNHWLQJDQGWKH\RSHUDWHIUHHO\LQERWKUXUDODQGXUEDQPDUNHWV
&RPPRQPDUNHWLQJFKDQQHOVIRUIRRGFRPPRGLWLHVLQFOXGHWKUHHDOWHUQDWLYHVDWKHPRYHPHQW
IURPWKHSURGXFHUWKURXJKWKHUXUDOFROOHFWRUWRXUEDQPDUNHWVUHWDLOHUDQGHQGFRQVXPHUVE
WKH PRYHPHQW IURP WKH SURGXFHU WR D UXUDO PDUNHW ZKHUH WUDQVSRUWHUV FDUU\ WKHP WR XUEDQ
PDUNHWVDQGZKROHVDOHUVZKRSDVVWKHSURGXFWWRUHWDLOHUVDQGFRQVXPHUVDQGFWKHPRYHPHQW
IURPWKHSURGXFHUWRODUJHUEX\HUVZKRGLUHFWO\SURFHVVRUSUHSDUHIRUH[SRUW
/DWHO\DVKLIWRIORFDOFRQVXPHUEHKDYLRXUZLWKUHJDUGWRIRRGFDQEHZLWQHVVHG(YHQOHVVZHOO
HQGRZHG UXUDO DQG XUEDQ KRXVHKROGV KDYH EHFRPH DZDUH RI WKH KLJK FRVWV RI OHQJWK\
SUHSDUDWLRQ RI UDZ IRRGV DW KRPH DQG WKRVH ZKR ILQG OHVV WLPH IRU LW IRU H[DPSOH GXH WR
VSHQGLQJPRUHWLPHLQFRPPHUFLDODJULFXOWXUHORRNIRUVHPLSURFHVVHGIRRGSURGXFWVDQGHYHQ
IDVWIRRGVROXWLRQVWKH\FDQMXVWSXUFKDVH ,QVWHDG RIPDNLQJJDULDWKRPHDIDPLO\ZRXOGMXVW
EX\JDUL+HQFHWKHPDUNHWIRUVHPLSURFHVVHGIRRGVSURGXFWVLQFUHDVHV
0DL]HDQGVRUJKXPDUHXVHGLQFUHDVLQJO\DVSDUWLDOVXEVWLWXWHVIRUZKHDWLQ EDNHU\ELVFXLWDQG
SDVWU\ LQGXVWULHV DV ZHOO DV UDZ PDWHULDOV LQ WKH EHYHUDJH DQG EUHZLQJ LQGXVWULHV +RXVHKROG
FRQVXPSWLRQRIWKHVHFURSVKDVUHVXOWHGLQWKHLUOLPLWHGDYDLODELOLW\IRULQGXVWULDOXVH7KXVVRPH
LQGXVWULHV QRZ HQJDJH LQ GLUHFW SURGXFWLRQ RI PDL]H DQG VRUJKXP LQ RUGHU WR PHHW WKHLU
UHTXLUHPHQWV
3URGXFW DQG PDUNHW GHYHORSPHQW LV RQO\ WR EH GHYHORSHG DPRQJ 1LJHULDQ IRRG SURFHVVRUV
3DFNDJLQJLVNHSWORZFRVWDQGQHZLGHDVIRUQHZSURGXFWGHVLJQUDWKHUFRPHIURPRXWVLGHUVRI
WKHGHYHORSPHQWFRPPXQLW\WKDQIURPFRPSDQ\LWVHOI
25
4.2.4 Chain Governance
3UHVHQWO\ WKHUH DUH IHZ RU QR IRUPDOL]HG IRUZDUG DQG EDFNZDUG OLQNDJHV EHWZHHQ VPDOOVFDOH
IDUPHU JURXSV FRRSHUDWLYHV RU DVVRFLDWLRQV ZLWK DJURLQGXVWULHV 2XWJURZHU VFKHPHV DQG
FRQWUDFW IDUPLQJ DUH VWLOO ODUJHO\ XQNQRZQ ZLWK VRPH H[FHSWLRQV ZKHUH D IHZ OHDG ILUPV KDYH
WULHG WR LQWURGXFH WKHP )RU H[DPSOH EUHZHULHV VXFK DV 'LDJHR 3OF *XLQQHVV 1LJHULD DQG
,QWHUQDWLRQDO %UHZHULHV -,% VRXUFH VRUJKXP DQG EDUOH\ IURP IDUPHUV XQGHU VSHFLILF FRQWUDFW
DUUDQJHPHQWV %ULWLVK $PHULFDQ 7REDFFR UXQV DQ RXWJURZHUV VFKHPH ZLWK WREDFFR IDUPHUV LQ
2\R 6WDWH 1HVWOp 1LJHULD 3OF HQJDJHV LQ D VWUDWHJ\ RI ÉX\LQJ IURP 1LJHULD DQG VHOOLQJ LQ
1LJHULDµ ZKLFK IRUHVHHV FRQWUDFWLQJ ZLWK IDUPHUV WR VRXUFH UDZ PDWHULDOV ORFDOO\ HJ FRFRD
VRUJKXPDQGVR\EHDQV2XWJURZHUVFKHPHVDUHDOVRNQRZQLQWKHFRWWRQVHFWRU
2XWJURZHU VFKHPHV SURPRWH YHUWLFDO LQWHJUDWLRQ LQ YDOXH FKDLQV $Q DJURLQGXVWU\ FRPSDQ\
FRPPLWVLWVHOIWRSXUFKDVHWKHSURGXFWVDQGXVXDOO\DOVRVXSSRUWVSURGXFWLRQWKURXJKVXSSO\RI
IDUPLQSXWVFUHGLWODQGSUHSDUDWLRQDQGWKHSURYLVLRQRIWHFKQLFDODGYLFH%XUGHQHGZLWKGHEWV
DQGVRDULQJVHHGVDQGIHUWLOL]HUFRVWVFRQWUDFWIDUPLQJRIWHQDSSHDUVWREHDJRRGVROXWLRQIRU
IDUPHUV'HVSLWHWKHPDQ\EHQHILWVRXWJURZHUVFKHPHVDUHDOVRFULWLFL]HGIRUWKHZD\WKH\DOORZ
EX\HUV JDLQ SRZHU RYHU IDUPLQJ FRPPXQLWLHV ZKLOH OLPLWLQJ WKHLU FDSDFLW\ WR SURGXFH IRRG
:LWKRXWIXUWKHUH[WHQGLQJWKLVGLVFXVVLRQWKLVUHSRUWWDNHVWKHSRVLWLRQWKDWRXWJURZHUVFKHPHV
UHTXLUHFOHDUVRFLDOVWDQGDUGVDQGDJRYHUQPHQWWKDWPRQLWRUVDQGHQIRUFHVWKHP
2WKHU VHFWRUV VXFK DV FHUHDOV FDVVDYD IUXLWV DQG YHJHWDEOHV VR\EHDQ DQG RLO SDOP KDYH
H[SHULPHQWHGZLWKVFKHPHVVLPLODUWRWKDWRIRXWJURZLQJ+RZHYHUGXHWRWKHH[LVWHQFHRIDQ
DOWHUQDWLYHPDUNHWWRZKLFKIDUPHUVFDQVHOODQGWKHDVVRFLDWHGKLJKULVNIRUDJURSURFHVVRUVWR
SURYLGHLQSXWVDQGFUHGLWVWKH\KDYHQRWPDWHULDOL]HGLQWRDIRUPDOFRQWUDFW5DWKHUWKH\UHPDLQ
YHUEDOFRPPLWPHQWVWKDWERWKSDUWLHVRIWHQGRQRWFRPSO\ZLWK7KHUHDUHKRZHYHUH[DPSOHV
RIJRRGDQGEHVWSUDFWLFHVDVLQWKHFDVHRI2/$01LJHULD3OFLQWKHULFHVHFWRUVHH%R[
%R[)LQDQFLQJVPDOOKROGHUULFHSURGXFWLRQ²7KH2/$01LJHULD37&6FKHPH
,Q2/$0ERXJKWRQHRIWKHPDQ\XQXVHGULFHPLOOVLQWKHFRXQWU\7RJHWKHUZLWKWKH86$,'²
IXQGHGSURMHFW´0$5.(76µLWVWDUWHGDVFKHPHWRPXOWLSO\ULFHSURYLGHVHHGVIHUWLOL]HUDQGRWKHUIDUP
LQSXWVWRIDUPHUVWRDVVXUHWKHSURFXUHPHQWRIKLJKTXDOLW\ULFHZKLFKWKH\FRXOGSURFHVVLQWKHLUPLOOVLQ
RUGHUWRFRPSHWHZLWKLPSRUWHGULFH
,WJRWDORDQIURP)LVW%DQNWRILQDQFHWKHSXUFKDVHRILQSXWV7KHVFKHPHVWDUWHGZLWKIDUPHUV
\HDUV DJR DQG UHDFKHG DURXQG IDUPHUV WRGD\ 2/$0 PDQDJHG WKH DFFRXQWV RI IDUPHUV ZKR
UHFHLYHGLQSXWVIDUPHUVUHLPEXUVHGZKHQGHOLYHULQJWKHSURGXFWWRWKHIDFWRU\7KHORDQGLGXVXDOO\QRW
H[FHHG RI WKH SURGXFW YDOXH $IWHU \HDUV 2/$0 IRXQG LW WRR GLIILFXOW DQG ULVN\ WR PDQDJH
DFFRXQWVIRUVRPDQ\IDUPHUVDQGVZLWFKHGWRDV\VWHPZKHUHIDUPHUVKDGWRSD\IRULQSXWVLQFDVK
Input Advances

OLAM Farmers
Product Delivery

Credit

First Bank

:KHUHDSSOLHGVXFFHVVIXOO\RXWJURZHUVFKHPHVFDQDWWUDFWILQDQFHIURPFRPPHUFLDOEDQNVDQG
RSHQXSRSSRUWXQLWLHVIRUPRUHFUHDWLYHIXQGLQJVFKHPHVLQZKLFKIDUPHUVJHWDFFHVVWRILQDQFH
WKURXJK WKH DJURLQGXVWU\ FRPSDQ\ RU GLUHFWO\ XSRQ SURRI RI VWDEOH FRQWUDFWXDO UHODWLRQVKLSV
ZLWKDEX\HULQWKHSDVW
26
:LWK UHJDUG WR WKH VLWXDWLRQ RI LQSXWV DQG VXSSOLHV WR SULPDU\ DJULFXOWXUDO SURGXFWLRQ WKHUH
VHHPV WR EH D ELDV WRZDUG WKH GHYHORSPHQW DQG GLVVHPLQDWLRQ RI LPSURYHG FURS YDULHWLHV DQG
IHUWLOL]HU VXEVLGLHV YLD WKH VWDWH DQG GHYHORSPHQW DJHQFLHV .QRZOHGJH WHFKQRORJ\ PDUNHW
LQIUDVWUXFWXUH DQG FUHGLWV WKDW QHHG WR JR LQ KDQGZLWK LPSURYHG VHHGV DQG IHUWLOL]HU DUH PDGH
DYDLODEOHOHVVHIIHFWLYHO\WKURXJKRXWWKHFRXQWU\2YHUDOOSULPDU\DJULFXOWXUDOSURGXFWLRQPDNHV
OLPLWHG SXUFKDVHV IURP LQGXVWU\ ² IHUWLOL]HU DQG VHHGV DUH HVWLPDWHG WR EH OHVV WKDQ RI
UHTXLUHPHQWV GXH WR ODFN RI FUHGLW WR IDUPHUV DQG LQDGHTXDWH VXSSO\ DQG GLVWULEXWLRQ 3$.
3URJUDPPH
4.2.5 Resource Productivity and Environmental Performance

(QYLURQPHQWDO GHJUDGDWLRQ SHUSHWUDWHG E\ RLO FRPSDQLHV EXW DOVR E\ FDUHOHVV ODQG XVH DQG
GHVWUXFWLRQ RI QDWXUDO UHVRXUFHV VXFK DV IRUHVWV SDVWXUHV DQG HFRV\VWHPV KDV HURGHG 1LJHULD·V
UHVRXUFHEDVHQRWDEO\ODQGDQGZDWHU7KLVVLWXDWLRQLVIXUWKHUFRPSRXQGHGE\LQFHVVDQWVRFLR
HFRQRPLF FRQIOLFWV DQG UHVWLYHQHVV DPRQJ \RXQJ SHRSOH ZKLFK KDYH KDPSHUHG GHYHORSPHQW
HIIRUWVDQGVHYHUHO\FRPSURPLVHGWKHFDUHIXOXVHRIQDWXUDOUHVRXUFHVLQ1LJHULD
)HZFRQFUHWHLQYHVWPHQWRSSRUWXQLWLHVVHHPWRH[LVWLQWKHQDWXUDOUHVRXUFHVVHFWRU+RZHYHU
EDQNVPD\QHHGWREHFDUHIXOQRWWRIXQGDJULFXOWXUDOSURMHFWVZKLFKMHRSDUGL]HWKHVXVWDLQDELOLW\
RIWKHLQWHUDFWLRQLQWHUPVRIVRFLDOHFRQRPLFDQGHQYLURQPHQWDOVWDQGDUGV
4.2.6 Macro Economic and Policy Context

1RQ7DULII %DUULHUV WKDW KDYH EHHQ LQWURGXFHG E\ 1LJHULD LQ WR SURWHFW LWV DJULFXOWXUDO
VHFWRULQFOXGHEDQVIRUWKHLPSRUWVRIVRUJKXPPLOOHWDQGZKHDWIORXUSDVWDDQGELVFXLWVDVZHOO
DVIUR]HQSRXOWU\WLOOWKH\HDUDWOHDVW
*HQHUDOO\ WKH ODFN RI EDVLF LQIUDVWUXFWXUH VXFK DV URDGV WUDQVSRUWDWLRQV SRWDEOH ZDWHU
HOHFWULFLW\ FRPPXQLFDWLRQ LQKLELWV HIILFLHQF\ DQG DJULFXOWXUDO SURGXFWLRQ FDSDFLW\ LPSDLUV WKH
TXDOLW\ RI UXUDO SURGXFWV DQG LV DQ HQRUPRXV VWUDLQ RQ WKH ODERXU IRUFH 0DQ\ RI WKH UXUDO
FRPPXQLWLHVDUHVHUYHGE\GLUWWUDFNVZKLFKDUHLPSDVVDEOHGXULQJWKHZHWVHDVRQ
$UHODWHGSUREOHPLVWKHODFNRIDUHOLDEOHDQGLQH[SHQVLYHWUDQVSRUWV\VWHP:KHUHWKHWUDQVSRUW
V\VWHP LV SRRU WKH UHODWLYHO\ IHZ WUDGHUV ZKR FDQ PRYH FRPPRGLWLHV IURP UHPRWH YLOODJHV
GRPLQDWHWKHPDUNHW
6SRUDGLF DYDLODELOLW\ RI HOHFWULFLW\ IURP WKH JULG IRUFHV PDQ\ EXVLQHVVHV WR UXQ WKHLU RZQ
H[SHQVLYH SRZHU SODQWV7KLV LV DOVR WKH FDVH IRU ZDWHU VXSSO\ IRU ZKLFK PDQ\ DJUR LQGXVWULHV
UHVRUW WR VHOI SURYLVLRQLQJ EHFDXVH SXEOLF ZDWHU VXSSO\ LV QRW DYDLODEOH RU QRW UHOLDEOH IRU
LQGXVWULDOXVH
4.2.7 Availability of Finance

$YDLODELOLW\ RI ILQDQFH IRU DJULFXOWXUDO YDOXH FKDLQV LQ 1LJHULD UHIHUV WR YROXPH ² KDYLQJ DQ
DGHTXDWHDPRXQWRIILQDQFHDYDLODEOH²DVZHOODVWRGHVLJQ²KDYLQJDFFHVVWRDSSURSULDWHDQG
DIIRUGDEOHILQDQFLDODQGFRPSOHPHQWDU\SURGXFWVDQGVHUYLFHV
(IIHFWLYHO\LQFUHDVLQJWKHYROXPHRIDYDLODEOHILQDQFHUHTXLUHVFDUHIXOGHVLJQRIWKHSURGXFWVWR
PHHW WKH ILQDQFLDO QHHGV RI WKH YDULRXV FKDLQ DFWRUV 3UHVHQWO\ DOPRVW DOO VHJPHQWV RI WKH
H[DPLQHG YDOXH FKDLQV KDYH GLIILFXOWLHV LQ DFFHVVLQJ DGHTXDWH DQG VXIILFLHQW ILQDQFH IRU
LQYHVWPHQWLQWRIL[HGDVVHWVHTXLSPHQWWHFKQRORJLHVHWFDQGIRUZRUNLQJFDSLWDO
7KLVFRQVWUDLQVWKHFKRLFHVWKH\PDNHLQUXQQLQJWKHLUEXVLQHVVHVHQFRXUDJLQJWKHDGRSWLRQRI
ULVNPDQDJHPHQWVWUDWHJLHVVXFKDVDGRSWLQJORZHU\LHOGFURSYDULHWLHVGXHWRLQDELOLW\WRDFFHVV
LQSXWVZKLFKUHVXOWLQORZHUSURGXFWLYLW\DQGLPSHGHWKHGHYHORSPHQWRIWKHFKDLQ
0RVWRIWKHDGXOWSRSXODWLRQLQWKHFRXQWU\LV´XQEDQNHGµZLWKWKHSURSRUWLRQORZHVWLQUXUDO
DUHDVSHUFHQWLQUXUDODUHDVGRQRWKDYHDEDQNDFFRXQWYHUVXVSHUFHQWRYHUDOO7KHVL]H
27
RI WKH SRSXODWLRQ PDNHV WKLV D YHU\ ODUJH PDUNHW IRU ILQDQFLDO VHUYLFH SURYLGHUV WR PRYH LQWR
3UHFLVHHVWLPDWHVRIGHPDQGIRUDJULFXOWXUDOILQDQFHDUHGLIILFXOWWRILQGEXWLQGLFDWLRQVRQFUHGLW
QHHGVIURP1$&5'%·VUHFDSLWDOLVDWLRQDQGDSSOLFDWLRQVWRFRPPHUFLDOEDQNVDUHVXEVWDQWLDO
:KLOVW PLFUR DQG VPDOO HQWHUSULVHV UHTXLUH UHODWLYHO\ OLWWOH FDSLWDO LQYHVWPHQW WR VWDUW XS DV
EXVLQHVVHV H[SDQG RYHU WLPH WKH\ DWWDLQ HIIHFWLYH GHPDQG IRU ORDQV LQ UDQJH RI 1 WR
1GHSHQGLQJRQWKHDFWLYLW\ZKHUHDVORDQVVRXJKWWRFRYHUZRUNLQJFDSLWDOUHTXLUHPHQWV
JHQHUDOO\UDQJHIURP1WR1&KHPRQLFV6PDOOHUORDQVDUHDOVRLQGHPDQG
ZKLFK LV VRPHZKDW PHW E\ VXEVLGL]HG FUHGLW SURJUDPPHV DOWKRXJK WKHVH DUH PDLQO\ VXSSO\
GULYHQ
7KH VRXUFHV RI ILQDQFH DYDLODEOH WR WKH FKDLQV FDQ EH EURDGO\ GLYLGHG LQWR WKH IRUPDO DQG WKH
LQIRUPDO VHFWRUV )RUPDO VRXUFHV FRPSULVH OLFHQVHG ILQDQFLDO LQVWLWXWLRQV VXFK DV FRPPHUFLDO
EDQNV GHYHORSPHQW EDQNV LQFOXGLQJ WKH 1LJHULD $JULFXOWXUH &RRSHUDWLYH DQG 5XUDO
'HYHORSPHQW%DQN1$&5'%FRPPXQLW\EDQNVPLFURILQDQFHEDQNV0)%VILQDQFHKRXVHV
FRRSHUDWLYHV DQG 1*2V ,QIRUPDO VRXUFHV RI ILQDQFH VXFK DV IDPLO\ DQG IULHQGV EXVLQHVV
FROOHDJXHVRUSDUWQHUVFOXEVVRFLHWLHVVDYLQJVDQGORDQDVVRFLDWLRQVDQGPRQH\OHQGHUVSURYLGH
WKHEXONRIH[WHUQDOILQDQFLQJ$FFHVVWRILQDQFHDQGWRDVPDOOHUGHJUHHFRVWRIILQDQFHZHUH
IRXQG WR EH WKH VHFRQG PRVW FRQVWUDLQLQJ IDFWRU RQ EXVLQHVVHV LQ 1LJHULD DIWHU HOHFWULFLW\ ,Q
HIIHFWPRVWEXVLQHVVHVUHO\RQLQWHUQDOILQDQFLQJWKURXJKUHWDLQHGHDUQLQJVWRPHHWWKHLUQHHGV
ZLWKWKHVLWXDWLRQPRVWSURQRXQFHGIRUVPDOOHUHQWHUSULVHV2QO\DERXWSHUFHQWRI60(VDUH
HVWLPDWHGWRKDYHDFFHVVWRORDQVVHH)LJXUH
:KLOHVHYHUDOVWXGLHV)$2)5186$,'()LQ$KDYHIRXQGWKDWDVLJQLILFDQW
SURSRUWLRQ DSSUR[LPDWHO\ RQH TXDUWHU RI 1LJHULDQ EXVLQHVVHV DQG LQGLYLGXDOV XVH LQIRUPDO
VHUYLFHV WR DFFHVV ILQDQFH UHOLDEOH LQIRUPDWLRQ RQ LQIRUPDO VHUYLFHV RXWVLGH WKH EXVLQHVV
UHODWLRQVKLSV RI YDOXH FKDLQV LV VFDUFH 7KH PRVW SUHGRPLQDQW IRUP RI LQIRUPDO ILQDQFH DUH
´HVXVXµ DVVRFLDWLRQV DOVR DGDVKL RUDMR DNLQ WR LQIRUPDO JURXS OHQGLQJ VFKHPHV ZKHUHE\
PHPEHUVFRQWULEXWHDIL[HGDPRXQWSHULRGLFDOO\DQGSDUWRIWKHDFFXPXODWHGIXQGVDUHJUDQWHG
WR PHPEHUV LQ URWDWLRQ XQWLO HDFK KDV EHQHILWHG ,QIRUPDO PRQH\ OHQGHUV VDYLQJ DQG FUHGLW
DVVRFLDWLRQV FUHGLW XQLRQV FRRSHUDWLYHV DQG SURGXFHU DQG SURFHVVRUV· DVVRFLDWLRQV DUH RWKHU
VRXUFHV RI LQIRUPDO ILQDQFH 0RQH\OHQGHUV WHQG WR EH YLHZHG DV KLJKO\ H[SORLWDWLYH DV WKH\
FKDUJHKLJKWRH[RUELWDQWUDWHVRILQWHUHVWDQGRQO\RIIHUVKRUWUHSD\PHQWSHULRGV(ILQ$
7KH VDYLQJ DQG FUHGLW DVVRFLDWLRQV RSHUDWH LQ PRUH IRUPDOL]HG ZD\V DQG PD\ RU PD\ QRW EH
UHJLVWHUHG 7KH\ PRELOL]H FDSLWDO WKURXJK VKDUHV PHPEHUVKLS IHHV UHJXODU FRQWULEXWLRQV DQG
VDYLQJV DQG VRPH ERUURZ IURP IRUPDO ILQDQFLDO LQVWLWXWLRQV IRU H[DPSOH WKH FRRSHUDWLYH
ILQDQFLQJDJHQF\LQ%DXFKL+RZHYHUVDYLQJVDQGFUHGLWFRRSHUDWLYHVPXVWEHUHJLVWHUHGXQGHU
WKH&RRSHUDWLYH$VVRFLDWLRQ$FWDQGVPDOOHUFUHGLWVRFLHWLHVRIWHQFRPHWRJHWKHUWRIRUPFUHGLW
XQLRQV
7KHVRXUFHRIORDQVZKHWKHUIURPIRUPDORULQIRUPDOVRXUFHVRIWHQGHSHQGVRQWKHSXUSRVH
)RUPDOVRXUFHVDUHVHHQDVEHLQJDEOHWRSURYLGHODUJHORDQDPRXQWVDQGEDQNVDUHWKHHDVLHVWWR
DFFHVV DPRQJ WKH IRUPDO LQVWLWXWLRQV +RZHYHU RI WKH DGXOW SRSXODWLRQ RI 1LJHULD LV
FRQVLGHUHGWRQHYHUKDYHKDGDFFHVVWRIRUPDOORDQVIURP%DQN()LQ$7KHIUHTXHQWO\
FLWHGEDUULHUVWRJHWWLQJORDQVIURPEDQNVDUHKLJKFROODWHUDOGHPDQGVKLJKLQWHUHVWUDWHVFKDUJHG
EDG H[SHULHQFHV RI UHODWLYHVDVVRFLDWHV ZKR KDYH EHHQ SXUVXHG IRU IDLOXUH WR UHSD\ DQG
XQIDYRXUDEOHUHSD\PHQWWHUPV
7KHPRVWIUHTXHQWO\FLWHGEHQHILWVRILQIRUPDOILQDQFHVRXUFHVDUHWKHLUSUR[LPLW\WRXVHUVHDVH
RIDFFHVVOHVVFXPEHUVRPHPRUHWUXVWLQWKHLQVWLWXWLRQVDQGPLQLPDOLQWHUHVWFKDUJHV(ILQ$
7KHLQIRUPDOFUHGLWLQVWLWXWLRQVDUHSDWURQL]HGEHFDXVHRIWKHLUUHVSRQVHWRIDUPHU·VQHHGV
EXWORDQVJUDQWHGDUHORZDQGXQDEOHWRSURYLGHIRUKLJKHUFRVWLQYHVWPHQWVVXFKDVSURFHVVLQJ
PDFKLQHVDQGVWRUDJHIDFLOLWLHV
28
7KHUHDUHDSSUR[LPDWHO\OLFHQVHGPLFURILQDQFHEDQNV0)%VLQWKHFRXQWU\DOWKRXJKWKH\
DUH JHRJUDSKLFDOO\ FRQFHQWUDWHG LQ XUEDQ DUHDV HVSHFLDOO\ DURXQG /DJRV DQG KDYH OLPLWHG
UHOHYDQFHIRUDJULFXOWXUDOYDOXHFKDLQVHJPHQWVLQWKHUXUDODUHDV7KLVLVHVSHFLDOO\WKHFDVHLQWKH
1RUWK RI WKH FRXQWU\ ZKLFK KDV WKH ORZHVW FRQFHQWUDWLRQ RI 0)%V 7KLV LV FRPSRXQGHG E\
QHJDWLYH SHUFHSWLRQV RI 0)%V GXH WR XQSURIHVVLRQDO SUDFWLFHV RI VRPH RSHUDWRUV 7KH 0LFUR
&UHGLW )XQG 0&) ODXQFKHG LQ DQG WKH LQWURGXFWLRQ RI D 0LFURILQDQFH 'HYHORSPHQW
)XQG0')KDYH\HWWRPDNHVLJQLILFDQWLPSDFWV6FDUFHGDWDRQFRRSHUDWLYHVSURKLELWVDQDO\VLV
RI WKDW V\VWHP·V RXWUHDFK EXW LW LV JHQHUDOO\ XQGHUVWRRG WKDW FRRSHUDWLYHV DQG FUHGLW XQLRQV
FRQWLQXHWREHFDSDFLW\DQGFDSLWDOFRQVWUDLQHGOLPLWLQJWKHLUSURYLVLRQRIILQDQFLDOVHUYLFHV
)LJXUH$YDLODELOLW\RIFUHGLWWR1LJHULDQEXVLQHVV

6RXUFH:RUOG%DQN
:KLOH LQIRUPDO VRXUFHV RI ILQDQFH DUH IOH[LEOH DQG ILOO D JDS IRU DJULEXVLQHVVHV WKH\ DOVR OHDYH
WKHPLQDPRUHSUHFDULRXVILQDQFLDOVLWXDWLRQWKDWLVQRWFRQGXFLYHWRORQJWHUPGHYHORSPHQWRI
WKH FKDLQ 7KH DUJXPHQW IRU IRFXVLQJ RQ IRUPDO ILQDQFH OLHV LQ LWV HIIHFWLYHQHVV WR SURYLGH D
ZLGHUUDQJHRIVHUYLFHVDWVFDOHDQGWRRIIHUDSRROLQJRIULVNVZKLFKLQIRUPDOILQDQFHFDQQRW
)RUPDO ILQDQFLDO LQVWLWXWLRQV KDYH GLIIHUHQW DSSURDFKHV DQG WDUJHW PDUNHWV IRU OHQGLQJ ,Q
JHQHUDOODUJHUHQWHUSULVHVDUHVLJQLILFDQWO\EHWWHUSRVLWLRQHGWRDYDLORIILQDQFHIURPFRPPHUFLDO
EDQNV7KHFRQVWUDLQWVLQDFFHVVLQJILQDQFHDUHWRXJKHVWIRUGRPHVWLFILUPVZLWKH[SRUWHUVDQG
IRUHLJQILUPVKDYLQJHDVLHUDFFHVVWRILQDQFHWKHODWWHURIWHQIURPRYHUVHDVVRXUFHV
6LPLODUO\ VPDOO ILUPV FRPSODLQ PRUH RIWHQ WKDQ GR PHGLXP RU ODUJH ILUPV DQG DUH WKH PRVW
UHOLDQWRQLQWHUQDOILQDQFLQJIRUERWKVKRUWWHUPQHHGVVHH7DEOHDQGHYHQPRUHVRIRUORQJ
29
WHUP QHHGV 7KH YHU\ ORZ UHOLDQFH RQ EDQN ERUURZLQJ SHUFHQW LV VWDUN LQ LQWHUQDWLRQDO
FRPSDULVRQVSHUFHQW%UD]LOSHUFHQW,QGLDSHUFHQW6RXWK$IULFD
7DEOH6RXUFHVRIVKRUWWHUPILQDQFHLQ1LJHULDE\ILUPVL]H

6RXUFH,&$6XUYH\:RUOG%DQN
)XUWKHUPRUHPRVWVKRUWWHUPFUHGLWLVREWDLQHGIRUILQDQFLQJLPSRUWVDQGLVXVXDOO\VHFXUHGRQ
WKH VKLSPHQW SURYLGLQJ DQ H[WUD KXUGOH IRU VHJPHQWV IXUWKHU UHPRYHG IURP VXFK PDUNHWV
)RUHLJQILUPVKDYHWKHKLJKHVWUDWHRIXVHRIRYHUGUDIWVDQGOLQHVRIFUHGLWILYHWLPHVPRUHWKDQ
GRPHVWLFILUPV,WLVQRWFOHDUZKHWKHUWKLVLVEHFDXVHIRUHLJQILUPVDUHPRUHXVHGWRUHVRUWLQJWR
IRUPDO VHFWRU EDQNLQJ IDFLOLWLHV RU LI WKH\ DUH DSSURYHG PRUH RIWHQ ,Q WHUPV RI LQGXVWULHV D
SUHFLVHEUHDNGRZQLVQRWDYDLODEOHIRUWKHYDOXHFKDLQVH[DPLQHGKHUHKRZHYHUWKH,&$VXUYH\
RIILQGVWKDWIRRGPDQXIDFWXULQJKDVEHWWHUDFFHVVWRFUHGLWIURPIRUPDOVRXUFHVWKDQWKH
FRWWRQJDUPHQWV VHFWRU SHUFHQW YHUVXV OHVV WKDQ SHUFHQW IRU RYHUGUDIWV DQG SHUFHQW
YHUVXVSHUFHQWIRUOLQHVRIFUHGLW
2YHUGUDIWV XVXDOO\ DOVR UHTXLUH VHFXULW\ DQG DOWKRXJK WKH\ DUH FRQVLGHUHG VKRUWWHUP
LQVWUXPHQWV WKH\ DUH RIWHQ UROOHG RYHU UHVHPEOLQJ PHGLXPWHUP LQVWUXPHQWV 7KLV FDQ PDNH
WKHP SRSXODU IRU HIIHFWLYHO\ ILQDQFLQJ FDSLWDO DVVHWV DQG WKH SUHILQDQFLQJ RI DJULFXOWXUDO
SURGXFWLRQRIVXSSO\LQJIDUPHUV0RUHRYHUWKH VORZUHDFWLRQRIWKHODUJHEDQNVWRUHYLVHEDVH
OHQGLQJ UDWHV PDNHV WKHP DWWUDFWLYH DV VRXUFH RI FUHGLW ZKHQ UDWHV DUH ULVLQJ EXW GLVDGYDQWDJH
WKHPZKHQUDWHVDUHIDOOLQJ
6XSSOLHUFUHGLWLVDYDLODEOHIURPFRPPHUFLDOEDQNVXVXDOO\WRFRYHUWKHSHULRGEHWZHHQWKHWLPH
DQRUGHULVSODFHGDQGWKHWLPHDQLQYRLFHEHFRPHVSD\DEOH7KHVHDOVRFDQSURYLGHILQDQFLQJWR
NH\GLVWULEXWRUVRIODUJHPDQXIDFWXULQJFRPSDQLHV7KLVXVXDOO\LQYROYHVWKDWWKHEDQNSD\VWKH
PDQXIDFWXUHU DV VRRQ DV JRRGV DUH VXSSOLHG WR WKH GLVWULEXWRU DQG VXEVHTXHQWO\ UHFHLYHV
SD\PHQWIURPWKHSURFHHGVRIWKHJRRGVVXSSOLHG
/HDVLQJ VHUYLFHV DUH DYDLODEOH IURP VSHFLDOL]HG SURYLGHUV HJ & , /HDVLQJ DQG /HDVLQJ
&RPSDQ\ RI 1LJHULD ZLWK RSHUDWLRQDO OHDVHV EHLQJ PRUH FRPPRQ WKDQ ILQDQFLDO )DFWRULQJ
VHUYLFHV DUH SURYLGHG E\ D VPDOO QXPEHU RI ILQDQFH FRPSDQLHV EXW WKH SUDFWLFH LV QRW \HW
FRPPRQDQGWKHPDUNHWODFNVGHSWKDVRIQRZ7KLVW\SHRIILQDQFHLVDYDLODEOHRQDVHOHFWLYH
EDVLVDQGLQOLPLWHGTXDQWLWLHVZLWKUDWHVUHIOHFWLQJWKHERUURZHU·VFUHGLWZRUWKLQHVV
)LQDQFLDO OLWHUDF\ LV D SUREOHP IRU LPSURYLQJ DFFHVV WR ILQDQFH IRU DJULFXOWXUDO YDOXH FKDLQV
.QRZOHGJHRIILQDQFLDOVHUYLFHVLQJHQHUDOLVORZLQ1LJHULDDQGORZHVWIRUVHUYLFHVWKDWFRXOG
ZRUNZHOOIRUPRUHUXUDODQGVPDOOHUHQWUHSUHQHXUVVXFKDVPRELOHEUDQFKOHVVEDQNLQJPRELOH
WHOHSKRQH PLFURILQDQFH VHUYLFHV DQG ULVNPLWLJDWLRQ SURGXFWV VXFK DV LQVXUDQFH SHUVRQDO
VDYLQJVLVWKHPRVWZLGHO\XVHGWRROWRPLWLJDWHULVN
30
7KHODFNRIZLGHVSUHDGFRQWUDFWXDOUHODWLRQVKLSVLQVRPHRIWKHYDOXHFKDLQVHJFDVVDYDOLPLWV
WKH DELOLW\ RI FRPPHUFLDO EDQNV WR SURILWDEO\ HQWHU OHQGLQJ WR VXFK FKDLQV )RU WKHVH FKDLQV
HLWKHUVWURQJHUVSHFLDOLQFHQWLYHVZRXOGEHUHTXLUHGRURWKHUDFWRUVGUDZQXSRQVXFKDV0)%V
ZKR PD\ EH EHWWHU DEOH WR PHHW WKH ILQDQFLDO QHHGV RI VPDOOVFDOH SURGXFHUV DQG SURFHVVRUV
&RPPHUFLDO EDQNV FRXOG WKHQ EH HQWLFHG WR WDUJHW ODUJHU VFDOH FRPPHUFLDO SURGXFHUV DQG
SURFHVVRUV WR PHHW LQYHVWPHQW LQ HTXLSPHQW DQG ZRUNLQJ FDSLWDO QHHGV 3UREOHPV LQ LQSXW
PDUNHWV IRU VRXUFLQJ RI UDZ PDWHULDOV KDYH NQRFNRQ HIIHFWV RQ WKH FKDLQ WKURXJK KLJKHU
ZRUNLQJ FDSLWDO UHTXLUHPHQWV DQG ORQJHU SHULRGV WR EUHDNHYHQ RQ IL[HG LQYHVWPHQW GXH WR
RSHUDWLQJEHORZFDSDFLW\
)L[HG DVVHWV RI VPDOOHU ILUVW OHYHO SURFHVVRUV HJ FRWWRQ WHQG WR FRQVLVW RI PRYDEOH SURSHUW\
YHKLFOHVHTXLSPHQWVHWFZKLFKDUHOHVVOLNHO\WREHDFFHSWHGDVFROODWHUDOE\FRPPHUFLDOEDQNV
+RZHYHUWKHLQFUHDVLQJHPSKDVLVRQDQGUHDFKRIFUHGLWEXUHDX[LVDIDFLOLWDWLQJVWHSLQRSHQLQJ
XS OHQGLQJ RQ EDVLV RI YHULILHG FUHGLW KLVWRULHV 6HFRQGOHYHO SURFHVVLQJ WHQGV WR KDYH PRUH
LPPRYDEOHSURSHUW\ZKLFKLVPRUHDFFHSWDEOHWREDQNVDVFROODWHUDOIRUOHQGLQJ
7KHUHKDYHEHHQYDULRXVVFKHPHVODXQFKHGWRDFFHOHUDWHOHQGLQJWRDJULFXOWXUDOYDOXHFKDLQVDQG
VPDOODQGPHGLXPHQWHUSULVHVVXFKDVWKH$JULFXOWXUDO&UHGLW*XDUDQWHH6FKHPH)XQG$&*6)
WKH $JULFXOWXUDO &UHGLW 6XSSRUW 6FKHPH $&66 WKH &RPPHUFLDO $JULFXOWXUH &UHGLW 6FKHPH
&$&6 6PDOO DQG 0HGLXP 6L]HG (QWHUSULVHV &UHGLW *XDUDQWHH 6FKHPH 60(&*6 :KLOH D
GHWDLOHGDVVHVVPHQWRIWKHLULPSDFWVLVQRWDYDLODEOHLWLVFOHDUWKDWDVWUHDPOLQHGDSSURDFKWRWKH
VHFWRUKDVEHFRPHLPSHUDWLYHDQGZLWK1,56$/WKHRSSRUWXQLW\H[LVWVWREXLOGRQWKHOHVVRQV
OHDUQHGIURPHDUOLHUVFKHPHV7KHPDLQVWUHQJWK RIWKLVDSSURDFKLVWKHIRFXVRQLQFHQWLYLVLQJ
SURYLGHUVRIILQDQFHWRDJULFXOWXUDOYDOXHFKDLQVWRPDNHWKHIORZVRIIXQGVDQGVHUYLFHVWRWKLV
VHFWRUVXVWDLQDEOH$QRWKHUNH\DVSHFWLVGHVLJQLQJSURGXFWVWKDWILWZLWKWKHILQDQFLDOQHHGVRI
WKHYDOXHFKDLQVDQGWKHLUVHJPHQWVWRHQVXUHDGHPDQGUDWKHUWKDQVXSSO\GULYHQDSSURDFK
31
5. Conclusion and Recommendations
9DOXHFKDLQILQDQFHPHDQVOLQNLQJILQDQFLDOLQVWLWXWLRQVWRWKHYDOXHFKDLQDQGRIIHULQJILQDQFLDO
VHUYLFHV WR D VHW RI DFWRUV DOORZLQJ WKHP WR XSJUDGH WKHLU EXVLQHVVHV DQG EXLOG VXVWDLQDEOH
EXVLQHVV UHODWLRQVKLSV LQ WKH FKDLQ 9DOXH FKDLQ ILQDQFH KDV WZR LPSOLFDWLRQV IRU ILQDQFLDO
LQVWLWXWLRQVLWVXJJHVWVDUHYLVLRQRIWKHSUDFWLFHRIOHQGLQJWRLQGLYLGXDOEXVLQHVVWDNLQJLQWR
DFFRXQW WKH LQWHUUHODWHGQHVV RI EXVLQHVV RSHUDWLRQV LQ WKH FKDLQ DQG LW JXLGHV WRZDUGV QHZ
ZD\V RI VHFXULQJ ORDQV WR EXVLQHVVHV EH\RQG WUDGLWLRQDO FROODWHUDOV PDNLQJ XVH RI WKH IORZ RI
SURGXFW ,W SURYLGHV WUHPHQGRXV SRWHQWLDO IRU XQOHDVKLQJ H[LVWLQJ SURGXFWLRQ DQG PDUNHWLQJ
RSSRUWXQLWLHV VFDOLQJ XS RI EXVLQHVVHV DQG LPSURYLQJ SURGXFWLRQ DQG LQFRPH RI WKH PDQ\
DFWRUVWKDWDUHDQGSRWHQWLDOO\FDQEHSDUWRIWKHYDOXHFKDLQV9DOXHFKDLQILQDQFHLVUDWKHUDQHZ
FRQFHSWWRWKHIRUPDOEDQNLQJVHFWRULQ1LJHULD7KHUHIRUHDQ\ILQDQFLDOVFKHPHIRVWHULQJYDOXH
FKDLQ GHYHORSPHQW YLD WKH IRUPDO EDQNLQJ VHFWRU PXVW WDNH LQWR FRQVLGHUDWLRQ WKH QHHG WR
LQWLPDWHO\ XQGHUVWDQG EXVLQHVVHV LQ WKH DJULFXOWXUDO YDOXH FKDLQ DQG WKH LQWHUOLQNDJHV EHWZHHQ
WKHP
5.1 Choosing where to invest

*LYHQWKHHQRUPRXVQHHGIRUILQDQFHDFURVVYDOXHFKDLQVLQ1LJHULDDGHFLVLRQRQZKLFKYDOXH
FKDLQ ILQDQFLDO VXSSRUW VFKHPHV VKRXOG WDUJHW LV D GLIILFXOW WDVN 7KLV VWXG\ VXJJHVWV WKDW WKH
GHFLVLRQLVEHVWPDGHRQWKHEDVLVRILQIRUPDWLRQWKDWWDNHVLQWRDFFRXQWDWKHGHYHORSPHQW
SRWHQWLDORIDYDOXHFKDLQDQGELWVILQDQFLDOQHHGV:HKDYHSURYLGHGWKHWRROWRPDNHWKLV
GHFLVLRQ ,Q WKH HQG WKH W\SH RI ILQDQFLDO VXSSRUW D YDOXH FKDLQ DQG LWV LQGLYLGXDO DFWRUV ZLOO
UHFHLYH GHSHQGV DOVR RQ F WKH ILQDQFLDO DWWUDFWLYHQHVV RI WKH YDOXH FKDLQ EXVLQHVV
RSSRUWXQLWLHVWRWKHILQDQFLQJLQVWLWXWLRQDQGGWKHILQDQFLDOSURGXFWVDQGLQFHQWLYHVFKHPHV
DYDLODEOHWRWKHILQDQFLQJLQVWLWXWLRQV
5.2 Agricultural value chains and their financial needs

&RQFOXVLRQVRIWKHVWXG\ZLWKUHJDUGWRWKHVLWXDWLRQLQWKHYDOXHFKDLQVDQGWKHLUILQDQFLDOQHHGV
DUHVXPPDUL]HGDVIROORZV
• 7KH SRWHQWLDO IRU WKH GHYHORSPHQW RI DJULFXOWXUDO YDOXH FKDLQV LQ 1LJHULD LV VXEVWDQWLDO
DQG SURPLVLQJ 2Q RQH VLGH WKHUH DUH VXIILFLHQW QDWXUDO UHVRXUFHV ODQG ZDWHU GLYHUVH
FOLPDWHDQGODERXUDYDLODEOHIRUERRVWLQJDJULEXVLQHVVHVDQGLQFRPHV2QWKHRWKHUVLGH
WKHUHLVDODUJHGRPHVWLFPDUNHWZLWKSURPLVLQJRSSRUWXQLWLHVIRUUHJLRQDOH[SRUWPDUNHW
IRUVRPHSURGXFWFDWHJRULHVZKLFKDUHKHDYLO\XQGHUVXSSOLHGIURPGRPHVWLFSURGXFWLRQ
• 7KH YDOXH FKDLQV H[DPLQHG DUH FKDUDFWHULVHG E\ D SUHSRQGHUDQFH RI VPDOOKROGHUV DQG
UHODWLYHO\IHZSURFHVVRUVZKRHQFRXQWHUVHYHUHFKDOOHQJHVLQWKHDFTXLVLWLRQRIVXIILFLHQW
TXDOLW\UDZPDWHULDOVWKHXVHRIDSSURSULDWHDQGPRGHUQWHFKQRORJ\DQGWKHPDUNHWLQJ
RISURGXFWVJLYHQLQWHUQDWLRQDOFRPSHWLWLRQ,QPDQ\IRRGVVWDSOHVHFWRUVWKHUHDUHDOVR
PDQ\VPDOOSURFHVVLQJXQLWVWKDWHQJDJHLQPLOOLQJJULQGLQJSHHOLQJDQGRWKHURSHUDWLRQV
RISULPDU\SURFHVVLQJZLWKOLWWOHSRWHQWLDOLQYDOXHDGGLWLRQ
• 'LIIHUHQW DFWRUV LQ WKH FKDLQV H[DPLQHG DUH QRW ZHOO LQWHJUDWHG RU ZHOO FRRUGLQDWHG
7KHUHDUHVRPHH[SHULHQFHVZLWKRXWJURZHUVFKHPHVDQGFRQWUDFWIDUPLQJ7KHVHKDYH
ZRUNHGZHOORQO\LQYDOXHFKDLQVZLWKEX\HUPRQRSROLHV7KHUHDUHIHZOHDGILUPVWKDW
SURPRWH LPSURYLQJ WKH RSHUDWLRQV RI WKHLU EX\HUV DQG VXSSOLHUV 2WKHU IRUPV RIYDOXH
FKDLQ FRRUGLQDWLRQ DQG VHOIRUJDQL]DWLRQ RI DFWRUV DUH UDUH DQG OLPLWHG WR WKH QHZ
LQLWLDWLYHVOLNHWKH&RPPHUFLDO$JULFXOWXUH6RPHSDUWVRIWKHYDOXHFKDLQVUHFHLYHGLUHFW
VXSSRUW IURP JRYHUQPHQW HJ VXEVLGL]HG IHUWLOL]HU +RZHYHU WKHUH LV YLUWXDOO\ QR
JRYHUQPHQWVXSSRUWWRYDOXHFKDLQFRRUGLQDWLRQ
32
• 7KHUH DUH PDQ\ GHYHORSPHQW SURJUDPPHV WKDW VXSSRUW YDOXH FKDLQ GHYHORSPHQW DQG
SDUWO\ DOVR GHDOZLWK WKH LVVXH RI ILQDQFH +RZHYHU WKH W\SH RI ILQDQFH WKH\ SURYLGH LV
QRWVXIILFLHQWWRFRYHUQHHGVRIWKHHQWLUHYDOXHFKDLQ
• )LQDQFLDOQHHGVDUHSDUWLFXODUO\DFXWHIRUIDUPHUVZKRQHHGWREX\VHHGVIHUWLOL]HURWKHU
LQSXWV DQG EHDU WKH FRVWV RI ODQG SUHSDUDWLRQ FURSSLQJ KDUYHVWLQJ WUDQVSRUW HWF
)DUPHUVFDQJHWDFFHVVWRILQDQFHGLUHFWO\WKURXJKUHODWLRQVKLSVZLWKPRQH\OHQGHUVDQG
ILQDQFLDO LQVWLWXWLRQV DQG LQGLUHFWO\ WKURXJK LQSXW VXSSOLHUV JUDQWLQJ GHOD\HG SD\PHQW
DQG WKURXJK EX\HUV JUDQWLQJ DGYDQFHG SD\PHQW RU LQNLQG GLVWULEXWLRQ RI LQSXWV $W
EHVWIDUPHUVKDYHDFFHVVWRDFRPELQDWLRQRIWKRVHIXQGLQJVRXUFHVEXWWKHWRWDODPRXQW
RI ILQDQFH DYDLODEOH LV UDUHO\ VXIILFLHQW WR DOORZ IDUPHUV RSHUDWH WKHLU EXVLQHVVHV
SURILWDEO\)LQDQFHLVDPDMRUERWWOHQHFNIRULPSURYHGIDUPHULQFRPH
• 7KH H[LVWLQJ ILQDQFLDO SURGXFWV DUH WDLORUHG WR QHHGV IRU HTXLSPHQW DQG VKRUWWHUP
ZRUNLQJ FDSLWDO +RZHYHU WKH\ DUH LOOILWWHG WR SURYLGH PRQH\ WR DJULFXOWXUDO SURGXFHUV
WKDWQHHGWRILQDQFHWKHHQWLUHF\FOHRIDJULFXOWXUHSURGXFWLRQZKLFKFDQWDNHXSWRRQH
\HDUIRUDQQXDOFURSVRUPRUHIRUSHUHQQLDOVDQGOLYHVWRFN)DUPHUVDQGWKLVLVQRWRQO\
QHZV IURP WKLV UHSRUW KDYH WHUULEOH GLIILFXOWLHV LQ REWDLQLQJ FUHGLW DV WKH\ FDQQRW
SURYLGHFROODWHUDOVWKDWVDWLVI\IRUPDOILQDQFLDOLQVWLWXWLRQV
• 7KHUHDUHPDQ\VPDOODJULEXVLQHVVHVHQJDJLQJLQWKHSULPDU\SURFHVVLQJRIIRRGVWDSOHV
DQGRSHUDWLQJRQORZSURILWPDUJLQVOLNHFDVVDYDFHUHDOVHWF7KHVHEXVLQHVVHVFDQEH
LPSURYHG WKURXJK WHFKQRORJLFDO XSJUDGLQJ DQG RUJDQL]DWLRQ 7KLV UHTXLUHV OLPLWHG
DPRXQWVRIILQDQFHZKLFKWKH\RIWHQILQGGLIILFXOWWRJHW
• )LQDQFLDO QHHGV DOVR H[LVW DW WKH OHYHO RI PHGLXP WR ODUJH DJURSURFHVVLQJ XQLWV ZKR
GHVSLWH RIWHQ KDYLQJ VXIILFLHQW FDSDFLWLHV QHHG HTXLSPHQW ORDQV WR XSJUDGH WKH
WHFKQRORJ\ DQG PDWFK TXDOLW\ RI FRPSHWLWRUV RQ WKH PDUNHW /RQJWHUP ORDQV IRU
HTXLSPHQW DQG PDFKLQHU\ DUH GLIILFXOW WR JHW IURP EDQNV $JURSURFHVVRUV RIWHQ DOVR
QHHGWRSUHILQDQFHDJULFXOWXUDOSURGXFWLRQRIWKHLUVXSSOLHUVWKLVFUHGLWOLQHXVXDOO\IRU
RQH \HDU LV RIWHQ QRW DYDLODEOH 6RPH SURFHVVRUV KDYH WKHUHIRUH RSWHG WR HQJDJH RQ
WKHLURZQLQSULPDU\SURGXFWLRQUHTXLULQJVXEVWDQWLDOILQDQFHIRUODQGSUHSDUDWLRQWUHH
SODQWLQJHWF
• 2WKHU SDUWV RI WKH YDOXH FKDLQ DOVR QHHG ILQDQFH EXW WKHLU QHHGV DUH OHVV DFXWH )RU
H[DPSOH WUDQVSRUWHUV WUDGHUV DQG VWRUDJH SURYLGHUV RIWHQ RSHUDWH WKHLU EXVLQHVVHV LQ
DIILOLDWLRQ WR ODUJHU EX\HUV RU LQSXW SURYLGHUV DQG PD\ UHFHLYH ILQDQFH IURP WKHP ,Q
FDVHV ZKHUH WKH\ RSHUDWH LQGHSHQGHQWO\ WKH\ QHHG ILQDQFLQJ IRU ZRUNLQJ FDSLWDO DQG
HTXLSPHQW 7KH VDPH DSSOLHV WR ZKROHVDOHUV DQG UHWDLOHUV 7KH LQSXW LQGXVWU\ DQG WKH
H[SRUWHUV DSSHDU WR KDYH EHWWHU DFFHVV WR ILQDQFH LQFOXGLQJ WKURXJK LQWHUQDWLRQDO
PDUNHWV
5.3 Designing Value Chain Finance Support

7KHVWXG\DOVRSURYLGHVWKHEDVLVIRUVRPHJHQHUDOUHFRPPHQGDWLRQVZKLFKVKRXOGEHWDNHQLQWR
DFFRXQWLQWKHGHVLJQRIDQ\YDOXHFKDLQILQDQFHVXSSRUWVFKHPHLQFOXGLQJ1,56$/
$ ZLGH UDQJH RI LQQRYDWLYH ILQDQFLDO SURGXFWV DQG VHUYLFHV LV UHTXLUHG WR UHDFK FKDLQ
DFWRUV VXFK DV SURGXFHUV WUDGHUV SURFHVVRUV DQG DJULFRPSDQLHV 6RPH RI WKHVH
SURGXFWVLQFOXGHRYHUGUDIWVIL[HGDVVHWORDQVIDFWRULQJDQGOHDVLQJDVZHOODVLQYHVWPHQW
ORDQV JXDUDQWHHV LQVXUDQFH HWF 7KHUH DUH DOVR D QXPEHU RI ILQDQFLDO SURGXFWV DQG
PHWKRGV WKDW DUH SDUWLFXODUO\ DGDSWHG WR YDOXH FKDLQ ILQDQFH VXFK DV WKLUG SDUW\
JXDUDQWHHVVHFXULQJORDQVXSRQFDVKIORZUHFRUGVDQGFDVFDGHILQDQFLQJ7KHVXLWDELOLW\
RIWKHVHGHSHQGVRQWKHW\SHRIYDOXHFKDLQDQGWKHSDUWLFXODUVHJPHQWLQWKHYDOXHFKDLQ
WREHWDUJHWHG
33
/HQGLQJ WR DFWRUV LQ DJULFXOWXUDOYDOXH FKDLQV UHTXLUHV D WKRURXJK XQGHUVWDQGLQJ RI WKH
YDOXHFKDLQDQGFDUHIXOLGHQWLILFDWLRQRIQHHGVDQGRSSRUWXQLWLHVRQWKHGLIIHUHQWOHYHOV
RI WKH FKDLQ 3URYLGLQJ ODUJHVFDOH ORDQV WR D IHZHYHQWXDOO\ SURPLVLQJ DJURSURFHVVLQJ
XQLWVZLOOQRWUHQGHUTXLFNZLQVLIWKHUHVWRIWKHYDOXHFKDLQLVQRWUHFHLYLQJQHFHVVDU\
VXSSRUWDVZHOO3DUWLFXODUO\SRVLWLYHHIIHFWVRQLQFRPHVDQGSRYHUW\FDQQRWEHDFKLHYHG
E\ORRNLQJDWSURFHVVLQJRSHUDWLRQVDORQH
,Q JHQHUDO UXUDO DUHDV LQ 1LJHULD DUH FKDUDFWHUL]HG E\ WKH ODFN RI IRUPDO ILQDQFLDO
LQVWLWXWLRQV SDUWLFXODUO\ FRPPHUFLDO EDQNV 7KLV QHJDWLYHO\ DIIHFWV WKRVH VHJPHQWV RI
DJULFXOWXUDO YDOXH FKDLQV WKDW DUH ORFDWHG LQ UXUDO DUHDV $Q\ ILQDQFLDO VFKHPH IRVWHULQJ
DJULFXOWXUDO YDOXH FKDLQ GHYHORSPHQW QHHGV WR WDNH LQWR FRQVLGHUDWLRQ KRZ LW DGGUHVVHV
WKH QHHGV RI DFWRUV ORFDWHG LQ UXUDO DUHDV ,Q FDVH FRPPHUFLDO EDQNV DUH QRW SUHVHQW
DOWHUQDWLYH LQVWLWXWLRQV PXVW EH LGHQWLILHG HJ FRPPXQLW\ EDQNV UXUDO PLFURFUHGLW
LQVWLWXWLRQVDQGRWKHUV
7KHUH LV D QHHG WR EXLOG YHUWLFDO OLQNDJHV LQ WKH ILQDQFLDO VHFWRU WR SURYLGH VXIILFLHQWO\
FRPSUHKHQVLYH ILQDQFLDO VHUYLFHV WR YDOXH FKDLQV )RU H[DPSOH SURYLVLRQ RI DQ
LQYHVWPHQW ORDQ WR D SURFHVVLQJ FRPSDQ\ SURSRVHV FROODERUDWLRQ ZLWK PLFURILQDQFH
LQVWLWXWLRQV WR SURYLGH LQSXW ORDQV WR SURGXFHUV 7KH PLFURILQDQFH LQVWLWXWLRQV DJUR
LQVXUDQFH SURYLGHUV DQG EDQNV QHHG WR OLQN XS WR DOLJQ WKHLU VHUYLFHV LQ D YDOXH FKDLQ
FRQWH[W
,QWKHGHVLJQRIDQ\YDOXHFKDLQILQDQFHVXSSRUWVFKHPHRQHQHHGVWREHDZDUHRIWKH
H[LVWLQJIRUPVRIIRUPDODQGLQIRUPDOILQDQFHSURYLVLRQLQVSHFLILFYDOXHFKDLQV'HVSLWH
WKH IDFW WKDW ILQDQFH WR YDOXH FKDLQ DFWRUV LV FRPPRQO\ VFDUFH DQG LQVXIILFLHQW WKH
H[LVWLQJ IRUPDO DQG LQIRUPDO ILQDQFLDO PHFKDQLVPV PD\ FRPSOHPHQW DQ\ DGGLWLRQDO
VXSSRUWVFKHPH$WWLPHVWKH\DOVRFDQFRQIOLFWZLWKWKHPZKHQLWFRPHVWRJXDUDQWHHV
DQGFROODWHUDOV
)LQDQFH LV RQO\ RQH FRQGLWLRQ IRU EXVLQHVVHV LQ WKH YDOXH FKDLQ WR EH SURILWDEOH
&RPSOHPHQWDU\FRQGLWLRQVUHODWHWRH[LVWLQJDQGSRWHQWLDOPDUNHWVVXSSOLHVWHFKQRORJ\
DVZHOODVKRUL]RQWDODQGYHUWLFDOLQWHJUDWLRQDPRQJFKDLQDFWRUVFKDLQJRYHUQDQFHDQG
WKHSROLF\DQGVHUYLFHHQYLURQPHQW7KRVHKDYHWREHDFFXUDWHO\UHIOHFWHGLQDQ\DQDO\VLV
RI ILQDQFLDO DWWUDFWLYHQHVV )XUWKHU SURYLGLQJ ILQDQFH DORQH ZLWKRXW DGHTXDWH WHFKQLFDO
DVVLVWDQFH DQG LQ D FRPPRGLW\ FKDLQ ZLOO QRW HQKDQFH SURGXFWLYLW\ DQG OHDG WR PRUH
SURILWDEOH FRPSHWLWLYH EXVLQHVVHV %XVLQHVVHV DORQJ WKH FKDLQ QHHG DFFHVV WR EXVLQHVV
SODQQLQJ WHFKQRORJLFDO XSJUDGLQJ DQG PDUNHW GHYHORSPHQW DQG H[SDQVLRQ VWUDWHJLHV
7KH\DOVRQHHGDVVLVWDQFHLQWKHDUHDVRIPDQDJHPHQWWUDLQLQJILQDQFLDOV\VWHPVHWF
7KHUHDUHPDQ\GHYHORSPHQWSURJUDPPHVWKDWSURPRWHWKHGHYHORSPHQWRIDJULFXOWXUDO
YDOXHFKDLQVLQWKHFRXQWU\0DQ\RIWKHVHSURJUDPPHVKDYHIRFXVHGSDUWO\RQILQDQFH
LVVXHV DQG GHYHORSHG VRPH VXFFHVVIXO PRGHOV RI ILQDQFH %DQNV FDQ FROODERUDWH ZLWK
WKHVHSURJUDPPHVEHQHILWLQJIURPWKHLUNQRZOHGJHDQGH[SHUWLVHUHJDUGLQJWKHVLWXDWLRQ
LQ SDUWLFXODU YDOXH FKDLQV 7KLV PD\ FRQVWLWXWH D ILHOG ZKHUH ´TXLFN ZLQVµ FDQ EH
DFKLHYHG
0RVW RI WKH FRPPHUFLDO EDQNV DUH QRW HQJDJHG LQ DJULFXOWXUDO OHQGLQJ DQG H[LVWLQJ
VFKHPHVWRHQFRXUDJHWKHPWRGRVRKDYHEHHQOHVVHIIHFWLYH7KLVUDLVHVWZRTXHVWLRQV
ZKHWKHU RU QRW FRPPHUFLDO EDQNV KDYH D FRPSDUDWLYH DGYDQWDJH RYHU RWKHU ILQDQFLDO
LQVWLWXWLRQV VXFK DV '),V 1$&5'% %2, DQG ZKLFK LQFHQWLYHV ZRXOG EH UHTXLUHG
DQG DW ZKDW FRVW WR HQWLFH FRPPHUFLDO EDQNV WR SDUWLFLSDWH LQ DJULFXOWXUDOYDOXH FKDLQ
ILQDQFLQJ"
34
Annex: Diagnostics of Value Chains
7KLV DQQH[ SURYLGHV LQIRUPDWLRQ RQ WKH OHYHO RI GHYHORSPHQW DQG WKH QHHG IRU ILQDQFH LQ
VHOHFWHGSURPLVLQJDJULFXOWXUDOYDOXHFKDLQVLQ1LJHULD
A.1 Cassava
&DVVDYD LV D PDMRU VWDSOH FURS LQ 1LJHULD DQG FRQVXPSWLRQ FXWV DFURVV DOO UHJLRQV DQG LQFRPH
VWUDWD,QWHUPVRISURGXFWLRQFDVVDYDLVWKHVHFRQGPRVWLPSRUWDQWDJULFXOWXUDOFRPPRGLW\LQ
1LJHULDDIWHU\DP
Mapping the chain

0DLQ DFWRUV LQ WKH FKDLQ LQFOXGH SURYLGHUV RI IHUWLOL]HU VPDOO WR PHGLXP VFDOH IDUPHUV
SURFHVVRUV UHWDLOHUV DQG WR OLPLWHG GHJUHH LQGXVWULHV WKDW HQJDJH LQ WKH SURGXFWLRQ RI DQLPDO
IHHGVIORXUIRUEDNLQJEUHZLQJDQGSKDUPDFHXWLFDOXVHVWDUFKSURGXFWLRQIRULQGXVWULDOXVHDQG
JOXFRVHSURGXFWLRQ3URFHVVLQJRIIUHVKFDVVDYDWRJDULDQGIXIXE\VPDOOVFDOHSURFHVVRUVLVWKH
PRVWLPSRUWDQWSURFHVVLQJDFWLYLW\7KLVVHFWRUVWLOODEVRUEVPRUHWKDQRIWKHWRWDOFDVVDYD
SURGXFWLRQRIWKHFRXQWU\
)LJXUH$SURYLGHVDQRYHUYLHZRQPDLQVHJPHQWVRIWKHFDVVDYDYDOXHFKDLQ,QDGGLWLRQRQH
PD\ DOVR FRQVLGHU DFWRUV LQ WKH LQSXW LQGXVWU\ DQG GLIIHUHQW VHUYLFHV VXFK DV WUDQVSRUW DQG
WUDGLQJ 3ULYDWH VHUYLFH SURYLGHUV LQFOXGH PLGGOHPHQ WUDGHUV DQG WUDQVSRUWHUV VXSSOLHUV RI
SURFHVVLQJHTXLSPHQWVXSSOLHUVRISDFNDJLQJPDWHULDOVDQGWRDOLPLWHGGHJUHHILQDQFLDOVHUYLFH
SURYLGHUV 3XEOLF DQG GHYHORSPHQW FRRSHUDWLRQ VXSSRUW LV DOVR SURYLGHG RQ EHKDOI RI UHVHDUFK
DQGH[WHQVLRQDJHQFLHVPRVWRIZKLFKIRFXVRQSULPDU\SURGXFWLRQDQGVPDOOVFDOHSURFHVVLQJ
)LJXUH$0DSRI&DVVDYD9DOXH&KDLQLQ1LJHULD

6RXUFH0DUNHWV
Primary Production and Sourcing of Inputs

&DVVDYD LV D PDMRU VWDUFKSURYLGLQJ IRRG VWDSOH LQ 1LJHULD JURZQ E\ VPDOOKROGHU IDUPHUV ,Q
DGGLWLRQWRWKHURRWWKHOHDYHVRIWKHFDVVDYDSODQWDUHHGLEOHDQGULFKLQSURWHLQ&DVVDYDJURZV
LQSRRUVRLOVLVGURXJKWWROHUDQWDQGFDQEHLQWHUFURSSHGZLWKRWKHUFURSV7UDGLWLRQDOFDVVDYD
EDVHGIDUPLQJV\VWHPVDUHFKDUDFWHUL]HGE\YLUWXDOO\QRXVHRISXUFKDVHGLQSXWVXFKDVIHUWLOL]HUV
KHUELFLGHVSHVWLFLGHVDQGLPSURYHGVHHGPDWHULDO
35
+RZHYHULQWHQVLILFDWLRQWKURXJKZHHGLQJXVHRIIHUWLOL]HUVDQGDJURFKHPLFDOVDVZHOODVWKHXVH
RI LPSURYHG SODQWLQJ PDWHULDOV FDQ LQFUHDVH WKH \LHOG VXEVWDQWLDOO\ XS WR WRQV SHU KD DQG
PRUH&DVVDYDLVYHJHWDWLYHO\SURSDJDWHG(DFKSODQWSURYLGHVPXOWLSOHFXWWLQJVDQGVFKHPHVRI
UDSLG PXOWLSOLFDWLRQ WKDWKDYH EHHQ DOUHDG\ LQWURGXFHG LQYDULRXV UHJLRQV RI 1LJHULD +RZHYHU
SURSDJDWLRQUDWHVDUHVWLOOORZLQFRPSDULVRQZLWKVHHGEDVHGSURSDJDWLRQ
7KH SURGXFWLRQ RI FDVVDYD VWDJQDWHV DW D OHYHO ZKHUH LW LV KDUGO\ DEOH WR PHHW WKH QDWLRQDO
GHPDQG 3DUWLFXODUO\ WKH FDVVDYD SURFHVVLQJ LQGXVWU\ LV QRW DEOH WR SURFXUH VXIILFLHQW SULPDU\
SURGXFWV /LPLWHG SURGXFWLRQ LV SDUWO\ GXH WR WKH ODFN RI SURILWDELOLW\ RI WKH WUDGLWLRQDO
SURGXFWLRQV\VWHPV/DFNRISURILWDELOLW\LQFDVVDYDSURGXFWLRQKDVEHHQDWWULEXWHGLQSDUWVWR
L KLJK ODERXU FRVW LQ SURGXFWLRQ LL KLJK FRVW RI FDVVDYD KDUYHVWLQJ DQG WUDQVSRUW DQG LLL
XQUHOLDEOHVXSSO\DQGKLJKFRVWRIXWLOLWLHV2ORPROD
6XLWDEOH NQRZOHGJH DQG WHFKQRORJ\ WR UHQGHU FDVVDYD SURGXFWLRQ DPRQJ VPDOO VFDOH IDUPHUV
PRUHSURILWDEOHRFFXUVWREHUHDGLO\DYDLODEOHIURPYDULRXVVRXUFHVRIUHVHDUFKEXWGLIIXVLRQDQG
LPSOHPHQWDWLRQRILWVHHPVWREHKDPSHUHGE\DQLQHIILFLHQWH[WHQVLRQV\VWHPODFNRIILQDQFH
DQG SUREOHPV RI IDUPHU·V DFFHVVLQJ EX\HUV DQG PDUNHWV 3UHVLGHQWLDO ,QLWLDWLYH RQ &DVVDYD
5HSRUWV7KH3UHVLGHQWLDO,QLWLDWLYHRQ&DVVDYDVHWXSLQFRQVWLWXWHGDPDMRUHIIRUW
WR EXLOG XS WKH GRPHVWLF SURGXFWLYH FDSDFLW\ 7KH LQLWLDWLYH IRFXVHG RQ SURYLGLQJ SODQWLQJ
PDWHULDODQGIHUWLOL]HUWRIDUPHUV+RZHYHUPDQ\VPDOOVFDOHIDUPHUVKDYHVWUXJJOHGWREHQHILW
IURP WKH VFKHPH HYHQWXDOO\ WHPSRUDO DYDLODELOLW\ RI LQSXWV FRXOG QRW PDNH XS IRU VWUXFWXUDO
GHILFLHQFLHVUHJDUGLQJWKHDFFHVVWRPDUNHWVDQGILQDQFH
+RZHYHU WKH VHFWRU KDV H[SHULHQFHG WKH HPHUJHQFH RI ODUJHVFDOH IDUPLQJ RI FDVVDYD E\
FRPPHUFLDOIDUPHUV3URILWDELOLW\RIVXFKIDUPRSHUDWLRQVVHHPVWREHUDWKHUKLJKDOWKRXJKWKH
FRVWVFRQVLVWLQJODUJHO\RIGHSUHFLDWLRQRIIL[HGDVVHWVQRQODERXULQSXWVVXFKDVVHHGVIHUWLOL]HU
DQG FKHPLFDOV DQG KLUHG ODERXU DUH TXLWH VXEVWDQWLDO DQG FDQQRW EH ERUQH ZLWKRXW DGGLWLRQDO
ILQDQFH $OVR WKH WHFKQLFDO DQG RSHUDWLRQDO FDSDFLW\ UHTXLUHG IRU VXFK W\SH RI ODUJH HVWDWH
SURGXFWLRQ LV QRW LQKHUHQWO\ DYDLODEOH DPRQJ HQWUHSUHQHXUV WUDGLWLRQDOO\ HQJDJHG LQ SURFHVVLQJ
DQGVDOHV
Processing Capacity and Technology

7KRXJKFDVVDYDFDQEHOHIWRQWKHILHOGXQKDUYHVWHGIRUDORQJWLPHRQFHKDUYHVWHGWKHURRWV
DUH VXVFHSWLEOH WR SK\VLRORJLFDO GHWHULRUDWLRQ 5RRWV DIWHU KRXUV KDYH OLWWOH PDUNHW YDOXH
OLPLWLQJ WKH UDQJH RYHU ZKLFK IUHVK URRWV FDQ EH PDUNHWHG 'HWHULRUDWLRQ FDQ EH GHOD\HG E\
ZD[LQJRUVWRUDJHLQSODVWLFEDJVIROORZLQJDIXQJLFLGDOWUHDWPHQW
&DVVDYDFRQWDLQVXSWRRIZDWHU7KHEXONLQHVVRIIUHVKFDVVDYDSOXVWKHFRVWVIRUORDGLQJ
DQG XQORDGLQJ PDNHV LW GLIILFXOW WR WUDQVSRUW RYHU D ORQJHU GLVWDQFH &DVVDYD·V EXON LV
VXEVWDQWLDOO\UHGXFHGZKHQSURFHVVHG3URFHVVLQJDOVRLQFUHDVHVVKHOIOLIH
0RVWFDVVDYDLQ1LJHULDLVSURFHVVHGLQWKHVRFDOOHGÍUHVKFDVVDYDYDOXHFKDLQµE\LQIRUPDORIWHQ
DUWLVDQDOVPDOOVFDOHSURFHVVLQJXQLWVZKLFKWUDQVIRUPIUHVKFDVVDYDLQWRSURGXFWVVXFKDVJDUL
DQG IXIX 7KLV VHFWRU PD\ DFFRXQW IRU PRUH WKDQ RI WKH DFWXDO SURFHVVLQJ FDSDFLW\ )RU
ÍUHVK FDVVDYD SURFHVVLQJµ WKH URRWV PXVW EH SHHOHG FKLSSHG VRDNHGIHUPHQWHG GULHG DQG
VRPHWLPHVJUDWHG)UHVKFDVVDYDSURFHVVLQJLVODERXULQWHQVLYHDQGWLPHFRQVXPLQJ6DQQLHWDO
3HHOLQJUHSUHVHQWVWKHPRVWODERXULQWHQVLYHRSHUDWLRQQRQPHFKDQL]HGDQGWUDGLWLRQDOO\
GRQHE\ZRPHQDQGVRPHWLPHVFKLOGUHQ6WRUDJHVSDFHIRUIUHVKDQGSURFHVVHGFDVVDYDLVRIWHQ
VFDUFHDQGRUQRWDGHTXDWH2YHUDOOWKHUHLVDVWURQJQHHGIRUPHFKDQL]DWLRQLQRUGHUWRUHGXFH
ODERXUFRVWV7KHDEVHQFHRIHTXLSPHQWLVDPDMRUFRQVWUDLQWWRIXUWKHUPHFKDQL]DWLRQRIFDVVDYD
SURFHVVLQJ 6RPH RI WKH SURFHVVLQJ HTXLSPHQW QHHGHG IRU FDVVDYD SURFHVVLQJ LQFOXGH SHHOHUV
ZDVKHUVJUDWHUVDQGFKLSSHUVH[WUDFWRUVSUHVVHUVVLIWHUVGU\HUVFRQYH\RUVFRRNHUVDQGERLOHUV
6DQQLHWDO)LQDQFHIRUWKHSXUFKDVHRIVXFKHTXLSPHQWLVRIWHQQRWDYDLODEOH$OOWKHVH
IDFWRUVFRQWULEXWHWRWKHIDFWWKDWPDQ\LIQRWPRVWFDVVDYDSURFHVVLQJXQLWVRSHUDWHZLWKQRRU
RQO\PDUJLQDOSURILWDELOLW\6DQQLHWDO
36
7KH VR FDOOHG ´GU\ FDVVDYD YDOXH FKDLQµ SURFHVVHV FDVVDYD LQWR IORXU DQG VWDUFK DQG IXUWKHU LQWR
LQGXVWULDOSURGXFWVVXFKDVIHHGVWXIIIORXUVWDUFKDQGJOXFRVH$GGLWLRQDOWUDQVIRUPDWLRQDOORZV
IRUWKHSURGXFWLRQRIHWKDQROZKLFKODWHO\LVSLFNLQJXSRQO\OLPLWHGE\WKHORZSULFHVIRUIXHOLQ
WKH FRXQWU\ 8VXDOO\ WKH LQGXVWU\ PDNHV XVH RI PRUH VRSKLVWLFDWHG DQG ODUJHUVFDOH SURFHVVLQJ
HTXLSPHQW VXFK DV GLVWLOOHUV DGKHVLYH UHDFWRUV IHUPHQWHUV IU\HUV SHOOHWL]HUV SDFNDJLQJ
PDFKLQHV DV ZHOO DV JULQGHUV DQG PLOOHUV 6DQQL HW DO $ QXPEHU RI LQGXVWULDO FDVVDYD
SURFHVVLQJSODQWVKDYHDOUHDG\EHHQVHWXSLQFOXGLQJ(.+$ZKLFKSURGXFHVJOXFRVHV\UXSDQG
160 DQG 0$71$ ZKLFK SURGXFH VWDUFK $OO RI WKHP RSHUDWH EHORZ WKHLU FDSDFLWLHV DV WKH\
KDYH QRW EHHQ DEOH WR DFKLHYH FRQWLQXRXV VXSSO\ RI UDZ PDWHULDOV 7KH SHULVKDELOLW\ DQG
EXONLQHVVRIIUHVKFDVVDYDUHTXLUHVWKDWWKHVHLQGXVWULHVEHORFDWHGFORVHWRSURGXFWLRQFHQWUHVRU
LQYLOODJHV+RZHYHULQGXVWU\VWLOOQHHGVWRVROYHSUREOHPVLQSURFXUHPHQWRISULPDU\SURGXFWV
DQG UHODWLRQVKLSV ZLWK VXSSOLHUV ZKLOH DOVR LQFUHDVLQJ HIILFLHQF\ WKURXJK EHWWHU HTXLSPHQW
WHFKQRORJ\DQGNQRZKRZ2PRORODILQGVWKDWEXVLQHVVLQVWDUFKSURFHVVLQJRSHUDWHZLWK
EDUHO\HQRXJKUHYHQXHVWRFRYHUWKHFRVWVRISURGXFWLRQOHWDORQHFRVWVRIFDSLWDOUHPXQHUDWLRQ
&RQVHTXHQWO\ QR SURILW LV UHDOL]HG 0DMRU FRQVWUDLQWV WR SURFHVVLQJ DUH HTXLSPHQW UHODWHG
ILQDQFH ORZ SURILW URDG WUDQVSRUWDWLRQ GLIILFXOWLHV LQVXIILFLHQW VXSSO\ RI FDVVDYD URRWV KLJK
FRVWVRISURGXFWLRQDQGORZGHPDQGIRUFDVVDYDSURGXFWV'XHWRWKHVHUHDVRQVVRPHLQGXVWULDO
SURFHVVRUVLQ1LJHULDKDYHDOUHDG\VZLWFKHGRYHUWRJDULSURFHVVLQJZKHUHGHPDQGLVKLJK
End-Markets and Trade

(QGSURGXFWV &DVVDYD SURGXFWV LQ 1LJHULD DUH FRPPRQ DQG GLYHUVH 7KH\ LQFOXGH $EDFKD
VOLFHG SLHFHV RI FRRNHG FDVVDYD FKLSV IORXU IXIX IHUPHQWHG ZHWSDVWH *DUL IHUPHQWHG
JUDQXODU IORXU SHOOHWV VWDUFK DQG WDSLRFD JHODWLQL]HG GULHG FDVVDYD VWDUFK (]HGLQPD HW DO
3KLOLSHWDO3URGXFWVWKDWJRWKURXJKIXUWKHUWUDQVIRUPDWLRQXVXDOO\RQWKHEDVLVRI
VWDUFKRUSHOOHWVLQFOXGHJOXHVDQGDGKHVLYHVEUHDGH[WHQGHUVWKLFNHQLQJDQGERG\LQJDJHQWVLQ
IRRGSURFHVVLQJODXQGU\VWDUFKDOFRKROSDSHUVL]LQJDQGERQGLQJDVZHOODVWH[WLOHVL]LQJDQG
VWUHQJWKHQLQJ 5RRW SHHO SHOOHWV WDSLRFD DQG EURNHQ URRWV DUH DOVR XVHG DV IHHGVWXII IRU
OLYHVWRFN)XUWKHUKLJKTXDOLW\FDVVDYDIORXU+4&)FDQEHXVHGXSWRSHUFHQWDQGPRUHDVD
VXEVWLWXWHIRUZKHDWIORXULQEUHDGDQGRWKHUZKHDWEDVHGSURGXFWV
(QGPDUNHWV*UHDWLPEDODQFHVFRQWLQXHWRH[LVWEHWZHHQWKHGHPDQGDQGVXSSO\RIFDVVDYDLQ
1LJHULD 7KH GHPDQG IRU SURGXFWV IURP FDVVDYD SURFHVVLQJ ODUJHO\ H[FHHGV WKH VXSSO\ 7KH
DEVHQFHRIDSSURSULDWHPDUNHWOLQNVDQGRXWOHWVIRUFDVVDYDSURGXFWVLVDSDUWLFXODUFRQVWUDLQWWR
IXUWKHUGHYHORSPHQWRIWKHYDOXHFKDLQ:KLOHLQGXVWULDOGHPDQGIRUFDVVDYDEDVHGSURGXFWVLV
VWLOOORZDQGGRHVQRWSURYLGHHQRXJKLQFHQWLYHVIRULQFUHDVHVLQFDVVDYDSURGXFWLRQWKHEXONRI
WKHSURGXFWLVVROGWRVPDOOWUDGHUVRUGLUHFWO\WRORFDOKRXVHKROGV&RPPXQLWLHVWKDWWKULYHLQ
FDVVDYD SURGXFWLRQ DQG SURFHVVLQJ DUH XVXDOO\ ORFDWHG FORVH WR PDUNHW SODFHV ZKHUH WKH\ FDQ
HIILFLHQWO\ VHOO FDVVDYD SURGXFWV &HUWDLQ URDGVLGH PDUNHWV KDYH DOUHDG\ VWURQJO\ GHYHORSHG DV
WKH\DUHFORVHWRFRQVXPHUPDUNHWV3URGXFWPDUNHWLQJZLWKWKHH[FHSWLRQRIDIHZODUJHUVFDOH
LQGXVWULHV LV SRRU DQG OLPLWHG WR WUDGLWLRQDO PDUNHWLQJ FKDQQHOV ,I IDUPHUV DQG VPDOO VFDOH
SURFHVVRUV FRXOG EH FDSDFLWDWHG WR HIILFLHQWO\ DQG HIIHFWLYHO\ FKLS JULQG DQG GU\ FDVVDYD WKH\
FRXOG LQFUHDVH WKH YDOXH RI WKHLU SURGXFWV ZKLFK LQ WXUQ FRXOG EH HDVLHU PDUNHWHG WR EXON
SXUFKDVHUVWUDGHUVDQGFRPPHUFLDOEX\HUV
&RPSHWLWRUV 7KH LQWHUQDWLRQDO GHPDQG IRU VWDUFK SURGXFWV LV VXEVWDQWLDO DQG ZRUOG PDUNHW
SULFHVDUHFXUUHQWO\KLJK+RZHYHUWKHODFNRISULPDU\SURGXFWVFRPSDUDWLYHO\KLJKSURGXFWLRQ
DQG SURFHVVLQJ FRVWV DQG WKH SRRU PDUNHWLQJ SUDFWLFHV KDYH GHSULYHG 1LJHULD WR HQJDJH LQ
LQWHUQDWLRQDOWUDGHRIFDVVDYDSURGXFWV
4XDOLW\ DQG VWDQGDUGV )UHVK FDVVDYD FRQWDLQV F\DQRJHQLF JO\FRVLGHV ,I FDVVDYD LV LQDGHTXDWHO\
SURFHVVHGWKLVFUHDWHVDSRWHQWLDOKHDOWKKD]DUG(IIHFWLYHSURFHVVLQJHVVHQWLDOO\LQYROYLQJURRW
GLVLQWHJUDWLRQ DQG UHPRYDO RI WKH F\DQRJHQLF FRPSRXQGV ZLWK ZDWHU HQVXUHV WKH VDIHW\ RI
SURGXFWV3URSHUKDQGOLQJRIIUHVKFDVVDYDDOUHDG\GXULQJWKHVWRUDJHDQGWUDQVSRUWSHHOLQJDQG
IXUWKHUSURFHVVLQJLVFULWLFDOIRUJHQHUDWLQJSURGXFWVWKDWFDQEHXVHGLQIXUWKHUWUDQVIRUPDWLRQ
37
DQG PRUH VRSKLVWLFDWHG HQGPDUNHWV7KH FDVVDYD VHFWRU LV FKDUDFWHUL]HG WR D ODUJH H[WHQW E\ D
ODFN RI JUDGHV DQG VWDQGDUGV 6PDOOVFDOH SURFHVVLQJ XQLWV ILQG LW GLIILFXOW WR SURGXFH
KRPRJHQRXV SURGXFWV DQG WHPSRUDO KD]DUGV LQ SURFHVVLQJ DW WLPHV MHRSDUGL]H WKH TXDOLW\ RI
SURGXFWV
Chain Governance and Linkages

/HDG ILUPV 7KHUH DUH QR OHDG ILUPV ZKLFK VRXUFH PDMRU SHUFHQWDJHV RI WKH SULPDU\ RU VHPL
SURFHVVHGSURGXFWV3URFHVVRUVDUHXQDEOHWRH[FHHGSURGXFWTXDOLW\JLYHQWKHOLPLWHGVXSSO\RI
SURGXFWVDQGWKHODFNRIDFFHSWHGVWDQGDUGVDFURVVWKHSURGXFHUDQGSURFHVVRUFRPPXQLW\
&RRUGLQDWLRQ PHFKDQLVPV 2YHUDOO WKH FRRUGLQDWLRQ DPRQJ DFWRUV LQ WKH YDOXH FKDLQ LV SRRU
7KHUH DUH QR RXWJURZHU DQG FRQWUDFW SURGXFWLRQ VFKHPHV DQG WKH ODFN RI SULPDU\ SURGXFWV
PDNHV LW GLIILFXOW IRU EX\HUV WR PDNH VXSSOLHUV FRPSO\ ZLWK TXDOLW\ FULWHULD $OVR WKHUH DUH QR
VWDQGDUGV WKDW DUH VXIILFLHQWO\ DFFHSWHG E\ SURGXFHUV DQG VPDOO SURFHVVRUV 7KH VHWWLQJ XS RI
ODUJHU FRPPHUFLDO IDUPV ZKLFK DOVR KDQGOH SURFHVVLQJ RSHQV XS WKH SRVVLELOLW\ WR GHYHORS
FXVWRPL]HGRXWJURZHUVXSSRUWSURJUDPPHVEHWZHHQFRPPHUFLDOIDUPVDQGLQGXVWULDOEX\HUV
7\SHRIJRYHUQDQFH7KHVHFWRULVPDLQO\FKDUDFWHUL]HGE\DSRO\SROLVWLFPDUNHWVWUXFWXUHZKHUH
DODUJHQXPEHURISURGXFHUVDQGSURFHVVRUVSURYLGHSURGXFWVWRDODUJHQXPEHURIFRQVXPHUV
PDNLQJ XVH RI PDQ\ WUDQVSRUWHUV DQG WUDGHUV 7KHUH LV QR OHDGHUVKLS WKDW HQVXUHV D EHWWHU
RUJDQL]DWLRQDQGLQWHJUDWLRQRIWKHYDOXHFKDLQLQDZD\WKDWFRQWUDFWXDODUUDQJHPHQWVEHWZHHQ
EX\HUV DQG VXSSOLHUV DUH WUDQVSDUHQW HQDEOLQJ IDLU DQG WUDQVSDUHQW GHOLYHU\ DQG SD\PHQW DQG
SURYLGLQJLQFHQWLYHVWRPRUHSURGXFWLRQRIKLJKHUTXDOLW\SURGXFWV
Resource Productivity and Environmental Performance

7UDGLWLRQDO FDVVDYD SURFHVVLQJ LV DQ DFWLYLW\ ZKLFK GXH WR FRQWDPLQDWLRQ RGRXU DQG QRLVH LV
EDQQHG IURP XUEDQ DUHDV E\ ODZ 7KH SURFHVV XVHV D VXEVWDQWLDO DPRXQW RI ZDWHU DQG HQHUJ\
ZKLFKDOVRFRQWULEXWHVWRLWVKLJKFRVWV&DVVDYDSHHOLVXVXDOO\XVHGDVDQLPDOIHHGVEXWZDWHULV
XVXDOO\ FRQWDPLQDWHG ZLWK F\DQRJHQLF VXEVWDQFHV $ QXPEHU RI DOWHUQDWLYH HQHUJ\ DQG ZDWHU
VDYLQJWHFKQRORJLHVLVDYDLODEOHEXWGXHWRWKHODFNRIVWDQGDUGVRIFOHDQHUSURGXFWLRQDQGKLJKHU
FRVWVXVXDOO\GRQRWJHWLQWRXVH
Macro Economic and Policy Context

&HQWUDODQGVWDWHJRYHUQPHQWVWU\WRLQIOXHQFHWKHFDVVDYDVHFWRUPRVWO\WKURXJKWKHSURYLVLRQ
RIVXEVLGL]HGIHUWLOL]HU7KHUHLVQROLPLWWRWKHH[SRUWRIFDVVDYD+RZHYHUWKHGRPHVWLFPDUNHW
DEVRUEVDOPRVWDOOSURGXFWV,QUHODWLRQWRSURGXFHUVRIFDVVDYDEDVHGIHHGVWXIIIURP$VLDWKH
1LJHULDQFDVVDYDVHFWRUVWLOOODFNVFRPSHWLWLYHQHVV6RPHHIIRUWVKDYHEHHQPDGHWRYHQWXUHLQWR
WKHH[SRUWRIFDVVDYDSURGXFWVWRWKH(XURSHDQ&RPPXQLW\(8ZLWKPL[HGVXFFHVVWKHPDMRU
OLPLWDWLRQEHLQJDIL[HGWRQVSHUDQQXPTXRWDJUDQWHGIRU$&3FRXQWULHVE\WKH(8
Availability of Finance
)LQDQFLDO DWWUDFWLYHQHVV *LYHQ WKH OLPLWHG SURILWDELOLW\ RI SURFHVVLQJ EXVLQHVVHV WKHLU ILQDQFLDO
DWWUDFWLYHQHVVLVJHQHUDOO\ORZ)LQDQFLDODWWUDFWLYHQHVVLVDOVROLPLWHGGXHWRWKHOLPLWHGVFDOHRI
WKH SUHGRPLQDQW VPDOOVFDOH SURFHVVLQJ DQG WKH LQDGHTXDWH OLDELOLW\ VWDWXV RI WKH FRPPXQLWLHV
IDUPHUVJURXSVDQGLQGLYLGXDOVHQJDJHGLQSURFHVVLQJ6RPHDJURLQGXVWULDOSURFHVVLQJSODQWVDUH
WKHH[FHSWLRQEXWDOVRKHUHWKHUHDUHFRQVWUDLQWVGXHWRODFNRIVXSSOLHVDQGXQVHFXUHGPDUNHWLQJ
RSSRUWXQLWLHVWKDWPDQ\RIWKHSODQWVIDFH7KHILQDQFLDODWWUDFWLYHQHVVRISURGXFWLRQVHHPVWR
EHVRPHZKDWEHWWHULIDGHTXDWHXVHRINQRZOHGJHDQGWHFKQRORJ\LVJLYHQ+RZHYHUDOVRKHUH
LQYHVWRUVLQFRPPHUFLDOFDVVDYDIDUPLQJDUHWKHH[FHSWLRQ)LQDQFHIRUZRUNLQJFDSLWDODQGWKH
SXUFKDVHRIVPDOOSURFHVVLQJHTXLSPHQWIRUIDUPHUJURXSVFRRSHUDWLYHVDQGLQGLYLGXDOIDUPHUV
EHLWE\UHJLVWHUHGDVVRFLDWLRQVFRRSHUDWLYHV1*2VLQYHVWRUJURXSVRULQGLYLGXDOVLVYLUWXDOO\
LQH[LVWHQW
38
&DSLWDOLQWHQVLW\3URFHVVLQJRIFDVVDYDUHTXLUHVDQXPEHURIHTXLSPHQWVXFKDVSHHOHUVZDVKHUV
JUDWHUV DQG FKLSSHUV H[WUDFWRUV SUHVVHUV VLIWHUV GU\HUV FRQYH\RUV FRRNHUV DQG ERLOHUV DOO RI
ZKLFK UHTXLUH DFFHVV WR ILQDQFH 7KH PRELOLW\ RI VXFK HTXLSPHQW GRHV QRW DOORZ WR XVH LW DV
FROODWHUDO LQ ZKLFK FDVH RWKHU PHDQV RI VHFXULQJ ORDQV PXVW EH IRXQG (TXLSPHQW DQG
PDFKLQHU\ IRU ODUJHU SURFHVVLQJ SODQWV DUH VXEVWDQWLDO DQG JLYHQ WKHLU VWDWLRQDU\ FKDUDFWHU DUH
PRUH VXLWDEOH IRU VHFXULQJ ORDQV +RZHYHU EDQNV DOZD\V UHTXLUH DGGLWLRQDO JXDUDQWHHV DQG
FROODWHUDOV
([LVWLQJIRUPDODQGLQIRUPDOILQDQFHVFKHPHV7KHUHDUHDQXPEHURIPLFURFUHGLWVFKHPHVWKDW
DOORZ IDUPHUV DQG VPDOO SURFHVVRUV WR FRYHU SDUWV RI WKHLU ILQDQFLDO QHHGV 7KHVH VFKHPHV
KRZHYHUDUHRQO\DYDLODEOHLQFHUWDLQUHJLRQVZKHUHVXFKVFKHPHVRSHUDWHXVXDOO\ZLWKVXSSRUW
RI WKH LQWHUQDWLRQDO GHYHORSPHQW FRRSHUDWLRQ 7KH\ DUH E\ QR PHDQV VXIILFLHQW WR FRYHU WKH
QHHGV RI WKH HQWLUH VHFWRU *LYHQ WKH DEVHQFH RI IRUPDO ILQDQFLQJ IURP EDQNV DQG RWKHU
LQVWLWXWLRQV ILQDQFH WKURXJK EX\HUV UHPDLQV WKH RQO\ DOWHUQDWLYH VRXUFH RI IXQGLQJ +RZHYHU
GXHWRWKHLQIRUPDOLW\RIEXVLQHVVWUDQVDFWLRQVLQWKHFKDLQWKHRSWLRQLVKDUGO\H[SORUHG0RVW
EX\HUV DUH VXIIHULQJ IURP ODFN RI ILQDQFH WKHPVHOYHV DQG OHQGLQJ WR VXSSOLHUV LV FRQVLGHUHG
PRVWO\WRRULVN\
6RPH ODUJHU SURFHVVLQJ SODQWV DOVR KDYH DFFHVV WR ILQDQFLQJ VFKHPHV WKDW DUH EDVHG RQ WKH
GHOLYHU\RIILQDOSURGXFWVWREX\HUV6XFKVFKHPHVSURYLGHDFFHVVWRILQDQFHXSRQWKHDYDLODELOLW\
RIILQDOSURGXFWVWKDWDUHUHDG\WREHGHOLYHUHGWREX\HUV$FFRUGLQJO\ODUJHUEX\HUVFDQDFFHVV
FUHGLWVXSRQWKHUHFHLSWRISURGXFWVZKLFKVHUYHDVDFROODWHUDOWLOOWKH\JHWVROGWRHQGEX\HUV
7KHUH LV QR UHFRUG RI DQ LQWHJUDWHG ILQDQFH VFKHPH LQ WKH FDVVDYD YDOXH FKDLQ LQ ZKLFK D
VLPXOWDQHRXVSURYLVLRQRIILQDQFHWRYDULRXVLQWHUUHODWHGDFWRUVLQWKHYDOXHFKDLQLVUHDOL]HG
Finance requirements
7KHDERYHDQDO\VLVKDVHQDEOHGDQXDQFHGLGHQWLILFDWLRQRIILQDQFLDOUHTXLUHPHQWVLQWKHYDULRXV
VHJPHQWVRIWKHYDOXHFKDLQVHH7DEOH
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHFDVVDYDYDOXHFKDLQ
Fresh cassava processing
Dry cassava processing

Commercial Farming
Trading & Transport

Small scale farming
Ethanol production
Wholesale / Retail
Food Processing
Input industry
Export
Need/ Working Working Working Working Working Working Working Working Working Working
purpose capital capital capital, capital, capital, capital capital, capital, capital capital
(planting (inputs, fixed vehicle equip- (processing equip- equip- Fixed (pre- and
material labour, assets ment & supplier ment ment assets post-
producers) transport) (short- credit), (storage, shipment)
medium equipment vehicle)
term)
Volume low high high low high medium high high low medium
needed (through
process-
ors)
Risks high medium medium high low low medium low low
Interest low low medium low medium high high high high
39
A.2 Cotton
,Q 1LJHULD FRWWRQ LV JURZQ LQ WKH QRUWKHUQ DQG FHQWUDO UHJLRQV RI WKH FRXQWU\ DV D FDVK FURS
7KH ILEUH PRVW RIWHQ LV VSXQ LQWR \DUQ RU WKUHDG DQG XVHG WR PDNH D VRIW EUHDWKDEOH WH[WLOH
ZKLFKLVWKHPRVWZLGHO\XVHGQDWXUDOILEUHFORWKLQFORWKLQJWRGD\1LJHULDLVRQHRIWKHOHDGLQJ
FRWWRQSURGXFLQJFRXQWULHVLQ:HVW$IULFD
Mapping the chain

7KH YDOXH FKDLQ LQ FRWWRQ LQFOXGHV FRWWRQ JURZLQJ FRWWRQ JLQQLQJ \DUQ VSLQQLQJ IDEULF
ZHDYLQJIDEULFILQLVKLQJG\HLQJDQGSULQWLQJDQGJDUPHQWLQJ$7KHDFWRUVLQWKHFKDLQDUH
PDLQO\ VXSSOLHUV RI LQSXWV VHHGV DJURFKHPLFDOV DQG IHUWLOL]HUV VPDOO WR ODUJHVFDOH IDUPHUV
EX\LQJDJHQWVDQGVPDOODQGODUJHVFDOHSURFHVVRUV7KHFRWWRQLQGXVWU\VHFWRULVGRPLQDWHGE\
JLQQHULHVWH[WLOHPLOOVZKLFKDEVRUERIWKHFRWWRQSURGXFWLRQLQWKHFRXQWU\&XUUHQWO\
WKHUHLVQRRUJDQL]HGJDUPHQWLQGXVWU\LQ1LJHULDDQGUDZWH[WLOHVDUHH[SRUWHG
)LJXUH$0DSRI*HQHULF&RWWRQ9DOXH&KDLQ

6RXUFH3DUNHVQRGDWH

&RWWRQSURGXFWLRQGHFOLQHGIURPDQRXWSXWRIWRQVLQWKHVWRWRQVLQWKH
V &HUWDLQ DGMXVWPHQWV DQG SULFH OLEHUDOL]DWLRQ LQWURGXFHG LQ ZHUH DEOH WR UHYLYH WKH
SURGXFWLRQ WR WRQV E\ 0LVEDKX UHSRUWV WKDW 1LJHULD KDV DEXQGDQW DUDEOH
ODQG XQGHU FRWWRQ FXOWLYDWLRQ ZLWK SRWHQWLDO WR HPSOR\ WZR PLOOLRQ SHRSOH ZLWKLQ UHODWHG
DFWLYLWLHVRISODQWLQJZHHGLQJKDUYHVWLQJDQGWUDQVSRUWDWLRQ,WLVHVWLPDWHGWKDWDERXW
KHFWDUHV RI VXLWDEOH ODQG LV DYDLODEOH IRU FRWWRQ IDUPLQJ LQ 1LJHULD +RZHYHU FXUUHQWO\ RQO\ D
WKLUG RI WKH SRWHQWLDO ODQG LV H[SORLWHG WR SURGXFH VRPH WRQV RI VHHG FRWWRQ E\ DQ
HVWLPDWHGPRVWO\VPDOOKROGHUIDUPHUV
,Q 1LJHULD WKHUH DUH WZR PDMRU FRWWRQ ]RQHV QDPHO\ WKH 1RUWK DQG WKH 6RXWK ZLWK GLIIXVLRQ
LQWR WKH &HQWUDO SDUW RI WKH FRXQWU\ 7KH 1RUWKHUQ FRWWRQ ]RQH FRPSULVHV .DWVLQD .DGXQD
=DPIDUD .DQR -LJDZD %DXFKL *RPEH 3ODWHDX <REH %RUQR 7DUDED DQG $GDPDZD VWDWHV
ZKLOH WKH 6RXWKHUQ FRWWRQ ]RQH FRPSULVHV .ZDUD 2JXQ 2QGR DQG 2\R 6WDWHV 7KH FHQWUDO
]RQHLVUHSUHVHQWHGE\1LJHUDQG7DUDEDVWDWHV
40
$ERXWRIFRWWRQIDUPHUVDUHVPDOOVFDOHKROGHUVZLWKDQDYHUDJHODQGKROGLQJRIKHFWDUHV
)HZODUJHVFDOHIDUPHUVH[LVWZLWKDERXWKHFWDUHVKROGLQJFDSDFLW\ZKLOHFURSKDUYHVWLQJLV
VHOGRP PHFKDQL]HG ZLWK ODUJH IDUPHUV HPSOR\LQJ WKH WUDGLWLRQDO KDQG SLFNLQJ PHWKRG WKUHH
WLPHV D \HDU 7KH DUHD XQGHU FRWWRQ SURGXFWLRQ KDV UHPDLQHG VWDJQDQW DW KHFWDUHV
EHWZHHQDQG6LPLODUO\1LJHULDKDVWKHORZHVW\LHOGSHUKHFWDUHQRWRQO\LQWKHZRUOG
DOVR VXEVWDQWLDOO\ ORZHU WKDQ YLVjYLV QHLJKERXULQJ )UDQFRSKRQH FRXQWULHV 7KH \LHOG GHFOLQHG
IURPNJKDLQWRNJKDLQFRQWUDVWWRJOREDOLPSURYHPHQWLQ\LHOGIURPNJKD
WRNJKD81,'2
+DQGSLFNHG FRWWRQ LV RI KLJK JUDGH DQG DFKLHYHV D EHWWHU SULFH WKDQ WKH PDFKLQH KDUYHVW
505'&&RWWRQLQ1LJHULDLVODUJHO\KDQGSLFNHGZLWKDPLQLPXPRIPHFKDQLFDOPHDQV
,W LV KLJKO\ ODERXU LQWHQVLYH HQJDJLQJ PRVWO\ ZRPHQ DQG VRPHWLPHV FKLOGUHQ 7KH DEVHQFH RI
HTXLSPHQW LV D PDMRU FRQVWUDLQW 7KH EXONLQHVV RI FRWWRQ SOXV WKH FRVWV IRU ORDGLQJ DQG RII
ORDGLQJPDNHVLWGLIILFXOWWRWUDQVSRUWRYHUDORQJGLVWDQFH
/LPLWHG SURGXFWLRQ RI FRWWRQ LV SDUWO\ GXH WR ODFNRI SURILWDELOLW\ LQ WKH WUDGLWLRQDO SURGXFWLRQ
V\VWHPV DULVLQJ IURP KLJK FRVW RI ODERXU KDUYHVWLQJ DQG WUDQVSRUWDWLRQ *HQHUDOO\ IDUPHUV
DFFRUG KLJKHU SULRULW\ WR IRRG FURSV WKDQ FRWWRQ DQG WKHUHIRUH UHGXFH WKH DUHD FXOWLYDWHG LQ
UHDFWLRQWRKLJKIRRGSULFHVORZFRWWRQSULFHVDQGRWKHUPDUNHWG\QDPLFV/DFNRIDIIRUGDEOH
ILQDQFHDWFULWLFDOWLPHVUHVXOWVLQGHOD\RILQSXWVXSSO\DQGDOVRDIIHFWVSURGXFWLRQ2WKHUIDFWRUV
DUHXQUHOLDEOHVXSSO\DQGKLJKFRVWVRIVHHGVIHUWLOL]HUFKHPLFDOVHTXLSPHQWKLULQJFURSOHYLHV
HWF6PDOOVFDOHIDUPHUVILQGLWGLIILFXOWWRSURFXUHLPSURYHGVHHGYDULHWLHVDSSURSULDWHSDFNLQJ
PDWHULDOV DQG VWRUDJH GXH WR ODFN RI ILQDQFH WKHUHE\ MHRSDUGL]LQJ WKH TXDOLW\ RI SURGXFWV7KH
VHFWRUDOVRVXIIHUVIURPFRQVWUDLQWVLQZHLJKWDQGPHDVXUHPHQWVTXDOLW\VWDQGDUGVDSSURSULDWH
SDFNDJLQJ PDWHULDOV SRO\SURS\OHQH DQG VWRUDJH IDFLOLWLHV FRQWDPLQDWLRQ HTXLSPHQW
XQFRQWUROOHGSUDFWLFHVRIIDUPHUVDEVHQFHRILQVWLWXWLRQDODUUDQJHPHQWIRUFRPPRGLW\JUDGLQJ
HWF7KH,QWHUQDWLRQDO7H[WLOH0DQXIDFWXUHUV)HGHUDWLRQUHSRUWV1LJHULDQOLQWWREHVRPHRIWKH
PRVW FRQWDPLQDWHG LQ WKH ZRUOG DORQJ ZLWK QDWLRQDO RULJLQV IURP 1LJHULD 7XUNH\ ,QGLD
7DMLNLVWDQ 3DNLVWDQ DQG 8JDQGD 3URGXFWLRQ LV VWLOO ODUJHO\ XQVWDQGDUGLVHG DQG WKLV LPSDFWV
QHJDWLYHO\RQSURGXFWLYLW\DQGILEUHTXDOLW\

0RVWRIWKHFRWWRQSURGXFHGLVSURFHVVHGE\JLQQHULHVORFDWHGLQWKHFRWWRQSURGXFWLRQ]RQHVLQ
WKHFRXQWU\2QO\DQLQVLJQLILFDQWTXDQWLW\LVJLQQHGLQIRUPDOO\E\WUDGLWLRQDOPHWKRGV$GHFDGH
DJRWKHUHZHUHDURXQGJLQQHULHVLQ1LJHULD+RZHYHUGXHWRUHGXFWLRQLQFRWWRQSURGXFWLRQ
DQGREVROHWHHTXLSPHQWWKHQXPEHURIDFWLYHJLQQHULHVLQ1LJHULDGXULQJWKHVHDVRQ
UHGXFHGWRRIZKLFKDUHFXUUHQWO\UHSRUWHGWREHDFWLYHLQWKH1RUWK:HVWDQGLQWKH
1RUWK(DVW7KHQDWLRQDODYHUDJHRXWSXWKDVEHHQPDLQWDLQHGEHWZHHQWRQVDQG
WRQV+RZHYHUWKHFRWWRQJLQQLQJFDSDFLW\RI1LJHULDLVWRQV0LVEDKX
&RWWRQ LV SURFHVVHG LQWR OLQW DQG E\SURGXFWV DV FRWWRQ VHHG 7KH FRWWRQ OLQW LV IXUWKHU
WUDQVIRUPHG LQWR \DUQ DQG IDEULF JUH\ IDEULFV EOHDFKHG IDEULFV G\HG DQG NQLWWHG IDEULFV IRU
JDUPHQWLQGXVWU\,QDGGLWLRQWKHFRWWRQVHHGVDUHWUDQVIRUPHGLQWRHGLEOHRLODQGDQLPDOIHHGV
1LJHULDKDVRYHUIRUW\WH[WLOHIDFWRULHVHVWDEOLVKHGVLQFHVZLWKODUJHVFDOHPRVWO\LQWHJUDWHG
SURFHVVLQJHTXLSPHQWIRUVSLQQLQJZHDYLQJG\HLQJDQGILQLVKLQJDFURVVWKHFRXQWU\6LPLODUO\
WKHUH DUH VPDOOVFDOH DQG ODUJH HGLEOH RLO DQG IHHG PLOOV HVWDEOLVKHG DW ORFDWLRQV FORVH WR WKH
JLQQHULHV+RZHYHUPRVWRIWKRVHLQGXVWULHVKDYHEHHQUXQGRZQWRDQH[WHQWWKDWWKH\DUHQRW
RSHUDWLRQDO RU RSHUDWH RQ D FDSDFLW\ XWLOLVDWLRQ RI OHVV WKDQ $OWHUQDWLYH ILEUHV VXFK DV
SRO\HVWHUFKLSVZHUHLQLWLDOO\LPSRUWHGDQGFRQYHUWHGWRILEUHLQ1LJHULD&XUUHQWO\KRZHYHUDOO
WKH FRPSDQLHV WKDW FRQYHUW FKLSV WR ILEUH KDYH FORVHG GRZQ 7KLV PHDQV WKDW WKH ILEUH DQG
FRWWRQ\DUQDVZHOODVV\QWKHWLF\DUQKDYHWREHLPSRUWHG
7KH 1LJHULDQ WH[WLOH LQGXVWU\ ZDV RQFH WKH ODUJHVW HPSOR\HU RI ODERXU DIWHU WKH )HGHUDO
*RYHUQPHQW7KHJURZWKDQGH[SDQVLRQRIWKHWH[WLOHPLOOVFRQWULEXWHGQXPHURXVHPSOR\PHQW
41
RSSRUWXQLWLHV LQ WKH VHFWRU DGGLQJ WR VXFFHVVIXO FRWWRQ SURGXFWLRQ ZKLFK RSHQHG XS VHDVRQDO
MREVDQGFDVKIORZWRWKHUXUDOIDUPHUV,WHPSOR\HGRYHUZRUNHUVLQWKHPLGV
7KLVHPSOR\PHQWOHYHOKDVKRZHYHUGURSSHGVWHDGLO\WKHUHDIWHUVXFKWKDWZLWKWKHFORVXUHRI
RXWRIWH[WLOHPLOOVVLQFH,QZRUNHUVUHPDLQHGHPSOR\HGLQWKHLQGXVWU\
DQGWKHORFDOWH[WLOHLQGXVWU\QRZVKDUHVMXVWRIWKHKRPHFORWKLQJPDUNHW81,'2
7KHFDSDFLW\XWLOL]DWLRQIHOOWRDGLVPDOLQ(YHQWKHH[LVWLQJFDSDFLWLHVQRZRSHUDWHDW
DVNHOHWDOOHYHODQGPDQ\PRUHDUHRQWKHEULQNRIFORVXUH&ULWLFDOFKDOOHQJHVLQFOXGHVLLQIOX[
RI FRXQWHUIHLW DQG VPXJJOHG WH[WLOHV PDLQO\ IURP &KLQD LL VFDUFLW\ DQG KLJK FRVW RI /3)2
EODFNRLOLLLHVFDODWLQJFRVWRIJDVLYH[SHQVLYHDOWHUQDWLYHVRXUFHRIHQHUJ\YFRVWO\DQG
SRRUO\ GLVWULEXWHG SRZHU VXSSO\ YL OLPLWHG PDUNHW DFFHVV IRU WKH 1LJHULDQ IDEULFV YLL KLJK
FRVWRIZDWHUVWHDPDQGODERXUYLLLDQGODFNRIDIIRUGDEOHFUHGLWOLQH,QVXPDWWKHSURFHVVLQJ
VWDJH RYHUKHDG FRVWV OLFHQVLQJ DQG HQHUJ\ DUH WKH PDMRU KLJK ILQDQFLDO FRVWV FRPSRQHQWV LQ
SURFHVVLQJ,QYLHZRIWKHVHFRQVWUDLQWVWKH)HGHUDO*RYHUQPHQWKDVUHOHDVHGWKHVXPRI1
ELOOLRQ DW D VLQJOH GLJLW LQWHUHVW IRU WKH UHYLYDO RI WKH WH[WLOH VHFWRU ZKLFK LV FXUUHQWO\ EHLQJ
PDQDJHGE\WKH%DQNRI,QGXVWU\
*DUPHQWLQGXVWU\LV\HWWREHHVWDEOLVKHGLQ1LJHULD+RZHYHUDIHZFRPSDQLHVDVVRFLDWHGZLWK
WKH1LJHULD7H[WLOH0DQXIDFWXULQJ$VVRFLDWLRQ170$DUHHQJDJHGLQNQLWWLQJSURFHVVLQJDQG
JDUPHQWLQJ 7KLV LQFOXGHV &RWV\Q 6XQIODJ JURXS )HPUR JURXS 1LJ /WG :HVW $IULFDQ
7KUHDG&R/WG$GKDPD7H[WLOH *DUPHQW,QG/WG5RVLHV7H[WLOH0LOOV/WG7KHUHDUHDOVR
RWKHU FRPSDQLHV WKDW DUH LQYROYHG LQ FXW PDNH DQG WULP &07 RSHUDWLRQV VXFK DV 6DP DQG
6DUD 5XII Q 7XPEOH 9LUDWH[ 2WKHU JURXSV DUH LQYROYHG LQ IDVKLRQ GHVLJQLQJ DQG WDLORULQJ RI
RXWILWVZKLFKFDWHUWRWKHSRSXODFHRQPDGHWRPHDVXUHEDVLV
7KHFRQVWUDLQWVFRQIURQWLQJWKHJDUPHQWLQJVHJPHQWLQFOXGHLOOHJDOLPSRUWDWLRQRIJDUPHQWVDV
ZHOO DV VHFRQG KDQG FORWKLQJ WKH VWURQJ FXOWXUH RI WKH SRSXODFH ZKLFK PDNHV WKHP SUHIHU
WUDGLWLRQDOGUHVVLQJKDELWVGHJUDGDWLRQRILQIUDVWUXFWXUHZKLFKKDVFRQWULEXWHGWRDKLJKFRVWRI
SURGXFWLRQDQGH[LVWLQJGHOD\VLQSURFHVVLQJH[SRUWLQFHQWLYHV2SSRUWXQLWLHVLQJDUPHQWLQJDUH
JURZLQJ XUEDQL]DWLRQ ZKLFK LV LQIOXHQFLQJ WKH GUHVVLQJ KDELWV LQFUHDVLQJ GHPDQG GXH WR
H[SDQVLRQ RI VFKRROV DQG IDFWRU\ DFWLYLWLHV ZKLFK FDOO IRU PRUH VFKRRO ZHDU DQG ZRUN ZHDU
UHVSHFWLYHO\ H[SDQVLRQ RI WKH KRVSLWDOLW\ LQGXVWU\ ZKLFK GHPDQGV IRU PRUH PDGH XS DUWLFOHV
VXFKDVWRZHOVEHGVKHHWVSLOORZFDVHVPDWWUHVVHVWLFNLQJHWFDQGWKHSRVVLELOLW\RIH[SRUWLQJ
WKURXJKWKH$*2$IUDPHZRUN

7KH GHUHJXODWLRQ RI WKH FRWWRQ VHFWRU LQ WKURXJK WKH DEROLWLRQ RI FRPPRGLW\ PDUNHWLQJ
ERDUG VRXJKW WR UHPRYH DOO IRUPV RI EDUULHUV WR SDUWLFLSDWLRQ LQ WKH PDUNHW DQG WR
HVWDEOLVKFUHDWHDVWDWHRIHIIHFWLYHFRPSHWLWLRQLQWKHPDUNHWZLWKWKH*RYHUQPHQWVWLOOGLFWDWLQJ
SULFHV RQ D UHJLRQDO EDVLV $V D UHVXOW WKH QRUWKHUQ FRWWRQ PDUNHW ZLWQHVVHG WKH ULVH RI D
VLJQLILFDQWQXPEHURILQGLYLGXDOEX\HUVDQGVHOOHUVJLYHQWKHQHZIUHHGRPRIHQWU\DQGDEVHQFH
RI SHUVLVWHQW SULFH GLVFULPLQDWLRQ 3ULFH IL[LQJ ZDV GHFHQWUDOL]HG DQG YDULHG IURP RQH EX\LQJ
SRLQWWRDQRWKHU0DUNHWLQJPDUJLQVZHUHVXEVWDQWLYHDQGYDULHGIURPRQHFKDQQHOWRDQRWKHU
UHYHDOLQJ LPSHUIHFWLRQ LQ WKH SULFLQJ V\VWHP 6LPLODUO\ IODZV ZHUH DOVR QRWLFHG ZLWK UHJDUG WR
XQIDLUSUDFWLFHVIUDXGDJDLQVWVHOOHUVDQGEX\HUVSUHHPSWLRQDQGXQGHVLUDEOHELDQGPXOWLODWHUDO
DJUHHPHQWV$OOWKLVFRQWULEXWHGWRWKHIDFWWKDWWKHFRWWRQPDUNHWVWLOOGRHVQRWHIIHFWLYHO\DQG
WUDQVSDUHQWO\SURYLGHSULFHVLJQDOVEULQJLQJWRJHWKHUGHPDQGZLWKVXSSO\2QXHWDO
$ERXW RI WKH ZRUOGZLGH FRWWRQ SURGXFWLRQ LV WUDGHG LQWHUQDWLRQDOO\ 7KH GRPLQDQW
H[SRUWHUVDUH868]EHNLVWDQ)UDQFRSKRQH$IULFDDQG$XVWUDOLDZKLFKDFFRXQWIRUWZRWKLUGVRI
ZRUOG H[SRUWV ,Q $IULFD SURGXFWLRQ DQG H[SRUW KDYH PDLQWDLQHG DQ XSZDUG WUHQG +RZHYHU
GXHWRORZOHYHOVRIGHYHORSPHQWRIWKHWH[WLOHLQGXVWU\HVSHFLDOO\LQ:HVW$IULFDDQG1LJHULDLQ
SDUWLFXODUWKHLQWHUQDWLRQDOGHPDQGKDVEHHQYHU\ORZ
42
7KH FRQVXPSWLRQ SDWWHUQ LV XVXDOO\ GHWHUPLQHG E\ WKH VL]H RI WKH WH[WLOH LQGXVWULHV RI WKH
GRPLQDQW FRWWRQ FRQVXPHUV &KLQD D OHDGLQJ WH[WLOH SURGXFHU DEVRUEHG PRUH WKDQ ô RI WKH
JOREDO FRWWRQ RXWSXW 6LQFH 1LJHULDQ FRWWRQ LV H[SRUWHG LQ WKH LQWHUQDWLRQDO PDUNHW EXW
GHFOLQHG GXH WR VHYHUDO FRQVWUDLQWV LQ WKH LQGXVWU\ ,Q VSLWH RI WKLV WKHUH LV VWLOO DQ LQFUHDVHG
GHPDQGIURPFRWWRQFRQVXPLQJQDWLRQVVXFKDV&KLQD,QGLDDQG7XUNH\3ULFHVRIFRWWRQLQWKH
LQWHUQDWLRQDO PDUNHW KDYH EHHQ XQVWDEOH EXW WHQG WR EH RQ WKH ULVH 1LJHULD KDV DOVR EHHQ
LQYROYHG LQ FRWWRQ VHHG LPSRUW DV SURGXFWLRQ IDFHG PRUH VHYHUH FRQVWUDLQWV ZKLOH H[SRUW KDV
EHHQRQWKHGHFOLQH

*UHDW LPEDODQFHV FRQWLQXH WR H[LVW EHWZHHQ WKH GHPDQG DQG VXSSO\ RI FRWWRQ LQ 1LJHULD
'HPDQGIRUSURGXFWVIURPFRWWRQSURFHVVRUVODUJHO\H[FHHGVWKHVXSSO\*LQQHULHVVHUYHDVWKH
PDLQ PDUNHW OLQNV DQG RXWOHWV IRU FRWWRQ 7KLV LV VXSSRUWHG E\ D FKDLQ RI LQGLYLGXDOV DQG
JLQQHULHVDVEX\HUVDQGVHOOHUVSURGXFHUV7KHPDMRULW\RIWKHEX\HUVDQGVHOOHUVDUHEHORZWKH
DJHRIDQGKDYHOLWWOHHGXFDWLRQ
:KLOH LQGXVWULDO GHPDQG IRU FRWWRQ SURGXFWV LV VWLOO YHU\ KLJK WKLV GRHV QRW VLJQLILFDQWO\
FRQWULEXWHWRKLJKHUFRWWRQSURGXFWLRQDVIDUPHUVSUHIHUWRSURGXFHIRRGFURSVZKLFKDUHHDV\
WRVHOORQORFDOPDUNHWV&RPPXQLWLHVWKDWDUHLQFRWWRQSURGXFWLRQDUHXVXDOO\ORFDWHGFORVHWR
WKH PDUNHW SODFHV ZKHUH WKH\ FDQ HIILFLHQWO\ VHOO WR EX\HUV EHFDXVH RI VWRUDJH DQG WUDQVSRUW
ORJLVWLFV FRQVWUDLQWV $YDLODELOLW\ RI DIIRUGDEOH ILQDQFH WR IDUPHUV FRPPHUFLDO EX\HUV DQG
JLQQHULHVLVDVHULRXVFRQVWUDLQWWRHQKDQFHGGHPDQGDQGVXSSO\DFWLYLW\LQWKHYDOXHFKDLQ
7KHUHLVQROHDGILUPLQWKHVHFWRUEXWDQHWZRUNRIJLQQHULHVDQGLQGLYLGXDOEX\HUV7KHUHLVQR
OHDGHUVKLSWKDWSURPRWHVDEHWWHURUJDQL]DWLRQDQGLQWHJUDWLRQRIWKHYDOXHFKDLQ
3URFHVVRUV UHSUHVHQWHG E\ JLQQHULHV FRPSHWH ZLWK LQGLYLGXDO EX\HUV WR VRXUFH IRU SULPDU\
SURGXFWV ZKLOH VHFRQGDU\ SURGXFWV DUH VRXUFHG ZLWKLQ DQG DPRQJVW WKH SURFHVVRUV :LWK WKH
DEROLWLRQRIFRPPRGLW\PDUNHWWKHUHQRFRRUGLQDWLRQDPRQJVWWKHSURGXFHUV
6RPH EX\HUV DQG SURFHVVRUV KDYH GHYHORSHG LQIRUPDO RXWJURZHU VFKHPHV SURYLGLQJ FUHGLW WR
IDUPHUVWRSXUFKDVHLQSXWVLQH[FKDQJHIRUWKHLUSURGXFWVDIWHUKDUYHVW,WLVGLIILFXOWIRUEX\HUV
WRPDNHVXSSOLHUVFRPSO\ZLWKTXDOLW\FULWHULDVLQFHWKHUHLVQRIRUPDOFRQWUDFW$OVRWKHUHDUHQR
VWDQGDUGVWKDWDUHVXIILFLHQWO\DFFHSWHGE\SURGXFHUVDQGJLQQHULHV

&RWWRQSURGXFWLRQKDVIHZQHJDWLYHLPSDFWVRQWKHHQYLURQPHQWZKLFKUHODWHWRWKHXVHRIDJUR
FKHPLFDOV+RZHYHUFRWWRQSURFHVVLQJLVDQDFWLYLW\WKDWLQYROYHVGU\DQGZHWSURFHVVHVZKHUH
KD]DUGRXVFKHPLFDOVDUHVRPHWLPHVXVHG,QWKHZHWSURFHVVHVVXEVWDQWLDODPRXQWVRIZDWHUDQG
HQHUJ\ DUH XVHG ZKLFK FRQWULEXWHV WR FRVWV $ QXPEHU RI DOWHUQDWLYH HQHUJ\ ZDWHU VDYLQJ DQG
SROOXWLRQIUHH WHFKQRORJLHV DUH DYDLODEOH EXW WKH ODFN RI VWDQGDUGV RI FOHDQHU SURGXFWLRQ DQG
KLJKHUFRVWVXVXDOO\GRQRWDOORZIRUDGRSWLRQ

,QWKH1LJHULDQJRYHUQPHQWLQWURGXFHGDQH[SRUWVXEVLG\WRSURPRWHQRQRLOH[SRUWV7KH
VXEVLG\ DOVR KDW XQLQWHQGHG HIIHFWV RQ RWKHU SDUWV RI WKHYDOXH FKDLQ$V FRWWRQ JURZHUVZHUH
H[SRUWLQJFRWWRQRQDQDFFHOHUDWHGEDVLVWRWDNHDGYDQWDJHRIWKHH[SRUWLQFHQWLYHWKH1LJHULDQ
WH[WLOHLQGXVWU\H[SHULHQFHGDVLJQLILFDQWVKRUWDJHRIUDZPDWHULDOZKLFKIRUFHGWKHPWRLPSRUW
KLJKHUSULFHG FRWWRQ WKHUHE\ VLJQLILFDQWO\ LQFUHDVLQJ WKHLU SURGXFWLRQ FRVWV +RZHYHU WKH
GLVWRUWLRQDU\HIIHFWRIWKHH[SRUWVXEVLG\RQGLIIHUHQWVHJPHQWVRIWKHWH[WLOHFKDLQZDVDPRQJ
WKHNH\LVVXHVWKDWDIIHFWHGWKHVHFWRU·VVXUYLYDO),$6
,Q1LJHULDDQG:HVW$IULFDLQJHQHUDOPDQ\FRXQWULHVKDYHYHQWXUHGLQWRWKHH[SRUWRIFRWWRQ
SURGXFWV WR WKH )DU (DVW DQG WKH 86 XQGHU WKH $PHULFDQ *URZWK DQG 2SSRUWXQLW\ $FFW
43
$*2$ZLWK PL[HG VXFFHVV7KH PDMRU OLPLWDWLRQ WRWKLV H[SRUW PDUNHW LV WKH DELOLW\ WR PHHW
H[SRUWUHTXLUHPHQWV
7KH DWWUDFWLYHQHVV RI ILQDQFLDO VXSSRUW LQ WKH YDOXH FKDLQ LV SURQRXQFHG DW WKH SURFHVVLQJ
VHJPHQW FRPSDUHG WR SULPDU\ SURGXFWLRQ OHYHO +RZHYHU WKH DSSDUHQW FRQVWUDLQWV DUH ODFN RI
VXSSOLHV ODQG SUHSDUDWLRQ KDUYHVWLQJ ORJLVWLFV DQG SRVW KDUYHVW ORJLVWLFV 7KXV ZLWK DGHTXDWH
ILQDQFH NQRZOHGJH DQG ORJLVWLFV WR WKH IDUPHU WKH SURGXFWLRQ OHYHO ZRXOG EH LQFUHDVHG
+RZHYHULQYHVWRUVYHU\IHZLQFRPPHUFLDOFRWWRQIDUPLQJGRQRWQHFHVVDULO\IDFHWKLVW\SHRI
FRQVWUDLQW GXH WR WKHLU VFDOH )XUWKHU WKHUH LV D ODFN RI ILQDQFH IRU ZRUNLQJ FDSLWDO DQG WKH
SXUFKDVHRIVPDOOXWLOLW\HTXLSPHQWIRUIDUPHUJURXSVFRRSHUDWLYHVDQGLQGLYLGXDOIDUPHUV
7KH VPDOO VFDOH IDUPHU GRHV QRW HQJDJH LQ WKH SURFHVVLQJ RI FRWWRQ GXH WR WKH FRVW DQG
VRSKLVWLFDWLRQRIWKHPDFKLQHU\DQGWKHWHFKQRORJ\LQYROYHG0RVWRIWKHHTXLSPHQWUHTXLUHGLV
WUDFWRUV VSUD\HUV WUDQVSRUW YHKLFOHV KDUYHVWHUV SDFNDJLQJ PDWHULDOV VWRUDJH HWF DOO RI ZKLFK
UHTXLUHDFFHVVWRILQDQFH7KHPRELOLW\RIVXFKHTXLSPHQWGRHVQRWDOORZIRUXVLQJLWDVFROODWHUDO
LQZKLFKFDVHRWKHUPHDQVRIVHFXULQJORDQVPXVWEHIRXQG6HFRQGDU\SURGXFWVUHTXLUHODUJHU
SURFHVVLQJSODQWVZKLFKDUHVXEVWDQWLDODQGJLYHQWKHLUVWDWLRQDU\FKDUDFWHUDUHPRUHVXLWDEOHIRU
VHFXULQJORDQV+RZHYHUEDQNVZRXOGDOZD\VUHTXLUHJXDUDQWHHVDQGFROODWHUDOV
,QJHQHUDOWKHUHDUHDQXPEHURIPLFURFUHGLWVFKHPHVWKDWDOORZIDUPHUVWRFRYHUSDUWRIWKHLU
ILQDQFLDO QHHGV 7KHVH VFKHPHV KRZHYHU DUH RQO\ DYDLODEOH LQ FHUWDLQ UHJLRQV XVXDOO\ ZLWK
VXSSRUWRIWKHLQWHUQDWLRQDOGHYHORSPHQWFRRSHUDWLRQ7KH\DUHE\QRPHDQVVXIILFLHQWWRFRYHU
WKH QHHGV RI WKH HQWLUH VHFWRU *LYHQ WKH DEVHQFH RI IRUPDO ILQDQFLQJ IURP EDQNV DQG RWKHU
LQVWLWXWLRQV VRXUFLQJ ILQDQFH WKURXJK EX\HUV UHPDLQ WKH RQO\ DOWHUQDWLYH VRXUFH RI IXQGLQJ
+RZHYHU GXH WR WKH LQIRUPDOLW\ RI EXVLQHVV WUDQVDFWLRQV LQ WKH FKDLQ WKH RSWLRQ LV KDUGO\
H[SORUHG%X\HUVDUHDOVRVXIIHULQJIURPODFNRIILQDQFH
6RPH ODUJHU SURFHVVLQJ SODQWV DOVR KDYH DFFHVV WR ILQDQFLQJ VFKHPHV WKDW DUH EDVHG RQ WKH
GHOLYHU\RIILQDOSURGXFWVWREX\HUV6XFKVFKHPHVSURYLGHDFFHVVWRILQDQFHXSRQWKHDYDLODELOLW\
RIILQDOSURGXFWVWKDWDUHUHDG\WREHGHOLYHUHGWREX\HUV$FFRUGLQJO\ODUJHUEX\HUVFDQDFFHVV
FUHGLWVXSRQWKHUHFHLSWRISURGXFWVWKDWVHUYHDVFROODWHUDOWLOOWKH\JHWVROGWRHQGEX\HUV
7KHDERYHDQDO\VLVZDVPHDQWWRHQDEOHDQXDQFHGLGHQWLILFDWLRQRIILQDQFLDOUHTXLUHPHQWVLQWKH
YDULRXVVHJPHQWVRIWKHYDOXHFKDLQVHH7DEOH
44
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHFRWWRQYDOXHFKDLQ
Secondary Processing(Textile
Primary Processing (Cotton
Local sourcing, trading and
Garment (Large-scale)
Garment(Small Scale)
Commercial Farming
Small scale farming
Input industry
production
production
middlemen
ginning)
Export
Mills)
Need/ Working Working Working Working Working Working Working Working
purpose capital capital, capital, capital, capital, capital, capital, capital
(inputs, fixed vehicles equipment equipment equipment equipme (pre- and
labour, assets (short- (medium- (short- nt post-
transport) medium long term) medium (medium shipment)
term) term) -long
term)
Volume none high high low high high high high medium
needed (through
processor
s)
Risks high medium medium high high high high low
Interest low low medium low medium low high high
45
A.3 Fisheries
Mapping the chain
,Q1LJHULDPRVWILVKDUHKDUYHVWHGE\DUWLVDQDOILVKHUVLQVPDOODPRXQWVXVLQJEDVLFWHFKQRORJLHV
VXFK DV GXJRXW RU SODQN FDQRHV DQG YDULRXV QHWV 7KH ILVK PRQJHUVSURFHVVRUV UHSUHVHQW WKH
ILUVWVHJPHQWRIWKHILVKPDUNHWFKDLQEX\LQJIUHVKILVKGLUHFWO\IURPILVKHUVDVWKHODWWHUODQGWKH
ILVK DW WKH VKRUHV LQ ERDWV RU FDQRHV 7KH ILVK FRXOG EH VROG IUHVK WKHUHDIWHU RU SURFHVVHG E\
VPRNLQJRUVXQGU\LQJ5HIULJHUDWLRQLVYHU\UDUHO\XVHGGXHWRODFNRIHOHFWULFLW\LQWKHILVKLQJ
YLOODJHV
3URFHVVHG ILVK LV XVXDOO\ VROG LQ EXON WR ZKROHVDOHUV )LVKHUV UDUHO\ EUHDN DOOHJLDQFH WR D ILVK
PRQJHUWRZKRPWKHUHLVRIWHQDFORVHDIILOLDWLRQ²HVSHFLDOO\LIWKHPRQJHUKDGSURYLGHGVRIW
ORDQFUHGLW²HYHQLIWKHILVKHUZRXOGJHWKLJKHUSULFHVHOVHZKHUH
)LVK ZKROHVDOHUV IRUP D SDUWLFXODUO\ LPSRUWDQW OLQN IURP WKH QRUWKHUQ UHJLRQV ZKHUH WKH\ DUH
LQYROYHG LQ ZHHNO\ WUDQVSRUWDWLRQ RI SURFHVVHG DQG VPRNHG ILVK WR GLVWDQW VRXWKHUQ 1LJHULDQ
PDUNHWV RI /DJRV 2QLWVKD (QXJX DQG ,EDGDQ 7KHVH PDUNHWV UHFHLYH RYHU RI WKH ILVK
SURGXFWVIURPWKHQRUWKHUQUHJLRQ)$2
)LJXUH$0DSRIILVKHULHV9DOXH&KDLQ

6RXUFH7KHDXWKRUV
7KHILVKUHWDLOPDUNHWHUVUHSUHVHQWWKHIDUHQGRIWKHILVKPDUNHWLQJFKDLQ7KLVDFWLYLW\LVYHU\
LPSRUWDQWIRUOLYHOLKRRGVLQVRXWKHUQ1LJHULDZKHUHGHPDQGIRUVPRNHGGULHGIUHVKZDWHUILVKLV
KLJK7KHUHWDLOILVKPDUNHWLVDOPRVWH[FOXVLYHO\WKHDFWLYLW\RIZRPHQH[FHSWIRUWKHQRUWKHUQ
UHJLRQ ZKHUH PHQ DFWLYHO\ SDUWLFLSDWH 5HWDLO VDOHV DUH XVXDOO\ GRPLQDWHG E\ ORFDOV RI WKH DUHD
ZKHUH WKH ILVK PDUNHWV DUH VLWXDWHG $FFHVV WR UHWDLO ILVK PDUNHWLQJ LV QRW UHVWULFWHG EXW
HQWUHSUHQHXUVPXVWEHORQJWRDQ\RIWKHH[LVWLQJORFDOLQIRUPDODVVRFLDWLRQVXQLRQV VHWXSWR
SURWHFWWKHLULQWHUHVWDQGWRIDFLOLWDWHWKHLUGHDOLQJZLWKWKHZKROHVDOHUV
46
6RPH IUHVK SURGXFWV DUH VROG GLUHFWO\ WR KRWHOV DQG UHVWDXUDQWV 7KH\ DUH VXSSOLHG E\ ILVK
YHQGRUVZKRLQWXUQFRQWUDFWILVKIDUPHUVDQGUHVHUYRLUILVKHUVWRVXSSO\DQDJUHHGSURSRUWLRQ
RI ILVK 7KH YHQGRUV ILQDQFH WKH ILVKHUV DV WKH\ ZRXOG RWKHUZLVH QRW EH FUHGLWZRUWK\ )$2


7KH LQODQG ILVKHU\ LV GRPLQDWHG E\ DUWLVDQDO ILVKHUV ZKR DUH FKDUDFWHUL]HG E\ ORZ FDSLWDO DQG
WHFKQRORJ\LQSXW)LVKLQJLVSUDFWLFHG\HDUURXQG9HU\EDVLFKDUYHVWLQJPHWKRGVVXFKDVJLOOQHWV
FDVWQHWVOLIWQHWVEHDFKVHLQHVGULIWQHWVDQGYDULRXVEDVNHWWUDSVDUHPRVWRIWHQXVHG
/DQGLQJVLWHVDUHVFDWWHUHGDORQJULYHUVDQGODNHVKRUHV$FFHVVWRVXFKFRPPXQLWLHVLVJHQHUDOO\
HDVLHUWKDQWRFRDVWDOILVKLQJFRPPXQLWLHV7KHPDMRULW\RILQODQGILVKKDUYHVWVRFFXULQ
WKUHH DUHDV 8SSHU 5LYHU %HQXH /DNH &KDG DQG WKH 1JXUX*DVKXD :HWODQGV )$2
,QODQGILVKHULHVSURYLGHHPSOR\PHQWIRUDSSUR[LPDWHO\KRXVHKROGV,WLVKRZHYHURIWHQ
D VHFRQGDU\ VRXUFH RI LQFRPH ² EHKLQG DJULFXOWXUH ² SURYLGLQJ URXJKO\ WR RI WRWDO
LQFRPHVIRUWKRVHKRXVHKROGV&DSLWDOLQSXWLVJHQHUDOO\OLPLWHGWRDERDWDQGJHDU$FFRUGLQJWR
D)$2VWXG\DW\SLFDOLQYHVWPHQWIRUDQDYHUDJHILVKHULV1WR1IRUDERDW
DQGDQRWKHU1IRUJHDU
,QSXWV VXFK DV ILVK JHDUGHDOHUV ERDW EXLOGHUV RXWERDUG HQJLQH PHFKDQLFVDQG QHW IDEULFDWRUV
DUH IHZ LQ HDFK FRPPXQLW\ DQG WKH GHPDQG IRU WKHLU VHUYLFHV GHSHQGV RQ ILVKLQJ LQWHQVLW\
+RZHYHU WKH LQFUHDVLQJ FRVW RI LQSXWV RIWHQ UHVXOWV LQ UHGXFHG LQSXW UHSODFHPHQW OHDGLQJ WR
FRQWLQXRXV XVH RI LQSXW EH\RQG LWV GHVLJQHG OLIH VSDQ IUHTXHQW EUHDNGRZQ DQG XOWLPDWHO\
LUUHJXODU ILVKLQJ WULSV DQG ORZ FDWFKHV )RUHVW GHSOHWLRQ DQG VFDUFLW\ RI ZRRG DOVR DIIHFWV
SURFHVVRUVDQGERDWEXLOGHUV,QIUDVWUXFWXUHDQGWUDQVSRUWDUHEDVLF
$TXDFXOWXUHZDVLQWURGXFHGLQ1LJHULDLQWKHVEXWIDLOHGWRPHHWH[SHFWDWLRQVSURYLGLQJ
RQO\ RI GRPHVWLF GHPDQG )$2 ,Q UHFHQW \HDUV WKH GHPDQG ² VXSSO\ JDS KDV
ZLGHQHG UHVXOWLQJ LQ D UHQHZHG LQWHUHVW LQ DTXDFXOWXUH WKDW LV SURMHFWHG WR FRQWLQXH 7KH QHZ
VWUDWHJ\ IRFXVHV ODUJHO\ RQ WKH SULYDWH VHFWRU )URP WKH ILVK IDUPV LGHQWLILHG IHZHU WKDQ
DUHVWDWHRZQHG)$27KHPDLQVSHFLHVIDUPHGLVWKH&ODULDVVSSPRUHFRPPRQO\
NQRZQ DV &DWILVK 6XEVLVWHQFH ILVK IDUPV SURGXFH DSSUR[LPDWHO\ ² WKD\U ZKLOH
LQWHJUDWHGIDUPVFDQSURGXFHWKD\UDQGLQWHQVLYHUHFLUFXODWLRQIDUPVFDQSURGXFH
²WPñ\U)$2
7KH PRVW LPSRUWDQW LQSXW IRU DTXDFXOWXUH LV ILVK IHHG 7KH VXSSO\ RI TXDOLW\ ILVK IHHG LV QRW
ZLWKRXW FKDOOHQJHV )HHG PLOOHUV IRFXV PDLQO\ RQ WKH SRXOWU\ LQGXVWU\ OHDYLQJ ILVK IHHG DV D
VHFRQGDU\ DFWLYLW\ RI RIWHQ SRRU TXDOLW\ 7KLV KDV UHVXOWHG LQ PDQ\ FRPPHUFLDO ILVK IDUPHUV
SURGXFLQJWKHLURZQILVKIHHGRQVLWH7RWDORXWSXWRIILVKIHHGLVDERXWW\UWRW\U
IRU PHGLXP DQG VPDOOVFDOH IDUPVZKLOH KLJKWHFK SURGXFHUV LPSRUW W\U RI ILVK IHHG IRU
LQWHQVLYH FXOWXUH V\VWHPV )$2 7KH VHFRQG PRVW LPSRUWDQW LQSXW IRU DTXDFXOWXUH LV
ILQJHUOLQJV6RPHKLJKWHFKIDUPVDUHFDSDEOHRIWXUQLQJRXWWRPLOOLRQILQJHUOLQJVSHU\HDU
7KHSURGXFWLRQRIILQJHUOLQJVKDVLQFUHDVHGIURPPLOOLRQLQWRDERXWPLOOLRQLQ
)$24XDOLW\ILQJHUOLQJVDUHZLGHO\DYDLODEOHDQGVXSSO\DGHTXDWHO\VDWLVILHVWKHGHPDQG

)LVK SURFHVVLQJ LV GRQH DOPRVW H[FOXVLYHO\ E\ ZRPHQ H[FHSW LQ QRUWKHUQ UHJLRQV ZKHUH PHQ
DFWLYHO\ SDUWLFLSDWH 6LPLODUO\ ILVK PDUNHWLQJ LV FRQWUROOHG E\ ZRPHQ H[FHSW ZKROHVDOH DQG
GLVWDQW WUDGH WKDW LV GRPLQDWHG E\ PHQ LQ LQODQG FRPPXQLWLHV ,QODQG DUWLVDQDO ILVKHUV SURFHVV
ILVKPDLQO\WKURXJKILVKGU\LQJDQGVPRNLQJ,QWKHWUDGHRIGULHGFDWILVKZDVYDOXHGDW
RYHU 86 PLOOLRQ DQG HPSOR\HG WKRXVDQGV RI SHRSOH LQ SURFHVVLQJ WUDQVSRUWDWLRQ DQG
PDUNHWLQJ
47
,Q UHVSRQVH WR LQFUHDVHG ORFDO DTXDFXOWXUH ILVK IHHG SURGXFWLRQ LV DOVR LQFUHDVLQJ ,Q FRDVWDO
DUHDVILVKZDVWHIURPLQGXVWULDOSURFHVVLQJSODQWVDUHWDNHQE\IHHGSURGXFHUV&OXSHLGVDUHVXQ
GULHG FUXVKHG DQG SDFNDJHG DV ILVK PHDO IRU QDWLRQDO GLVWULEXWLRQ ,Q WKH /DNH &KDG ILVKHU\
VWXQWHG7LODSLDEURNHQGULHG&ODULDVDQGLQVHFWLQIHVWHGILVKDUHGULHGSXOYHUL]HGDQGSDFNDJHG
IRU ILVK PHDO 7RWDO RXWSXW IRU WKH ILVK IHHG LQGXVWU\ LV HVWLPDWHG DW W\U ZRUWK 1
ELOOLRQ)$2
3URFHVVLQJ WHFKQRORJLHV UHPDLQ YHU\ EDVLF IRU WKH DUWLVDQDO ILVKHU\ $V D UHVXOW SRVWKDUYHVW
ORVVHVFDQEHDVKLJKDV)$27KHWUDGLWLRQDOVPRNLQJNLOQ$JRGRLVDFOD\W\SHRYHQ
RUGUXPRYHQDQGLVWKHPRVWZLGHO\XVHGIRUPRISURFHVVLQJ7KHPDMRUHQHUJ\VRXUFHLVZRRG
ZKLFK LV LQFUHDVLQJO\ LQ VKRUW VXSSO\ )LVK SURFHVVLQJ LV WLPH FRQVXPLQJ DQG DUGXRXV 7KH
VPRNHGSURGXFWEDQGDLVRIWHQFKDUUHGYHU\GU\DQGEULWWOH,WLVRIYHU\ORZTXDOLW\EXWLWVORQJ
VKHOI OLIH HQVXUHV WKDW GHPDQG IRU EDQGD UHPDLQV KLJK 7KH KLJK VKHOI OLIH DOVR IDFLOLWDWHV ZLGH
GLVWULEXWLRQWKURXJKRXWWKHFRXQWU\WRPHHWGHPDQGIURPORZHULQFRPHVWUDWD
)LVKLVDOVRGULHGLQWKHRSHQDLUXVLQJVLPSOHVKHOYHV$YHU\OLPLWHGDPRXQWRIILVKPRQJHUVXVH
UHIULJHUDWLRQ XQLWV WR NHHS IUHVK ILVK FRRO ZKLOH WKH\ DUH WUDQVSRUWHG IURP WKH ODQGLQJ VLWHV WR
PDUNHWVLQODQG

7UDQVSRUWLQJ ILVK SURGXFWV LV PRVW FRPPRQO\ GRQH WKURXJK SXEOLF WUDQVSRUW +RZHYHU WKLV
LQFUHDVHVULVNGXHWRLUUHJXODUVHUYLFHVDQGLQFUHDVHGH[SHQVH$VDUHVXOWILVKHUVDUHVRPHWLPHV
IRUFHGWRVHOOWKHLUFDWFKWRDYRLGVSRLODJH
7KHOLPLWHGSXEOLFWUDQVSRUWV\VWHPRIWHQOHDGVWRVLWXDWLRQVZKHUHWKHPDUNHWFDQEHGRPLQDWHG
E\DVPDOOJURXSRIWUDGHUVZLWKDFFHVVWRSULYDWHWUDQVSRUWDWLRQ7KHLULQIOXHQFHLVHQKDQFHGE\
WKH UHPRWHQHVV RI WKH YLOODJHV DQG WKH SHULVKDEOH QDWXUH RI WKH SURGXFW 7KLV RIWHQ OHDGV WR
UHODWLRQVKLSV ZKHUH ILVKHUV DUH HQWLUHO\ GHSHQGHQW RQ WUDGHUV WR SXUFKDVH WKHLU KDUYHVWV DQG LQ
PDQ\LQVWDQFHVSURYLGHFUHGLW7KLVDOVRDOORZVWUDGHUVDJUHDWHUGHJUHHRIIUHHGRPWRVHWSULFHV
DQG ORDQ LQWHUHVW UDWHV DV WKH\ VHH ILW 7KH WUDGHUV DUH KRZHYHU SURYLGLQJ VHUYLFHV WKDW DUH
HVVHQWLDO WR WKH HFRQRP\RI ILVKLQJ FRPPXQLWLHV WKDW PDQ\ IRUPDO LQVWLWXWLRQV DUH UHOXFWDQW WR
SURYLGH
1LJHULDQVFRQVXPHDERXWPLOOLRQWRQVRIILVKSHU\HDU)$2)UHVKDQGSURFHVVHGILVK
LV ZLGHO\ PDUNHWHG WKURXJKRXW WKH FRXQWU\ WKRXJK D VLJQLILFDQW SRUWLRQ RI ILVK LV LPSRUWHG
)UHVK ILVK VHOOHUV PDUNHW WKHLU SURGXFWV LQ WKH QHLJKERXUKRRG FRPPXQLWLHV DQG XUEDQ FHQWHUV
ZKLOHVPRNHGILVKGHDOHUVFDQGLVWULEXWHWKHLUSURGXFWVPXFKIXUWKHU7KHSULQFLSDODVVHWRIWKH
IUHVKILVKGHDOHUFDQEHGHHSIUHH]HUVORFDWHGDWQHLJKERXULQJPDUNHWVKRZHYHUWKHVHDUHRIWHQ
ODFNLQJ*HQHUDOO\ILVKSUHVHUYDWLRQLVGRQHWKURXJKVPRNLQJGU\LQJDQGLFLQJ
)UHVKO\IUR]HQILVKLVDYDLODEOHLQDOOPDMRUFLWLHVRIWKHFRXQWU\DOO\HDU7KHUHWDLOPDUNHWSULFH
IRUPDULQHILVKLVDSSUR[LPDWHO\1²NJ)$2)UHVKZDWHUILVKDUHDYDLODEOHLQDOO
PDMRU FLWLHV WKURXJKRXW 1LJHULD DOO \HDU GXH WR WKH SUHVHQFH RI ILVK IDUPV WKURXJKRXW WKH
FRXQWU\ 7KH PDUNHW SULFH IRU IUHVKZDWHU ILVK LV KLJKHU WKDQ PDULQH ILVK DW 1 ² NJ
)DUPHGFDWILVKDUHDYDLODEOHDW1NJDWWKHIDUPJDWHDQGFDQRIWHQUHDFK1NJLQ
QRUWKHUQ FLWLHV )$2 6PRNHG ILVK DUH RIWHQ VROG DORQJ PDMRU KLJKZD\ URXWHV EHWZHHQ
FLWLHV6WRUDJHIDFLOLWLHVIRUXQVROGILVKH[LVWDWWKHVHVDOHVSRLQWV
,QFLWLHVPXQLFLSDODXWKRULWLHVGHVLJQDWHVSHFLILFDUHDVIRUILVKPDUNHWVWKDWKDYHVXIILFLHQWURRP
IRU SURFHVVLQJ DQG VWRUDJH FDSDELOLWLHV &KDLQ VWRUHV DQG VXSHUPDUNHWV H[LVW IRU KLJKHQG
FRQVXPHUVZKHUHILVKDUHGLVSOD\HGRQLFHLQUHIULJHUDWHGFDELQHWVDQGVSHFLHVLQFOXGH&URDNHUV
6KLQHQRVH %DUDFFXGD 6KULPS DQG /REVWHU 3URGXFWV DUH VROG DW D IL[HG SULFH SHU NJ )LVK
SURGXFHUVLQ1LJHULDDUHXQDEOHWRPHHWGHPDQGIRUILVKSURGXFWVOHDYLQJ1LJHULDWRUHO\KHDYLO\
RQ LPSRUWV WR KHOS PHHW GHPDQG $FFRUGLQJ WR WKH )$2 LPSRUWV FRQWULEXWH EHWZHHQ
WRW\URIFRQVXPSWLRQ
48
6PRNHGILVKRIYDULRXVVSHFLHVDUHSRSXODULQ1LJHULD&OXSHLGVPDULQHDQGIUHVKZDWHUIDUPHG
ILVKVXFKDV&ODULDV+HWHUREUDQFKXVDQG&DUSDQGULYHULQHVSHFLHVVXFKDV+HWHURWLV&KULV\FKWK\VDQG
*\PDQDUFKXV DUH DOO SRSXODU WR FRQVXPH VPRNHG )$2 %RWK IUHVK IDUPHG FDWILVK DQG
VPRNHGFDWILVKDUHWUDGHGZLWKLQWKHUHJLRQ5HOLDEOHQXPEHUVDUHGLIILFXOWWRDWWDLQGXHWRWKH
ODUJH DPRXQWV WKDW DUH XQUHSRUWHG $ VLJQLILFDQW DPRXQW RI IUHVK SURGXFWV DUH VROG GLUHFWO\ WR
KRWHOV DQG UHVWDXUDQWV )LVK YHQGRUV DUH FRQWUDFWHG E\ KRWHOV DQG UHVWDXUDQWV ZKLOH YHQGRUV LQ
WXUQ FRQWUDFW ILVK IDUPHUV DQG UHVHUYRLU ILVKHUV 7KH HPHUJLQJ IDVW IRRG LQGXVWU\ LQ 1LJHULD LV
LQFUHDVLQJWKHGHPDQGIRUVSHFLILFVSHFLHVVL]HVDQGYDOXHDGGHG)$2
7KHUHLVFXUUHQWO\QRVWDQGDUGDQGDFFUHGLWDWLRQV\VWHPIRUWKHLQODQGDUWLVDQDOILVKHU\DQGVPDOO
VFDOHILVKIDUPLQJ+RZHYHUWKH)LVKHULHV6RFLHW\RI1LJHULDLVSDUWLFLSDWLQJLQWUDLQLQJFRXUVHV
WRHQDEOHWKHPWRXQGHUWDNHVHWWLQJVWDQGDUGVDQGSURYLGLQJDFFUHGLWDWLRQ

&KDQQHOVIRULQIRUPDWLRQVKDULQJZLWKUHJDUGWRSULFHVDORQJWKHYDOXHFKDLQDUHOLPLWHG,QUXUDO
DUHDV LQ SDUWLFXODU RUJDQL]DWLRQV DUH OHVV FRKHVLYH DQG OLWWOH LQIRUPDWLRQ LV H[FKDQJHG
&RPSHWLWLRQ DPRQJ DUWLVDQDO ILVKHUV LV RIWHQ PXWHG GXH WR WKH UROH SOD\HG E\ WUDGHUV ZKR
H[HUFLVHDVWURQJGHJUHHRIFRQWURORYHUSULFHV5XUDOILVKHUVKDYHYHU\IHZDOWHUQDWLYHVEXWWRVHOO
WKHLUKDUYHVWWRDWUDGHU&ROOXVLRQLQSULFHVHWWLQJLVYHU\OLNHO\7KHVLWXDWLRQLVEHWWHUQHDUXUEDQ
FHQWUHVZKHUHRUJDQL]HGJURXSVHQVXUHEHWWHUDFFHVVWRLQIRUPDWLRQ
7KHUH DUH VHYHUDO XSJUDGLQJ DQG GHYHORSPHQW RSSRUWXQLWLHV DORQJ WKH YDOXH FKDLQ WKDW VKRXOG
UHFHLYHIXUWKHUVWXG\
• 8VH RI KLJK HIILFLHQF\ VPRNLQJ RYHQVZKLFK GHFUHDVH ORVVHV DQG UHGXFH HQYLURQPHQWDO
LPSDFW
• ,QFUHDVHGXVHRIE\SURGXFWVIRUILVKPHDOSURGXFWLRQDPRQJRWKHUSRWHQWLDOO\LQFRPH
JHQHUDWLQJDFWLYLWLHV
• %HWWHUDFFHVVWRWUDQVSRUWIDFLOLWLHVSURYLGLQJILVKHUVZLWKPRUHRSWLRQVIRUWUDQVSRUWLQJ
ILVKWRPDUNHWVDQGZRXOGKHOSFUHDWHFRPSHWLWLRQ
• 8VHRIK\JLHQLFVRODUGU\LQJUDFNVWKDWLPSURYHWKHTXDOLW\RIGULHGILVK
• ,QFUHDVHGXVHRILFH²LQFOXGLQJSRVVLEOHLFHSODQWLQWURGXFWLRQ²KHOSLQJWRSUHVHUYHWKH
TXDOLW\RIIUHVKILVK
• 8SJUDGLQJ RI PDUNHW VLWHV WR HQVXUH K\JLHQH VWDQGDUGV DSSOLFDWLRQ RI EHWWHU ILVK
SUHVHUYDWLRQWHFKQRORJLHVWRLQFUHDVHWKHTXDOLW\RIILVK
• ,PSURYHG ILVK IHHG SURGXFWLRQ FHQWUHV LQ UXUDO DUHDV WR VXSSO\ VPDOOVFDOH DTXDFXOWXUH
IDUPV

:LWKUHJDUGWRVPDOOVFDOHDTXDFXOWXUHIDUPVWKHUHLVOLPLWHGNQRZOHGJHRISURSHUXVHRIZDWHU
UHVRXUFHV3RRUTXDOLW\ILVKIHHGVLQNVDQGFDQFUHDWHVLOWLQWKHZDWHU0RUHRYHUNQRZOHGJHRI
ILVKKHDOWKDQGGLVHDVHPDQDJHPHQWZDWHUTXDOLW\PDQDJHPHQWVXVWDLQDEOHUHPRYDORIQLWURJHQ
IURP ZDWHU V\VWHP ZDWHU SROOXWLRQ UHGXFWLRQ DQG ZDWHU UHFLUFXODWLRQ DQG IORZ WKURXJK
WHFKQRORJ\UHPDLQVOLPLWHG
2YHUILVKLQJ LQ LQODQG DUHDV VXJJHVWV WKDW WKHUH LV LQVXIILFLHQW WUDLQLQJ ZLWK UHJDUG WR
HQYLURQPHQWDO PDQDJHPHQW LVVXHV 1RQHWKHOHVV VRPH WUDGLWLRQDO IRUPV RI PDQDJHPHQW KDYH
VXFFHHGHGLQVXVWDLQDEOHPDQDJLQJVWRFNOHYHOV
49
)LVKHULHVLVRQHRIWKHHLJKWSURIHVVLRQDO'HSDUWPHQWVLQWKH)HGHUDO0LQLVWU\RI$JULFXOWXUHDQG
5XUDO 'HYHORSPHQW DQG LV KHDGHG E\ D 'LUHFWRU RI )LVKHULHV 6WDWH 'LUHFWRUV RI )LVKHULHV DOVR
KHDGVLPLODU'HSDUWPHQWVLQWKHLUUHVSHFWLYH0LQLVWULHVRI$JULFXOWXUH7KH)HGHUDO'HSDUWPHQW
RI )LVKHULHV )') LV UHVSRQVLEOH IRU SROLF\ IRUPXODWLRQ SURJUDPPH GHYHORSPHQW UHJXODWLRQV
DQGTXDOLW\FRQWURO1LJHULDKDVWZR)HGHUDO)LVKHULHV5HVHDUFK,QVWLWXWHV1LJHULDQ,QVWLWXWHIRU
2FHDQRJUDSK\ DQG 0DULQH 5HVHDUFK 1,205 /DJRV DQG 1DWLRQDO )UHVKZDWHU )LVKHULHV
5HVHDUFK ,QVWLWXWH 1,))5 1HZ %XVVD 1LJHULD DOVR KDV XQLYHUVLWLHV ZLWK IXOOIOHGJHG
GHSDUWPHQWV RI ILVKHULHV DQG DTXDFXOWXUH 0DULQH )LVKHULHV DW WKH 8QLYHUVLWLHV RI /DJRV DQG RI
&DODEDU DQG )UHVKZDWHU)LVKHULHV DW WKH 8QLYHUVLWLHV RI ,EDGDQ$EHRNXWD0DNXUGL 8PXGLNH
$NXUH0LQQDDQG<ROD1LJHULDDOVRKDVWKUHH)HGHUDO&ROOHJHVRI)LVKHULHVDW/DJRV1HZ%XVVD
DQG %DJD0DLGXJXUL 3ULYDWH LQVWLWXWLRQV VXFK DV WKH )LVKHULHV 6RFLHW\ RI 1LJHULD DQG WKH &DWILVK
)DUPHUV$VVRFLDWLRQRI1LJHULDDUHSOD\LQJDJUHDWHUUROHLQILVKHU\GHYHORSPHQW7KHUHDUHLQIRUPDO
LQVWLWXWLRQVDVZHOOVXFKDVFRPPXQLW\EDVHGRUJDQL]DWLRQVIRUWKHPDQDJHPHQWRIILVKHULHV
$UWLVDQDO ILVKHUV KDYH YHU\ UHVWULFWHG ILQDQFLQJ RSWLRQV )LVKHUV DUH YHU\ RIWHQ SRRU DQG VSHQG
PRVWRIWKHLULQFRPHRQLPPHGLDWHQHHGVVXFKDVIRRGOHDYLQJWKHPXQDEOHWRSD\IRUFDSLWDO
LWHPVWKHHGXFDWLRQRIWKHLUFKLOGUHQPHGLFDOVHUYLFHVFORWKLQJWUDQVSRUWDWLRQDQGRWKHULWHPV
)$2'),'
:LWKOLWWOHFDSLWDORUQHWZRUWKWRSXWXSDVFROODWHUDOILQDQFLDOLQVWLWXWLRQVGHHPILVKHUVWRRKLJK
DULVNHYHQDWLQFUHDVHGLQWHUHVWUDWHV7KLVOHDYHVDUWLVDQDOILVKHUVWRGHSHQGRQVPDOOSHUVRQDO
VDYLQJVORDQVIURPIULHQGVUHODWLRQVPRQH\OHQGHUVDQGWUDGHUV%R[$

%R[$&DSLWDOLQYHVWPHQWDQGRXWSXW
LQILVKHULHVYDOXHFKDLQVLQ1LJHULD1ELOOLRQLQ
6XEVHFWRU &DSLWDO,QYHVWPHQW 2XWSXW
,QGXVWULDO
$UWLVDQDO
$TXDFXOWXUH
2UQDPHQWDO
7RWDO
6RXUFH)$2
7KHUHLVYHU\OLWWOHUHFRXUVHWRIRUPDOILQDQFLDOLQVWLWXWLRQVDOWKRXJKWKHUHDUHFXUUHQWO\1*2V
DQG VHYHUDO SURMHFWV DLPHG DW IDFLOLWDWLQJ DFFHVV WR FUHGLW 7KH ODFN RI FDSLWDO LQYHVWPHQW LV D
PDMRU IDFWRU LQIOXHQFLQJ WKH DGRSWLRQ RI LPSURYHG WHFKQRORJ\ LQ WKH ILVKLQJ FRPPXQLWLHV $V
VWDWHG DERYH ILVKHUV UHO\ RQ SHUVRQDO VDYLQJV DQG RQ WUDGLWLRQDO VRXUFHV RI FUHGLW UHODWLYHV
IULHQGVPRQH\OHQGHUVHWFIRULQYHVWPHQWFDSLWDO7KHIXQGVDYDLODEOHDWWKLVOHYHODUHOLPLWHG
DQGFDQQRWPHHWWKHFDSLWDOUHTXLUHPHQWRILPSURYHGWHFKQRORJ\$VDUHVXOWDUWLVDQDOILVKHUPHQ
DUH XQDEOH WR LQYHVW LQ HTXLSPHQW WKDW ZRXOG UDLVH SURGXFWLYLW\ DOORZ PLFURHQWHUSULVHV WR
H[SDQGDQGXOWLPDWHO\LQFUHDVHLQFRPHV
50
7DEOH$)XQGLQJUHTXLUHPHQWVLQLQODQGDTXDFXOWXUHDQGDUWLVDQDOILVKHULHVYDOXHFKDLQ
Retailers / Shopkeepers
Aquaculture producers
Trader / Wholesaler /
Artisanal fishers
Input industry
Distributor
Processors
Export
Need/ Working Fixed assets Working capital Fixed assets Working capital Working capital
capital (equipment (operating (processing (operating (operating
purpose
(operating expenses), fixed equipment) expenses) expenses), fixed
expenses), assets assets (quality
fixed assets (equipment) assurance
(equipment) systems)
Volume high high medium high medium medium
needed
Risks high medium medium medium low medium
Interest high medium medium medium low medium
6RXUFH7KHDXWKRUV
51
A.4 Maize
0DL]HLVDQLPSRUWDQWJUDLQFURSLQ1LJHULDEHLQJERWKWKHPDMRUIHHGJUDLQDQGDQLPSRUWDQW
VWDSOHIRRG7KHFURSLVSURGXFHGLQDOOWKHDJURHFRORJLFDO]RQHVLQWKHFRXQWU\+RZHYHUWKH
1RUWK&HQWUDO=RQHLVWKHOHDGLQJSURGXFHUDFFRXQWLQJIRURQHWKLUGRIWRWDOPDL]HSURGXFHGLQ
WKHFRXQWU\$JJUHJDWHDYHUDJH\LHOGVDUHORZUDQJLQJIURPWRQVKDLQ1(WRWRQVKD
LQ6()DUPHUVFXOWLYDWHPDL]HERWKDVVROHDQGPL[HGFURSODUJHO\GHSHQGLQJRQWKHSURGXFWLRQ
ORFDWLRQ DQG REMHFWLYH 0HGLXP WR ODUJHVFDOH PDL]H IDUPHUV FXOWLYDWH PDL]H DV VROH FURS DQG
IROORZ VRPH GHILQHG FURS URWDWLRQ SDWWHUQV 6PDOOKROGHUV JHQHUDOO\ SUDFWLFH PL[HG FURSSLQJ
PDL]HZLWKRWKHUIRRGFURSVDVDPHDQVRIVHFXULW\VKRXOGPDL]HFURSIDLOGXHWRZHDWKHURU
XQDYDLODELOLW\RILQSXWV
Mapping the chain

7ZRW\SHVRIPDL]HDUHFXOWLYDWHGLQ1LJHULD²ZKLWHDQG\HOORZ)RUHDFKRIWKHVHKLJK\LHOGLQJ
YDULHWLHVKDYHEHHQGHYHORSHGE\WKH,QWHUQDWLRQDO,QVWLWXWHIRU7URSLFDO$JULFXOWXUH,,7$DQG
WKH ,QVWLWXWH IRU $JULFXOWXUDO 5HVHDUFK ,$5 0DL]H LV HLWKHU KDUYHVWHG JUHHQ RU GU\ WKRXJK
PXFKRIWKHPDL]HPDUNHWHGLVWKHRQHKDUYHVWHGGU\7KHPDUNHWVWUXFWXUHVDQGYDOXHFKDLQVRI
\HOORZDQGZKLWHPDL]HDUHQRWYHU\GLIIHUHQWEXWGHSHQGRQWKHHQGXVHV:KLWHPDL]HLVPRVWO\
IRUKXPDQFRQVXPSWLRQWKRXJKVRPHLVXVHGDVSRXOWU\IHHG<HOORZPDL]HLVYLUWXDOO\DOOXVHG
IRU SRXOWU\ IHHG DQG FRQVXPSWLRQ )LJXUH $ EHORZ LOOXVWUDWHV D VLPSOLILHG FKDLQ RI WKH PRVW
SUHGRPLQDQWVWDJHVRIYDOXHDGGLWLRQRIPDL]H
)LJXUH$3UHGRPLQDQW0DL]HYDOXHFKDLQVLQ1LJHULDQ

$VVHPEOHUV
)HHG
<HOORZ 3RXOWU\
0LOOV
PDL]H

,QSXW
0DL]H +RXVHKROG
VXSSOLHUV
IDUPHUV 3URFHVVLQJ
Food
Processing &RQVXPHUV

:KLWH
0DL]H

)ORXU
$VVHPEOHUV
PLOOV
6RXUFH7KHDXWKRUV
$ QXPEHU RI YDOXH DQG PDUNHW FKDLQV H[LVW IRU PDL]H LQ 1LJHULD 7KHUH DUH PDQ\ VLPLODULWLHV
EHWZHHQWKH\HOORZDQGZKLWHPDL]HPDUNHWFKDLQVDIWHUSXUFKDVHE\WKHPHGLXPDVVHPEOHUVRU
ODUJH SURFHVVLQJ FRPSDQLHV %XONLQJ RI TXDQWLWLHV IRU ZKLWH PDL]H LV GRQH E\ DVVHPEOHUV ZKR
LQLWLDOO\EX\PDL]HIURPIDUPHUVDQGWUDQVSRUWLWWRDFHQWUDOORFDWLRQ$ODUJHSURSRUWLRQRIWKH
PDL]H IRU KXPDQFRQVXPSWLRQ LV PLOOHG LQ ODUJHVFDOH PLOOV DQG VROG LQ EXON DQG WKHQ WR UHWDLO
PDUNHWV
52
,QFUHDVLQJPDL]HSURGXFWLRQLQ1LJHULDKDVUHFHLYHGWKHDWWHQWLRQRIWKH1LJHULDQ*RYHUQPHQW
GHYHORSPHQW SDUWQHUV DQG SULYDWH VHFWRU LQYHVWRUV RYHU WKH SDVW WZR GHFDGHV ,Q WKLV UHVSHFW
VHYHUDO DJULFXOWXUDO GHYHORSPHQW SURJUDPPHV KDYH RU DUH EHLQJ LPSOHPHQWHG DW WKH 6WDWH DQG
)HGHUDOOHYHOVWRSURPRWHSURGXFWLYLW\DQGSURGXFWLRQRIPDL]H6XFKSURMHFWVKDYHIRFXVHGRQ
DGGUHVVLQJ WKH JHQHUDOO\ REVHUYHG LQHIILFLHQW DQG XQFRPSHWLWLYH PDL]H FRPPRGLW\ V\VWHPV
PDLQO\ LOOXVWUDWHG E\ ORZ \LHOGV DQG KLJK WUDQVDFWLRQ FRVWV SRVW KDUYHVW 0DL]H SURGXFWLRQ
UHTXLUHVLQYHVWPHQWVIRULPSURYHGVHHGIHUWLOL]HUXVHDQGPDFKLQHU\+RZHYHUGXHWRKLJKSULFH
YDULDELOLW\ DQG FRVWO\ LQSXWV VPDOOKROGHU IDUPHUV DUH LQFDSDFLWDWHG RU ILQG LW XQHFRQRPLFDO WR
LQYHVWLQWKHVH\LHOGLPSURYLQJWHFKQRORJLHV
7KH IHZ PHGLXP WR ODUJHVFDOH PDL]H IDUPHUV XVH LPSURYHG PDL]H SURGXFWLRQ WHFKQRORJLHV
SDUWLFXODUO\ LPSURYHG PDL]H VHHG YDULHWLHV VRXQG DJURQRPLF SUDFWLFHV IHUWLOL]HU DQG KHUELFLGH
DSSOLFDWLRQDQGSRVWKDUYHVWKDQGOLQJWHFKQLTXHV$OWKRXJKWKHIHUWLOL]HULQGXVWU\LVGHUHJXODWHG
LQ 1LJHULD WKH VXSSOLHV RI DGHTXDWH IHUWLOL]HU LQ WLPH DQG DW DIIRUGDEOH SULFHV KDYH UHPDLQHG D
PDMRUSUREOHPUHVSRQVLEOHIRUORZPDL]H\LHOGV,QFUHDVLQJWKHSULYDWHVHFWRUVXSSO\RIIHUWLOL]HU
VHHGVSHVWLFLGHVDQGPHFKDQL]DWLRQLVUHTXLUHGWRLQFUHDVHSURGXFWLYLW\DQGVXSSO\RIPDL]HWR
ORFDOPDUNHWV
&XUUHQWO\ SRRU SURGXFHUV VXIIHU VXEVWDQWLDO ORVVHV IURP IDLOXUH WR HYDFXDWH SURGXFWV IURP
SURGXFLQJDUHDVDQGJHWWKHPWRWKHPRVWSURILWDEOHPDUNHWVDWWKHULJKWWLPHGXHWRSRRUURDGV
DQGXQUHOLDEOHWUDQVSRUW7KHVHORVVHVUHGXFHSURILWVIRUSURGXFHUVUHGXFHSURILWVIRUWUDGHUVDQG
PDQXIDFWXUHUV DQG UDLVH SULFHV IRU FRQVXPHUV 5HQWVHHNLQJ EHKDYLRXU E\ VWDWH RIILFLDOV LV
ZLGHVSUHDGLQWKHPDL]HLQGXVWU\DQGQRWRQO\ZLWKLQWKHWUDQVSRUWFRPSRQHQWDQGPXVWEH
UHGXFHGLIWKHEHQHILWVRILQFUHDVHGPDL]HGHPDQGDUHWREHWUDQVODWHGLQWRLQFUHDVHGLQFRPHIRU
SRRUSURGXFHUV

7KHUHLVDOUHDG\VXIILFLHQWFDSDFLW\LQVWDOOHGLQWKHFRXQWU\IRUILUVWVWDJHSURFHVVLQJRIDOOPDL]H
SURGXFHG PHGLXP WR ODUJHVFDOH PLOOV DUH XVXDOO\ EHWWHU HVWDEOLVKHG DQG KDYH EHWWHU DFFHVV WR
IRUPDOILQDQFLQJ
9LOODJHOHYHOPLOOVDUHOHVVZHOOHVWDEOLVKHGDQGPD\UHTXLUHWHFKQRORJLFDOXSJUDGLQJDQGWUDLQLQJ
RIRSHUDWRUVRWKHUZLVHWKHEXVLQHVVRSSRUWXQLWLHVWKH\SURYLGHDUHMXVWWRRLQVLJQLILFDQW$PRQJ
WKRVHDUHPDQ\XQOLFHQVHGRU´LQIRUPDOµWUDGHUVDQGPLOOHUVZKRSURYLGHPLOOLQJVHUYLFHVGLUHFWO\
WR KRXVHKROGV :KLOH WKH VPDOOVFDOH SURFHVVRUV DW YLOODJH OHYHO DUH PRVWO\ JULQGHUV VRPH
PHGLXP DQG ODUJHVFDOH FRPSDQLHV KDYH PDGH VLJQLILFDQW LQYHVWPHQWV LQ SURFHVVLQJ PDFKLQHU\
DQGLQIUDVWUXFWXUHVWRUDJHPLOOLQJSDFNDJLQJHWF
7KH VHFRQGDU\VWDJH LQGXVWU\ FRQVLVWV RI GU\ DQG ZHW PLOOLQJ LQGXVWU\ DQG WKH DQLPDO IHHG
LQGXVWU\0RVWRIWKHODUJHVFDOHPLOOVDUHFRQFHQWUDWHGLQ/DJRV.DGXQDDQG.DQR6FLHQWLVWVDW
WKH,,7$UHSRUWWKDWSUHDQGSRVWKDUYHVWFRQWDPLQDWLRQRIDIODWR[LQLQPDL]HLVDPDMRUKHDOWK
GHWHUUHQW IRU SHRSOH DQG OLYHVWRFN LQ 1LJHULD ,W LV UHSRUWHG WKDW PRUH WKDQ SHUFHQW RI
KDUYHVWHGPDL]HLQ1LJHULDKDYHKLJKOHYHORIDIXQJLSRLVRQFDOOHG$IODWR[LQ
3UHDQGSRVWKDUYHVW SUDFWLFHVWKDWUHGXFHDIODWR[LQFRQWDPLQDWLRQLQFOXGHWKHXVHRIUHVLVWDQW
FXOWLYDUV KDUYHVWLQJ DW PDWXULW\ DQG UDSLG GU\LQJ RQ SODWIRUPV WR DYRLG FRQWDFW ZLWK VRLO
DSSURSULDWHVKHOOLQJPHWKRGVWRUHGXFHJUDLQGDPDJHVRUWLQJXVHRIFOHDQDQGDHUDWHGVWRUDJH
VWUXFWXUHVFRQWUROOLQJLQVHFWGDPDJHDQGDYRLGLQJORQJVWRUDJHSHULRGV

0DL]H GHPDQG LQ WKH FRXQWU\ LV HVWLPDWHG WR LQFUHDVH DW DQ DYHUDJH RI SHUFHQW SHU \HDU
ODUJHO\GXHWRSRSXODWLRQLQFUHDVHDQGXUEDQL]DWLRQ$SDUWIURPEHLQJHDWHQDVLWLVRQWKHFRE
PDL]HLVXVHGDVIRRGLQIRUPRISRUULGJHVFRUQIODNHVDQGSRSSHGJUDLQV+RZHYHUPRUHWKDQ
53
RI 1LJHULD
V SURGXFWLRQ RI PDL]H LV FRQVXPHG E\ WKH LQGXVWULDO VHFWRU IRU SURGXFWLRQ RI
IORXUEHHUPDOWGULQNFRUQIODNHVVWDUFKV\UXSGH[WURVHDQGDQLPDOIHHGV
'RPHVWLF GHPDQG IRU PDL]H FRQWLQXHV WR EH ODUJHO\ GULYHQ E\ WKH HYROXWLRQ RI WUDGLWLRQDO
PDUNHWV HJ IHHG DQG IRRG PDUNHWV DV ZHOO DV E\ LQGXVWULDO XVH DQG WKH GHYHORSPHQW RI
DOWHUQDWLYHXVHVIRUPDL]H7UDGLWLRQDOO\FRQVLGHUHGDVXEVLVWHQFHFURSPDL]HLVQRZWUDQVIRUPHG
LQWRDFRPPHUFLDOFURSGXHWRWKHGHPDQGVRIWKHIHHGDQGSRXOWU\LQGXVWULHV0DL]HSURGXFHUV
KDYHEHFRPHPRUHPDUNHWRULHQWHGDQGRSHQWRWKHDGRSWLRQRILPSURYHGWHFKQRORJLHV,QWKH
QH[W WZR GHFDGHV WKH FRPSRVLWLRQ RI GHPDQG IRU PDL]H ZLOO OLNHO\ FKDQJH ZLWK IHHG XVH RI
PDL]HLQFUHDVLQJPRUHUDSLGO\WKDQIRRGXVH$VDUHVXOWRISURMHFWHGIDVWHUJURZWKLQIHHGXVH
WKH PDUNHW IRU \HOORZ PDL]H ZLOO H[SDQG UHODWLYH WR WKDW IRU ZKLWH PDL]H $ ORW RI WKH PDL]H
SURGXFHG LQ WKH JXLQHD VDYDQQDK ]RQH RI WKH FRXQWU\ LV WUDQVSRUWHG WR GLIIHUHQW SDUWV RI WKH
FRXQWU\
7KH IHHG LQGXVWU\ XVHV SULPDULO\ \HOORZ PDL]H IRU WKH SXUSRVHV RI DQLPDO IHHG PDQXIDFWXULQJ
$OWKRXJK\HOORZPDL]HLVXVHGLWFRPSULVHVDVPDOOSRUWLRQRIWKHWRWDOIHHGORWUHTXLUHPHQWDV
\HOORZPDL]HLVPXFKPRUHH[SHQVLYHWKDQZKLWHPDL]H<HOORZPDL]HLVPDLQO\XVHGLQEURLOHU
DQGOD\HUIHHGUDWLRQV
$KPHG HW DO LGHQWLILHG WKH IROORZLQJ FRQVWUDLQWV LQ WKH PDL]H PDUNHW L LQDGHTXDWH
DFFHVV WR IRUPDO FUHGLW IDFLOLWLHV LL LQDGHTXDWH VHFXULW\ IRU JRRGV LQ WUDQVLW LLL SRRU PDUNHW
LQIUDVWUXFWXUH LY XQRIILFLDO FKDUJHV E\ D GLYHUVH UDQJH RI DFWRUV DQG Y ODFN RI IRUPDO
LQVXUDQFH7KHVDPHVWXG\VXJJHVWVWKHLQWHUYHQWLRQVWRHQKDQFHWKHSHUIRUPDQFHRIWKHPDL]H
FRPPRGLW\ FKDLQ 7UDQVSRUW VHFWRU LPSURYHPHQWV DUH HVVHQWLDO DFURVV WKH PDL]H GLVWULEXWLRQ
FKDLQ7KLVUHTXLUHVDFRQFHUWHGHIIRUWIURPFHQWUDOVWDWHDQGORFDOJRYHUQPHQWVWRJHWKHUZLWK
GRQRUVXSSRUW

,Q JHQHUDO WKH ODUJHVFDOH IORXU DQG SRXOWU\ IHHG PLOOV WKURXJK WKH PDL]H DQG JUDLQ PHUFKDQWV
SOD\ DQ LPSRUWDQW UROH LQ GLUHFWLQJ WKH PDL]H PDUNHW 4XDOLW\ RI PDL]H GHOLYHUHG WR SURFHVVRUV
UHPDLQV D PDMRU SUREOHP LQ WKH VXSSO\ FKDLQ &RRUGLQDWLRQ DPRQJ WKH PDQ\ DQG VSDWLDOO\
GLVSHUVHGVPDOOKROGHUPDL]HIDUPHUVLVGLIILFXOWWRDFKLHYH
7KHUHDUHDOVRVHYHUDOLWLQHUDQWEX\HUVEXWODUJHQXPEHURIFRQVXPHUV2XWJURZHUVFKHPHVDQG
FRQWUDFW IDUPLQJ PRGHOV KDYH EHHQ WULHG LQ WKH PDLQ PDL]H SURGXFLQJ VWDWHV EXW WKLV KDV QRW
EHHQ VXFFHVVIXO 'XH WR WKH LQDGHTXDWH DFFHVV WR SURGXFWLYLW\ HQKDQFLQJ LQSXWV LW KDV EHHQ
GLIILFXOWWRLQWURGXFHVWDQGDUGV3RRUTXDOLW\GXHWRSRRUGU\LQJDQGVWRUDJHOHDGVWRKLJKOHYHOV
RIFRQWDPLQDWLRQDQGLQIHVWDWLRQRIDIODWR[LQV²ZKLFKSRVHVKHDOWKKD]DUGVWRERWKKXPDQVDQG
OLYHVWRFN
*LYHQWKHXQFRRUGLQDWHGQDWXUHRIWKHPDUNHWWKHUHLVQRFOHDUOHDGHULQWKHHQWLUHFKDLQWKRXJK
WKHVSHFLILFIORXURUOLYHVWRFNIHHGPLOOHUVFRXOGSXVKIRUDEHWWHURUJDQL]DWLRQDQGLQWHJUDWLRQRI
WKH YDOXH FKDLQ RI WKH PDQ\ VPDOOKROGHUV LQ D ZD\ WR HQVXUH TXDOLW\ RI PDL]H GHOLYHUHG WR WKH
PLOOV 7KH ,QWHUQDWLRQDO ,QVWLWXWH RI 7URSLFDO $JULFXOWXUH ,,7$ ,QVWLWXWH RI $JULFXOWXUDO
5HVHDUFK ,$5 =DULD DQG WKH 0DL]H )DUPHUV $VVRFLDWLRQ DUH WKH PDLQ SDUWQHUV LQ PDL]H
SURGXFWLRQ

3URGXFWLYLW\RIPDL]HLQ1LJHULDLVORZZLWK\LHOGVRQIDUPHUV·IDUPDYHUDJLQJWKD5HVHDUFK
UHVXOWVIURP,,7$LQGLFDWHVWKDWE\XVLQJLPSURYHGVHHGVDQGDJURQRPLFSUDFWLFHVPDL]HIDUPHUV
LQ1LJHULDFDQGRXEOH\LHOGVWRWKD
,Q DUHDV ZKHUH IDUPHUV FXOWLYDWH KLJK \LHOGLQJ PDL]H YDULHWLHV WKH\ WHQG WR XVH KLJK OHYHOV RI
IHUWLOL]HU DQG SHVWLFLGHV 8QFRQWUROOHG XVH RI KLJK GRVHV RI IHUWLOL]HUV DQG SHVWLFLGHV OHDGV WR
54
HQYLURQPHQWDO GHJUDGDWLRQ DQG LPEDODQFHV LQ SHVW SRSXODWLRQV ,PSURSHU DSSOLFDWLRQ RI
SHVWLFLGHVPD\KDYHKD]DUGRXVHIIHFWVRQKXPDQV

$V D PDMRU IRRG VHFXULW\ DQG LQFRPH HDUQLQJ FURS IRU VHYHUDO KRXVHKROGV PDL]H SURGXFWLRQ
UHFHLYHVVSHFLDODWWHQWLRQIURPWKHJRYHUQPHQW3UHYLRXVDQGSUHVHQWHIIRUWVWRLPSURYHPDL]H
SURGXFWLRQLQFOXGHLPSURYLQJDFFHVVRIVPDOOIDUPHUVWRPRGHUQSURGXFWLYHWHFKQRORJLHVFUHGLW
DQG H[WHQVLRQ DGYLFH ZKLOH DW WKH VDPH WLPH RSHQLQJ XS UXUDO FRPPXQLWLHV WR LPSURYHG
WUDQVSRUWDQGPDUNHWLQJRIDJULFXOWXUDOSURGXFH,QOLQHZLWKWKHVHVHWJRDOVVHYHUDODJULFXOWXUDO
GHYHORSPHQW SURJUDPPHV ZLWK VXSSRUW RI VWDWH DQG IHGHUDO JRYHUQPHQWV DUH RU KDYH EHHQ
LPSOHPHQWHG
)HUWLOL]HUSROLF\DIIHFWVPDL]HSURGXFWLRQPRUHWKDQDQ\RWKHUFURS2YHUWKH\HDUVWKHIHGHUDO
JRYHUQPHQW KDV XQGHUWDNHQ YDULRXV SROLF\ UHIRUPV DQG FDPSDLJQ E\ WR HQFRXUDJH WKH XVH RI
IHUWLOL]HU+RZHYHUWKHUHKDYHEHHQLQFRQVLVWHQFLHVLQIHUWLOL]HUSROLF\LQ1LJHULDRYHUWKH\HDUV
ZKLFKDIIHFWVWKHIHUWLOL]HUXVDJHUDWHWKHTXDQWLW\RIIHUWLOL]HUGLVWULEXWHGWKHSULFHRIIHUWLOL]HU
IDFWRUVZKLFKKDYHVLJQLILFDQWHIIHFWVRQPDL]HSURGXFWLRQ,WLVUHFRPPHQGHGWKDWIRUIHUWLOL]HU
SROLF\WRDIIHFWFURSSURGXFWLRQSRVLWLYHO\LQ1LJHULDWKHGLVWULEXWLRQRIIHUWLOL]HUWRIDUPHUVKDV
WREHLPSURYHG*RYHUQPHQWVKRXOGDOVRHQVXUHIDUPHUVDUHHGXFDWHGRQIHUWLOL]HUXVDJHUDWH
0DL]HIDUPLQJLVSURILWDEOHLIIHUWLOL]HULVDYDLODEOHDWDIIRUGDEOHSULFHV0DUNHWLVQRWDSUREOHP
DVWKHGHPDQGIRUPDL]HERWKIRUKXPDQFRQVXPSWLRQDQGDVOLYHVWRFNIHHGVH[FHHGVGRPHVWLF
SURGXFWLRQ 6HYHUDO YDOXH DGGHG SURGXFWV ZLWK DVVXUHG ORFDO PDUNHW UHQGHU WKH SURFHVVLQJ
EXVLQHVVHVDOVRILQDQFLDODWWUDFWLYHQHVV)LQDQFLDODWWUDFWLYHQHVVLQSURFHVVLQJLQFUHDVHVZLWKVFDOH
RISURFHVVLQJ

,QWHUYLHZVZLWKPDL]HIDUPHUVUHYHDOHGWKDWYHU\IHZVPDOOVFDOHIDUPHUVDUHDEOHWRPHHWEDQN·V
FULWHULDWRDFFHVVFUHGLWDQGDVDUHVXOWYHU\OLWWOHXWLOL]DWLRQRIIRUPDOFUHGLWRFFXUVE\VPDOOVFDOH
IDUPHUV IRU PDL]H SURGXFWLRQ 7KH SURYLVLRQ RI FROODWHUDO DQG EHLQJ SDUW RI D UHJLVWHUHG
FRPPRGLW\JURXSZLWKDQDFFHSWDEOHDFFRXQWLQJV\VWHPLVRIWHQEH\RQGWKHUHDFKRIPRVWVPDOO
VFDOHIDUPHUV+RZHYHUDQXPEHURILQIRUPDOORDQLQJDFWLYLWLHVRFFXUIRURIWHQVKRUWDQGYHU\
VSHFLILFDFWLYLWLHVIRUH[DPSOHE\PDL]HVKHOOLQJVHUYLFHSURYLGHUVWRIDUPHUVZKRDUHSDLGRQFH
WKHFURSLVVROG7KHJUHDWHVWQHHGRIIDUPHUVIRUFUHGLWLVWRSXUFKDVHIDUPLQSXWV

7KHUH DUH D QXPEHU RI PLFURFUHGLW VFKHPHV WKDW DOORZ IDUPHUV DQG VPDOO SURFHVVRUV WR FRYHU
SDUWV RI WKHLU ILQDQFLDO QHHGV 7KHVH VFKHPHV KRZHYHU DUH RQO\ DYDLODEOH WR WDUJHW JURXSV RI
FHUWDLQDJULFXOWXUDOGHYHORSPHQWSURJUDPPHV
55
7KHDERYHDQDO\VLVZDVPHDQWWRHQDEOHDQXDQFHGLGHQWLILFDWLRQRIILQDQFLDOUHTXLUHPHQWVLQWKH
YDULRXVVHJPHQWVRIWKHYDOXHFKDLQ
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHPDL]HYDOXHFKDLQ
Breakfasts Food Processing

Maize milling (small-scale)
Maize milling (industrial)
Maize – Livestock feed

Commercial Farming
Small scale farming
Input industry
middlemen
Wholesale
Export
Need/ Working Working Working Working Working Working Working Working Fixed Working
purpose capital capital capital, capital, capital, capital, capital, capital, assets capital
fixed vehicles equip- equip- equip- equip- (warehous (pre- and
assets ment ment ment ment e post-
(long- transport) shipment)
term)
Volume high high high medium low medium high low medium medium
needed
Risks high high medium medium high low low low low low
Interest low low low medium low medium low low high high
56
A.5 Fruits
1LJHULDSURGXFHVDZLGHYDULHW\RIIDPLOLDUWURSLFDOIUXLWVLQFOXGLQJFLWUXVPDQJRSDSD\DJXDYD
SLQHDSSOHEDQDQDZDWHUPHORQDQGDYDULHW\RIOLWWOHNQRZQLQGLJHQRXV$IULFDQIUXLWVVXFKDVWKH
$IULFDQVWDUDSSOHKRJSOXPQDWLYHSHDUDQG$IULFDQRUZLOGPDQJR
$FFRUGLQJWR)$2)$26WDWWKHFRXQWU\SURGXFHVDERXWPLOOLRQVRIWRQVRIIUXLWVDQGLV
WKHHLJKWKODUJHVWSURGXFHURIPDQJRJOREDOO\2WKHUQRWDEOHIUXLWVSURGXFHGDUHSLQHDSSOHVDQG
JXDYDVLQZKLFKWKHFRXQWU\UDQNVDVWKHWKLUGODUJHVWSURGXFHULQWKHZRUOG,QVSLWHRIWKHVH
VWURQJ SRVLWLRQV LQ WHUPV RI JOREDO SURGXFWLRQ 1LJHULD LV UDUHO\ PHQWLRQHG ZKHQ LW FRPHV WR
IUXLWH[SRUWEHFDXVHPRVWRIWKHIUXLWVSURGXFHGLQWKHFRXQWU\GRQRWUHDFKWKHJOREDOPDUNHW
GXHWRWKHYHU\SRRULQIUDVWUXFWXUHURDGVDQGFROGVWRUHV
7KHFRXQWU\·VGLYHUVHDJURHFRORJLFDO]RQHVUDQJHIURPKXPLGLQWKHVRXWKWRVXEKXPLGLQWKH
PLGGOH EHOW DQG VHPLDULGDULG LQ WKH QRUWK )UHVK IUXLWV DUH LQKHUHQWO\ PRUH OLDEOH WR
GHWHULRUDWLRQ XQGHU WURSLFDO FRQGLWLRQV FKDUDFWHUL]HG E\ KLJK DPELHQW WHPSHUDWXUHV DQG
KXPLGLW\DQGDKLJKLQFLGHQFHRISHVWVDQGGLVHDVHV&RQVHTXHQWO\SRVWKDUYHVWORVVHVRIIUXLWV
DQG YHJHWDEOHV DUH H[WUHPHO\ KLJK LQ 1LJHULD 2ODZDOH H[DFHUEDWHG E\ SRRU PDUNHWLQJ
GLVWULEXWLRQDQGVWRUDJHIDFLOLWLHV
Mapping the chain

7KH W\SLFDO PDUNHWLQJ V\VWHP IRU IUXLWV DQG YHJHWDEOHV LQ 1LJHULD FRQVLVWV RI WKUHH VWDJHV VHH
)LJXUH$,QWKHILUVWVWDJHVPDOOKROGHUIDUPHUVRIIHUVPDOOVXUSOXVHVWRWUDGHUVLQWKHYLOODJH
PDUNHWV RU ILUVW DVVHPEO\ SRLQWV )URP KHUH WKH GLVWULFW OHYHO WUDGHUV PRYH WKH DFFXPXODWHG
SURGXFHDORQJWKHPDUNHWFKDQQHOWRVHFRQGDU\FROOHFWLRQFHQWHUV7KHWKLUGVWDJHLQYROYHVWKH
PRYHPHQWRIWKHSURGXFHWRFHQWUDOZKROHVDOHPDUNHWVLQXUEDQFHQWHUVWKURXJKZKROHVDOHUV
7KHSURGXFHLVWUDQVSRUWHGIURPWKHIDUPJDWHWRWKHSULPDU\DQGVHFRQGDU\FROOHFWLRQFHQWHUV
SULPDULO\ DV KHDG ORDGV RU E\ PHDQV RI IDUP DQLPDOV FDUWV ELF\FOHV PRWRUELNHV DQG PRWRU
YHKLFOHV RI DOO VRUWV DQG IURP WKHUH WR XUEDQ FHQWUDO ZKROHVDOH PDUNHWV PDLQO\ LQ RSHQ QRQ
UHIULJHUDWHG WUXFNV ZLWK FDSDFLWLHV UDQJLQJ IURP OHVV WKDQ WRQV WR XS WR WRQV )HZ
ZKROHVDOHUVXQGHUWDNHJUDGLQJRIWKHIUXLWVDQGVXSSO\IUHVKSUHFXWVWRVXSHUPDUNHWV
)LJXUH$0DSSLQJRIWKHJHQHULFIUXLWYDOXHFKDLQLQ1LJHULD

6RXUFH7KHDXWKRUV
57
7KHUHDUHYHU\IHZIDFWRULHVSURFHVVLQJIUHVKIUXLWVLQWRMXLFHFRQFHQWUDWHVLQ1LJHULDDQGWKRVH
H[LVWLQJ DUH RSHUDWLQJ DW OHVV WKDQ RI WKHLU FDSDFLW\ GXH WR KLJK DJJUHJDWLRQ FRVW RI UDZ
PDWHULDOVIURPVPDOOKROGHUIDUPHUVLQGLIIHUHQWVWDWHV0RVWSURFHVVLQJRIMXLFHFRQFHQWUDWHLQWR
MXLFHLVGRQHE\DIHZODUJHVFDOHLQGXVWULHVZKLFKVRXUFHWKHLUFRQFHQWUDWHVIURPDEURDG

7KH IUXLW SURGXFWLRQ SDWWHUQ LQ 1LJHULD LV FKDUDFWHUL]HG E\ D ODUJH QXPEHU RI VPDOO KROGHU
IDUPHUVZLWKODQGKROGLQJVRIOHVVWKDQKHFWDUHV7KHIUXLWRUFKDUGRZQHUVLQWKHFRXQWU\ODFN
WKHQHFHVVDU\VXSSRUWLQFOXGLQJHGXFDWLRQWRIDUPHUVJRRGURDGVDQGUHIULJHUDWHGYHKLFOHVIRU
WUDQVSRUWLQJWKHSHULVKDEOHJRRGVWRPDLQPDUNHWV7KHXVHRIIHUWLOL]HUVDQGSHVWLFLGHVDUHYHU\
UDUHLQIUXLWRUFKDUGVRIVPDOOKROGHUV
6XSSO\RIIUHVKIUXLWVWRWKHIUHVKIUXLWSURFHVVLQJFRPSDQLHVLVGRQHRQDQLQIRUPDOEDVLV7KXV
PRVWRIWKHIHZSURFHVVRUVSURGXFHEHORZWKHLULQVWDOOHGFDSDFLW\)UXLWVDUHSURFXUHGORFDOO\E\
WKHVHFRPSDQLHVIURPLQGHSHQGHQWWUDGHUVZLWKLQIRUPDOOLQNVWRWKHFRPSDQ\7KHFRPSDQLHV
GHWHUPLQH WKH SULFH DQG XVXDOO\ RIIHU WKH DYHUDJH EHWZHHQ WKH VHDVRQDO DQG RIIVHDVRQDO SULFH
7KH FRPSDQLHV SUHIHU WR EX\ LQ WKH JOXW VHDVRQ ZKHQ SULFHV DUH ORZ VLQFH IUHVK IUXLW PDUNHW
GHPDQG LV OLWWOH 7KH SURFHVVRU PD\ SURYLGH WUDQVSRUW DQG LQ VRPH FDVHV SURYLGHV VRPH SUH
ILQDQFHWRWUDGHUV

%HIRUHSHUFHQWRIWKHIUXLWMXLFHFRQVXPHGLQ1LJHULDZDVLPSRUWHGDVUHDG\WRGULQN
IUXLW MXLFH $IWHU WKH LPSRUW EDQ RI RQ UHDG\WRGULQN MXLFHV VRPH ODUJH 1LJHULDQ IRRG
SURFHVVLQJFRPSDQLHVKDYHVWDUWHGWRLQYHVWLQIDFLOLWLHVIRUIUXLWMXLFHSDFNDJLQJ
)RUH[DPSOHLQ&RFD&ROD1LJHULD3OFLQYHVWHGRYHUPLOOLRQLQIUXLWMXLFHSURFHVVLQJ
DQGDSDFNDJLQJSODQWDQGPRYHGLQWRIDUPLQJWRREWDLQFRQFHQWUDWHIRULWV)LYH$OLYH%UDQG,Q
'DQJRWH*URXSHVWDEOLVKHGSURGXFWLRQRIWKH'DQVDEUDQGRIIUXLWMXLFH6&2$1LJHULD
3OFIROORZHGVXLWWKURXJKWKHVHWWLQJXSRILWVPLOOLRQWURSLFDOIUXLWMXLFHSURFHVVLQJSODQWLQ
/DJRV
3UHVHQWO\WKHGHPDQGIRUDOUHDG\SDFNDJHGIUXLWMXLFHSURGXFWVLVHVWLPDWHGDWVOLJKWO\PRUHWKDQ
PLOOLRQOLWHUVDQGFRPSDQLHVWKDWHQJDJHLQIUXLWMXLFHSDFNDJLQJKDYHFRQWLQXHGWRGHSHQG
RQLPSRUWHGFRQFHQWUDWHV7KRXJK1LJHULDKDVYDVWDUHDVRIIUXLWIDUPVLWKDVQHYHUEHHQDEOHWR
VXSSO\WKHUDZPDWHULDOWRLWVIUXLWSURFHVVLQJLQGXVWULHVPDLQO\GXHWRDEVHQFHRIWKHQHFHVVDU\
LQIUDVWUXFWXUH

7KHPDUNHWIRUIUXLWMXLFHFRQFHQWUDWHLVKXJH1LJHULD
VIUXLWMXLFHPDUNHWKDVJURZQSHUFHQW
RYHUWKHODVWILYH\HDUVDQGWKLVJURZWKLVGXHWRLQFUHDVLQJLQFRPHVRI1LJHULDQFRQVXPHUVDQ
H[SDQGLQJ PLGGOH FODVV DQG JUHDWHU KHDOWKFRQVFLRXVQHVV RI FRQVXPHUV 7KH PDUNHW IRU IUXLW
FRQFHQWUDWH SUHPL[ DQG V\UXS FRQFHQWUDWHV KDV WKXV ULVHQ IURP PLOOLRQ NJ LQ WR
DERXW PLOOLRQ NJ LQ 1LJHULD·V GHPDQG IRU FRQVXPHUSDFN IUXLW MXLFH ZDV HVWLPDWHG DW
PRUH WKDQ PLOOLRQ OLWHUV 0RVW RI WKLV MXLFH LV PDGH IURP LPSRUWHG FRQFHQWUDWH 1LJHULD
LPSRUWVFRQFHQWUDWHVIURPWKH(86RXWK$PHULFD$VLDDQG6RXWK$IULFD
,Q 1LJHULD WKH H[SDQGLQJ PLGGOH FODVV LQFUHDVLQJ XUEDQL]DWLRQ DQG D JURZLQJ QXPEHU RI
VXSHUPDUNHWV ZKLFK FDQ VRXUFH IUXLWV KDV PDGH WKH SUDFWLFH RI PXOWLSOH KDQGOLQJ RI WKH IUHVK
IUXLW IURP IUDJPHQWHG VPDOO KROGHU IDUPV OHVV RI DQ RSWLRQ ,Q WKH DEVHQFH RI ODUJHU ZHOO
PDQDJHG FRPPHUFLDO IDUPV WKHUH LV D QHHG WR SURPRWH VPDOOHU RXWJURZHU IDUPHUV XQGHU WKH
FORVHVXSHUYLVLRQRIWKHUHWDLOHUGLVWULEXWRU
,Q WKLV FDVH VPDOO KROGHU IDUPHUV DUH SURYLGHG ZLWK TXDOLW\ VHHGV DJULFXOWXUDO LQSXWV DQG
WHFKQLFDODQGH[WHQVLRQVHUYLFHVE\WKHPDQXIDFWXUHUVDQGUHWDLOHUV,QUHWXUQWKHIDUPHUVQHHGWR
58
SURYLGHWKHIUXLWVIRUIXUWKHUSURFHVVLQJDQGSDFNDJLQJDWDSUHGHWHUPLQHGSULFH7KLVLVDZLQ
ZLQ VLWXDWLRQ ZKHUH WKH PDQXIDFWXUHUV RU GLVWULEXWRUV JHW UDZ PDWHULDO RI GHVLUHG TXDOLW\ DQG
TXDQWLW\ ZKLOH WKH IDUPHUV DUH DVVXUHG RI PDUNHW RXWOHW IRU WKHLU IUXLWV DQG UHGXFWLRQ RI SRVW
KDUYHVWORVVHV
7KH PDMRU IHDWXUH RI WKH ZRUOG PDUNHW RI IUHVK IUXLW DQG IUXLW MXLFHV LV WKH JHRJUDSKLFDO
FRQFHQWUDWLRQ RI SURGXFWLRQ 7KH WZR PDLQ SOD\HUV LQ WKH SURGXFWLRQ RI IUXLW MXLFHV DUH /DWLQ
$PHULFDDQGWKH86$7KHH[SRUWRIIUXLWMXLFHVIURPWKHVHWZRUHJLRQVDPRXQWWRSHUFHQWRI
WKHZRUOGPDUNHW7KHPDMRUSOD\HULQMXLFHH[SRUWLV%UD]LOZKLFKKDVDVKDUHRISHUFHQWRI
ZRUOGH[SRUW
,QWHUQDWLRQDOWUDGHLQIUXLWMXLFHWDNHVSODFHLQWKHIRUPRIIUR]HQFRQFHQWUDWHGIUXLWMXLFH)&)-
LQ RUGHU WR UHGXFH WKH YROXPH XVHG VR WKDW VWRUDJH DQG WUDQVSRUWDWLRQ FRVWV DUH ORZHU 7KH
(XURSHDQ8QLRQLVE\IDUWKHODUJHVWLPSRUWHURIIUXLWMXLFHVDFFRXQWLQJIRURYHUSHUFHQWRI
ZRUOGIUXLWMXLFHLPSRUWV6RXWKHUQ+HPLVSKHUHFRXQWULHVGHYHORSLQJFRXQWULHVDQG$XVWUDOLD
DUHLQFUHDVLQJWKHLUSUHVHQFHLQLQWHUQDWLRQDOWUDGHE\SURYLGLQJRIIVHDVRQ IUXLWV WRWKH1RUWK
7KLVKDVEHHQIDYRXUHGE\WKHLPSURYHPHQWVLQVWRUDJHDQGWUDQVSRUWDWLRQWHFKQRORJLHV1LJHULD
KDVWRLPSURYHLWVLQIUDVWUXFWXUHTXDOLW\DVVXUDQFHV\VWHPDQGWUDFHDELOLW\WRLQFUHDVHLWVVKDUHLQ
WKHJOREDOPDUNHWRIFLWUXVIUXLWVDQGPDQJR

7KH IUHVK IUXLW VHFWRU LV PDLQO\ FKDUDFWHUL]HG E\ D ORQJ FKDLQ RI PLGGOHPHQ IURP WKH IDUP
WKURXJK WKHYLOODJH GLVWULFW WR VWDWH DQG QDWLRQDOZKROHVDOH PDUNHWV$ VPDOO SURSRUWLRQ RI WKH
IUHVKSURGXFWVLVVRUWHGJUDGHGDQGSDFNHGIRUWKHVXSHUPDUNHWV7KHIROORZLQJDUHWKHOHDGHUV
LQIUXLWMXLFHSURGXFWLRQLQ1LJHULD
• &KL/LPLWHG)UXLW'ULQNV
&KRSSHH)UXLW'ULQNDQG,QGXVWULHV/LPLWHG&KRSHH3LQHDSSOH'ULQN9DQLOOD3HDFK
$SSOH 2UDQJH
• &ODVVLF%HYHUDJHV1LJHULD/LPLWHG0DQXIDFWXUHUVRI9LUJLQVRIWGULQNV/D&DVHUDHWF
• )RUPRVD%RWWOLQJ&RPSDQ\6SDUNOLQJIUXLW-XLFHGULQN+HDOWK:DWHU7DEOH:DWHU3HW
3UHIRUPV%RWWOHV&DSVDQG3ODVWLF3URGXFWV
• )XPPDQ$JULFXOWXUDO3URGXFWV,QGXVWULHV/WGIUXLWMXLFHV
1RQHRIWKHVHLQGXVWULHVVRXUFHVXIILFLHQWIUXLWVIURPORFDOVXSSOLHUV7KH\LPSRUWDOPRVWDOOWKH
IUXLW MXLFH FRQFHQWUDWH WKH\ UHTXLUH IURP DEURDG PDLQO\ IURP FRPSDQLHV LQ (XURSH 6RXWK
$PHULFD$VLDDQG6RXWK$IULFD

,QWKH*21SODFHGDQLPSRUWEDQRQIUXLWMXLFHLQFRQVXPHUSDFNVDQGORZHUHGWKHWDULII
RQ FRQFHQWUDWH WR SHUFHQW :LWK ORFDO IUXLW SURGXFWLRQ UHPDLQLQJ ORZ SURFHVVRUV KDYH
FRQWLQXHGWRGHSHQGRQLPSRUWHGFRQFHQWUDWHV
7KHDERYHDQDO\VLVLVPHDQWWRHQDEOHDQXDQFHGLGHQWLILFDWLRQRIILQDQFLDOUHTXLUHPHQWVLQWKH
YDULRXVVHJPHQWVRIWKHYDOXHFKDLQVHH7DEOH$
59
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHIUXLWVYDOXHFKDLQ

Commercial orchards
Small scale farming
Fruit concentrate
Re-constitution
Input industry
Distribution
preparation
middlemen
Packaging
Need/ Working Working Working Working Working Equipment Working Working
purpose capital capital capital Capital, capital, (machinery) capital, capital,
(inputs) (inputs), Vehicles fixed assets equipment vehicles
fixed assets (storage), (machinery) (incl.
(equipment/ equipment storage)
machinery, (machinery)
storage)
Volume high high high low high high high high
needed (through
processors)
Risks high high medium medium high low low low
Interest high low low medium low high high low
60
A.6 Palm Oil
Mapping the chain
:KLOH SDOP RLO SURGXFWLRQ DQG SURFHVVLQJ LV FRQILQHG WR VWDWHV LQ 1LJHULD·V 6RXWK LWV
FRQVXPSWLRQFXWVDFURVV DOOUHJLRQVDQGLQFRPHVWUDWD0DMRUDFWRUVLQ WKHYDOXHFKDLQLQFOXGH
SURYLGHUV RI IHUWLOL]HU VHHGV DQG RWKHU LQSXWV VPDOO WR PHGLXP VFDOH IDUPHUV DQG ODUJHVFDOH
HVWDWH SODQWDWLRQV DV ZHOO DV PHGLXP DQG ODUJHVFDOH RLO PLOOV IRU FUXGH DQG UHILQHG HGLEOH RLO
SURGXFWLRQ 6HFRQGDU\ SURFHVVRUV RI SURPLQHQFH LQ WKH FKDLQ LQFOXGH VPDOO DQG ODUJHVFDOH
DQLPDOIHHGPLOOHUVDQGSURGXFHUVRIVRDS
,Q DGGLWLRQ WKHUH DUH VPDOO DQG ODUJHVFDOH EX\HUV IRU EXON VWRUDJH DQG UHSDFNDJLQJ LQ UHWDLO
SODVWLF FRQWDLQHUV WKDW DUH YHU\ DFWLYH DQG GRPLQDQW LQ WKH FKDLQ 0LGGOHPHQ WUDQVSRUWHUV
VXSSOLHUV RI SURFHVVLQJ HTXLSPHQW VXSSOLHUV RI SDFNDJLQJ PDWHULDOV DQG WR D OLPLWHG GHJUHH
ILQDQFLDO VHUYLFH SURYLGHUV DUH IRXQG DW YDULRXV VHJPHQWV RI WKH YDOXH FKDLQ 3XEOLF DQG
GHYHORSPHQWFRRSHUDWLRQVXSSRUWLVDOVRSURYLGHGE\UHVHDUFKDQGH[WHQVLRQDJHQFLHVPDLQO\WR
SXEOLF RU SULYDWH SDOP RLO SODQWDWLRQV PRVW RI ZKLFK IRFXV RQ SULPDU\ SURGXFWLRQ DQG
WUDGLWLRQDOVPDOOVFDOHSURFHVVRUV

8QWLO WKH V 1LJHULD ZDV WKH ZRUOG·V ODUJHVW SURGXFHU RI SDOP RLO DFFRXQWLQJ IRU RI
JOREDOSDOPRLOSURGXFWLRQ+RZHYHUGXHWRWKHRYHUUHOLDQFHRQWUDGLWLRQDOSURGXFWLRQPHWKRGV
H[FHVVLYH WDSSLQJ RI SDOP WUHHV IRU SDOP ZLQH DQG WKH FLYLO ZDU EHWZHHQ WKDW ZDV
IRXJKW LQ DUHDV ZKHUH SDOP DFWLYLWLHV ZHUH SUHGRPLQDQW SULPDU\ SURGXFWLRQ KDV H[SHULHQFHG
VLJQLILFDQW GUDZEDFNV +RZHYHU GXH WR YDULRXV UHDVRQV 1LJHULD·V DELOLW\ WR NHHS XS ZLWK WKH
JOREDOULVHLQGHPDQGZDVFXUWDLOHG3URGXFWLRQLQFUHDVHGIURPWRQVLQWR
WRQVLQ1LJHULDLVQRZWKHWKLUGODUJHVWSURGXFHURISDOPRLODIWHU,QGRQHVLDDQG0DOD\VLD
ZLWKDQDQQXDOSURGXFWLRQYROXPHRIPLOOLRQWRQV,WVRXWSXWKDVQRZGHFOLQHGWRDPHDJUH
RIWKHWRWDOZRUOGSURGXFWLRQZKLFKLVLQDGHTXDWHIRUORFDOFRQVXPSWLRQSXWDWDERXW
0$1
6LPLODUO\WKHGHUHJXODWLRQRIWKHFRPPRGLW\PDUNHWLQJERDUGDIWHULQGHSHQGHQFHDVZLWKRWKHU
DJULFXOWXUDO VHFWRUV LPSDFWHG QHJDWLYHO\ RQ WKH VHFWRU GHSULYLQJ LW RI WKH QHHGHG SURPRWLRQDO
VHUYLFHV DQG RXWULJKW FRQWURO RI RXWSXW DQG VDOHV 7KH SROLF\ HIIHFWLYHO\ XQGHUPLQHG PDQ\
IDUPHUV·DELOLWLHVWRREWDLQDSSURSULDWHSULFHVIRUWKHLUSURGXFH$VDUHVXOWVPDOOVFDOHIDUPHUV
UHPDLQ GHSULYHG RI DFFHVV WR ILQDQFH IHUWLOL]HUV DJURFKHPLFDOV DQG RWKHU ORJLVWLFV DQG LQSXWV
EHIRUHDQGGXULQJKDUYHVW7KRXJKJRYHUQPHQWVGRLQWHUYHQHRUJDQL]HGFKDQQHOVDQGQHWZRUNV
RI LQIRUPDWLRQ DUH QRW DYDLODEOH 6LPLODUO\ DGHTXDWH FDSLWDO EDVH RU VRIW FUHGLW WR IDUPHUV
DVVRFLDWLRQV DQG FRRSHUDWLYHV IRU LQSXW SURFXUHPHQW UHSUHVHQW FRQVWUDLQWV DQG WUDQVSRUWDWLRQ
DQGRWKHUVHUYLFHVDUHYHU\OLPLWHGDQGVRPHWLPHVQRQH[LVWHQWZLWKWKHH[FHSWLRQRISXEOLFIDUP
HVWDWHV RU SURFHVVRUV· HVWDWHV 7KH HFRORJLFDO GLVWULEXWLRQ RI SDOP WUHH LQ 1LJHULD LV
SUHGRPLQDQWO\ LQ WKH VRXWKHUQ SDUW HVSHFLDOO\ LQ WKHZHW UDLQ IRUHVW DQG VDYDQQDK EHOW ,W DOVR
H[LVWV LQ WKH ZHW SDUW RI 1RUWK FHQWUDO LQ DUHDV OLNH VRXWKHUQ .DGXQD .ZDUD %HQXH 1LJHU
3ODWHDX7DUDEDDQG1DVVDUDZDDVZHOODVWKH)HGHUDO&DSLWDO7HUULWRU\)&7$EXMD
7KHVPDOOKROGHUIDUPHUVDFFRXQWIRURYHURISDOPRLOSURGXFWLRQLQ1LJHULDZLWKDQDYHUDJH
RIKHFWDUHVKHOGE\DQLQGLYLGXDOVRPHWLPHVFKDUDFWHUL]HGE\PL[HGFURSSLQJWRPD[LPL]H
ODQGXVDJH+RZHYHUDODUJHFKXQNRIRLOSDOPH[LVWVLQWKHZLOGRUVHPLZLOGVWDWH,QDGGLWLRQ
JRYHUQPHQWDQGSULYDWHFRPSDQLHVDOVRRZQIDLUO\ODUJHSODQWDWLRQV7KXVWKHUHLVDQHVWLPDWHG
PLOOLRQKHFWDUHVRIFXOWLYDWHGODQGLQ1LJHULDUHSUHVHQWHGE\PLOOLRQKHFWDUHVZLOGJURYH
KHFWDUHVVPDOOKROGHUVDQGKHFWDUHVSXEOLFDQGSULYDWHHVWDWHV
61
3DOP RLO LV WKH ILUVW SULPDU\ SURGXFW WKDW LV SURFHVVHG LQ WKH YDOXH FKDLQ ,Q 1LJHULD WKH
SURFHVVLQJ RI WKH SDOP RLO KDV EHHQ GRPLQDWHG E\ WKH WUDGLWLRQDO FRWWDJH VHPLPHFKDQL]HG
SURFHVVLQJHTXLSPHQW6XUYH\VDQGGLVFXVVLRQVZLWKWKH1DWLRQDO3DOP3URGXFH$VVRFLDWLRQRI
1LJHULD 133$1 UHYHDOHG WKDW WKHUH LV D OLPLWHG QXPEHU RI DXWRPDWHG SURFHVVRUV LQ WKH
FRXQWU\ PRVWO\ LQ WKH 6RXWK (DVW DQG 6RXWK QDPHO\ LQ 5LYHUV ,PR &URVV 5LYHUV DQG (GR
6WDWHV3URGXFWLRQLVVWLOOGRPLQDWHGDWWKHYLOODJHOHYHOE\LQGLYLGXDOVDQGFRRSHUDWLYHVDVPRVW
SXEOLFSURFHVVLQJSODQWVDQGSODQWDWLRQVKDYHUHPDLQHGFORVHGZLWKREVROHWHHTXLSPHQWZKLFKLV
DEDQGRQHG
6LPLODUO\ WKHUH DUH FXUUHQWO\ QR H[LVWLQJ FDSDFLWLHV IRU WKH SURGXFWLRQ RI VHFRQGDU\ SDOP RLO
SURGXFWVLQWKHFRXQWU\81,'2LQFROODERUDWLRQZLWKVRPHSULYDWHLQLWLDWLYHVLVSLRQHHULQJWKH
LQWURGXFWLRQRIQHZWHFKQRORJLHVLQWKHVHFWRURQHRIZKLFKLVE\FXWWLQJWKHDJHGROGWUHHVDQG
WUDQVIRUPLQJWKHPLQWRGU\ORJVIRUWKHIXUQLWXUHLQGXVWU\1HZVHHGOLQJVZRXOGEHSODQWHGWR
UHSODFHWKHROGSDOPWUHHVFXWGRZQ&RQVHTXHQWO\WKHSRRUIDUPHUVZRXOGKDYHRSSRUWXQLWLHV
IRUDGGLWLRQDOLQFRPHJHQHUDWLRQDFWLYLWLHVDQGHPSOR\PHQW
7KHYHJHWDEOHRLOLQGXVWU\LVFDSDEOHWRSURFHVVWRQVRISDOPRLODQQXDOO\+RZHYHUGXH
WR WKH LQDGHTXDWH VXSSO\ RI WKH SURGXFW VHYHUDO RI WKH SDOP RLO UHILQHULHV DUH RSHUDWLQJ DW OHVV
WKDQRILQVWDOOHGFDSDFLW\&RQVHTXHQWO\WKHPDMRUHQGXVHUVRISDOPRLODQGLWVGHULYDWLYHV
ZKLFKLQFOXGHLQGXVWULHVSURGXFLQJVRDSVELVFXLWVQRRGOHVVDYRXU\DQGPLONILQGLWGLIILFXOWWR
JHWUHJXODUVXSSOLHVRISDOPRLOGHULYDWLYHVORFDOO\
2WKHU FKDOOHQJHV RI WKH LQGXVWU\ DUH WKDW PRVW RI WKH SDOP RLO UHILQHU\ SODQWV DUH ROG XVLQJ
LQHIILFLHQWVHPLDXWRPDWLFHTXLSPHQWVDQGWHFKQRORJLHV+RZHYHUWKHUHDUHHIIRUWVXQGHUZD\WR
UHMXYHQDWHRLOSDOPSURFHVVLQJSODQWVVHH%R[$$WWKHYLOODJHOHYHOVPDOOVFDOHSURFHVVLQJRI
GRPLQDWHVXVXDOO\SURGXFLQJORZTXDOLW\SDOPRLOZLWKKLJKOHYHORI)UHH)DWW\$FLGV0RVWRI
WKH ODUJHVFDOH RLO SDOP HVWDWHV ZHUH HVWDEOLVKHG E\ VWDWH JRYHUQPHQWV 3ULYDWL]DWLRQ RI WKHVH
HVWDWHIDUPVVRPHWLPHVIDFHVORFDOGLVFRQWHQW7KHODQGWHQXUHV\VWHPDQGODQGODZVDOVRLPSHGH
ODUJHVFDOHLQYHVWPHQWVIRUWKHHVWDEOLVKPHQWRIHVWDWHIDUPVVLPLODUWRWKRVHLQ0DOD\VLD

%R[$,QYHVWLQJLQ3DOP2LO,QGXVWU\8SJUDGLQJLQ,PRVWDWH
6RPHVWDWHVLQ1LJHULDSDUWLFXODUO\,PR5LYHUV&URVV5LYHUDQG$NZD,ERP6WDWHVDUHFXUUHQWO\WDNLQJ
DFWLRQ WR UHMXYHQDWH WKH DJLQJ VWDWHRZQHG SDOP HVWDWHV DQG WR XSJUDGH WKH UHILQHULHV 81,'2 LQ
FROODERUDWLRQZLWKVRPHSULYDWHLQWHUHVWJURXSVLQFOXGLQJ%DQNRI,QGXVWU\%2,SURPRWHWKHDGRSWLRQ
RIQHZSURGXFWLRQDQGSURFHVVLQJWHFKQRORJ\LQ,PR6WDWHZKHUHLQDPRQJRWKHUVWKHROGWUHHVZLOOEH
FXWDQGFRQYHUWHGLQWRKLJKUHVLVWDQWORJVIRUWKHIXUQLWXUHLQGXVWU\,QWKHLUSODFHQHZSDOPVHHGOLQJV
ZLOOEHSODQWHG$SSOLFDWLRQRIWKLVVFKHPHLVH[SHFWHGWRSURYLGHLQFRPHIRUWKHVPDOOVFDOHIDUPHUVDQG
UHMXYHQDWHWKHRLOSDOPVHFWRU7KHVFKHPHH[SHFWVWRDWWUDFWSULYDWHLQYHVWRUVDQGVXSSRUWLQYHVWPHQWV
WKURXJKSUHIHUHQWLDOORDQDJUHHPHQWV3RVVLEOHDUHDVUHTXLULQJILQDQFHLQFOXGHHVWDEOLVKPHQWRIQXUVHULHV
ODQGSUHSDUDWLRQDQGDFFHVVURDGVSXUFKDVHRILPSURYHGVHHGOLQJVIHUWLOL]HUVDJURFKHPLFDOVKDUYHVWLQJ
HTXLSPHQWVWUDFWRUVDQGHVWDEOLVKPHQWRIDSSURSULDWHVWRUDJHIDFLOLWLHVDQGXSJUDGLQJH[LVWLQJUHILQHULHV

3DOPRLOLVDQHGLEOHSODQWRLOZKLFKLVGHULYHGIURPWKHIUXLWVRISDOPWUHHV7KHRLOLVH[WUDFWHG
IURPWKHSXOSRIWKHIUXLW)URPLWVVHHGLVDOVRGHULYHGDVHFRQGDU\RLONQRZQDVSDOPNHUQHORLO
3DOPRLOLVQDWXUDOO\UHGGLVKLQFRORXUEHFDXVHLWFRQWDLQVDKLJKDPRXQWRIEHWDFDURWHQH%RWK
RLOVKDYHVRPHGUDZEDFNVDVWKH\DUHWZRRIWKHIHZKLJKO\VDWXUDWHGYHJHWDEOHIDWV3DOPRLOLVD
FRPPRQFRRNLQJLQJUHGLHQWLQ1LJHULDDQGKDVLQFUHDVLQJXVHLQWKHFRPPHUFLDOIRRGLQGXVWU\LQ
1LJHULD DQG RWKHU SDUWV RI WKH ZRUOG 6LPLODUO\ WKHUH LV QR SDUW RI WKH SDOP WUHH WKDW LV
FRQVLGHUHG ZDVWH ,Q 1LJHULD WKH GHULYDWLYHV RI SDOP WUHH LQFOXGH EURRP EXLOGLQJ PDWHULDOV
EDVNHWDQGPDWVSDOPZLQHORFDOJLQRU¶RJRJRUR·DQGORJV
62
6LQFHWKHHPHUJHQFHRISDOPRLOLQ1LJHULDWKHUHKDVEHHQOLPLWHGWUDQVIRUPDWLRQDQGXVHVRILWV
SULPDU\RUVHFRQGDU\SURGXFWVIRUHLWKHUIRRGRUQRQIRRGDSSOLFDWLRQV,QDGYDQFHGHFRQRPLHV
KRZHYHU SDOP RLO LV XVHG LQ WKH PDQXIDFWXULQJ RI PDQ\ IRRGVWXIIV LQFOXGLQJ PDQ\ LQGXVWULDO
DSSOLFDWLRQVDVFDQEHVHHQLQWKH%R[$EHORZ
%R[$)RRGDQGQRQIRRGXVHVRISDOPRLO
)RRG8VHV 1RQIRRG8VHV
&RRNLQJ2LO &RVPHWLFVDQGSHUVRQDOFDUH
'HHSIU\LQJRLOV 6RDSV
0DUJDULQHVDQGVSUHDGV &DQGOHV
%DNHU\IDWVVKRUWHQLQJ 3KDUPDFHXWLFDOV
&RFRDEXWWHUDOWHUQDWLYHIDWV /XEULFDQWVDQG*UHDVH
&RQIHFWLRQHU\IDWV 6XUIDFWDQWV
,FHFUHDPIDWV ,QGXVWULDO&KHPLFDOV
,QIDQWVQXWULWLRQIDWV $JURFKHPLFDOV
2WKHUIRRGDSSOLFDWLRQV &RDWLQJV
3DLQWVDQGODFTXHUV
(OHFWURQLFV
/HDWKHU
%LRGLHVHO

,W LV RQO\ LQ $IULFD WKDW SDOP RLO LV UHWDLOHG DV D SURGXFW LQ LWV RZQ ULJKW +RZHYHU PDUNHW
SRWHQWLDO IRU RLOV DQG IDWV ORRNV JRRG LQ WKH IXWXUH FRQVLGHULQJ WKH UDSLG LQFUHDVHV LQ
FRQVXPSWLRQ+RZHYHUSDOPRLOLVRQHDPRQJVHYHUDORWKHUPDMRURLOVDQGIDWVSURGXFHGDQG
WUDGHG LQ WKHZRUOGZLWKVXEVWLWXWHV DV VR\EHDQ FDQROD DQG VXQIORZHU RLOV3DOP RLO UHSUHVHQWV
RI WKH ZRUOG H[SRUW RI YHJHWDEOH RLOV DQG RI SURGXFWLRQ 1LJHULD·V FRQWULEXWLRQ WR
H[SRUWVLVUDWKHULQVLJQLILFDQWGXHWRLQFUHDVHGORFDOGHPDQG
$FFRUGLQJWR133$1SURGXFWLRQKDVUHPDLQHGORZIRUDQXPEHURIUHDVRQVDPRQJZKLFKDUH
DEVHQFH RI JRRG TXDOLW\ VHHGOLQJV QRQH[LVWHQW RU SRRU SURFHVVLQJ IDFLOLWLHV VWRUDJH DQG
WUDQVSRUWORJLVWLFVFRPPRQO\IDFHGE\VPDOOKROGHUV,QGLYLGXDOVPDOOKROGHUVWKHUHIRUHSUHIHUWR
VHOOWRRQWKHIDUPFRWWDJHRUFRRSHUDWLYHVPLOOVRUPLGGOHPHQZKREX\RQEHKDOIRIPHGLXPRU
ODUJHVFDOH SURFHVVRUV ZKR KDYH WKH DGYDQWDJH RI HYDFXDWLRQ ORJLVWLFV VWRUDJH DQG WUDQVSRUW
ORJLVWLFV 7R IXUWKHU HDVH VRPH RI WKHVH FRQVWUDLQWV RI HYDFXDWLRQ IURP SURGXFHUV FROOHFWLRQ
GHSRWV KDYH EHHQ HVWDEOLVKHG DW GHVLJQDWHG ORFDWLRQV LQ VRPH PDMRU FLWLHV LQ WKH SDOP RLO
SURGXFLQJVWDWHVPDQDJHGE\SULYDWHRZQHUVWRSRRODQGVHOORIIWREX\HUVIURPIDUGLVWDQFHVLQ
WKH1RUWKDQGRWKHUSDUWVRIWKHFRXQWU\:LWKUHJDUGVWRILQDQFHWKHUHLVFXUUHQWO\QRDYDLODEOH
DQGDIIRUGDEOHILQDQFHWRIDUPHUVFRPPHUFLDOEX\HUVDQGPLOOHUVZKLFKLVDVHULRXVFKDOOHQJHWR
HQVXULQJVPRRWKGHPDQGDQGVXSSO\DFWLYLW\LQWKHYDOXHFKDLQ133$1LVDGYRFDWLQJIRUVRIW
FUHGLWZLWKORQJHUWHQXUHZKLFKLVQRWDYDLODEOHLQFRPPHUFLDOEDQNV
133$1 REVHUYHG WKDW PRVW RI WKH PDMRU FRQVXPHUV RI SDOP RLO LQ WKH FRXQWU\ LH
PDQXIDFWXUHUVRIQRRGOHVKDYHUHMHFWHGSDOPRLOVXSSOLHGRUSURFHVVHGDWYLOODJHPLOOVDVDUHVXOW
RI SRRU TXDOLW\ GXH WR KLJK OHYHO RI )UHH )DWW\ $FLGV ))$ 8QIRUWXQDWHO\ WKHUH LV QR
LQVWLWXWLRQDOIUDPHZRUNWRHQVXUHHQIRUFHPHQWRITXDOLW\EHQFKPDUNVWKDWZRXOGIDFLOLWDWHEHWWHU
UHODWLRQVKLSVLQWKHYDOXHFKDLQ7KHUHLVDOVRWKHSUREOHPRIREVROHWHSURGXFWLRQWHFKQRORJ\LQ
63
WKHVHFWRU133$1LVFRQVWUDLQHGWRUHO\KHDYLO\RQJRYHUQPHQWLQWHUYHQWLRQWRDGGUHVVWKHVH
FKDOOHQJHVLQWKHVHFWRUDVSULYDWHLQLWLDWLYHVDUHQRQH[LVWHQW

7KHUH DUH QR OHDG ILUPV EXW WKH DFWLYLW\ LQ WKH YDOXH FKDLQ LV GULYHQ E\ VPDOO VFDOH EX\HUV DQG
VHOOHUVDVPDMRUFRQVXPHUVVXFKDVWKHORFDOPXOWLQDWLRQDOFRPSDQLHVLQWKHIRRGLQGXVWU\SUHIHU
WR LPSRUW UDWKHU WKDQ UHO\ RQ ORFDO SURGXFWLRQ7KH UROH RI PLGGOHPHQ DQG GHVLJQDWHG SULYDWH
VWRUDJH GHSRWV ODUJHO\ LQIOXHQFHV GHPDQG DQG VXSSO\ LQ WKH YDOXH FKDLQ 7KH 133$1 KDV QRW
EHHQDEOHWRRUJDQL]HRUHVWDEOLVKDFRRUGLQDWHGDFWLYLW\LQWKHYDOXHFKDLQ+RZHYHU133$1LV
FXUUHQWO\H[SORULQJSDUWQHULQJZLWKVWDWHDQGORFDOJRYHUQPHQWVIRUVXSSRUWIRUWKHUHMXYHQDWLRQ
RI WKH VHFWRU WR HVWDEOLVK PRGHUQ DXWRPDWHG SURFHVVLQJ XQLWV WKDW FRXOG SURFHVV KLJK TXDOLW\
SDOPRLOZLWKORZ))$LQWKHWKUHHVHQDWRULDOGLVWULFWVRI$NZD,ERPDVDPRGHOIRURWKHUSDOP
RLO SURGXFLQJ VWDWHV /LNH RWKHU VHFWRUV WKH SDOP RLO VHFWRU KDV JUHDW SRWHQWLDO IRU JURZWK
EHFDXVHRILWVLQFUHDVLQJXVHDVDVXEVWLWXWHIRURWKHURLOVDQGIDWVKHQFHWKHQHHGWRVXSSRUWDQG
XSJUDGH WKH YDULRXV FDSDFLWLHV LQ WKH SURGXFWLRQ SURFHVVLQJ PDUNHWLQJ DQG RWKHU VXSSRUW
VHUYLFHVZKLFKDUHEHQHILFLDOWRDOOVWDNHKROGHUV

• 3UDFWLFHVLQUHVRXUFHXVHZDWHUHQHUJ\ZDVWHPDWHULDOV
• 6WDQGDUGVRIFOHDQHUSURGXFWLRQDSSOLHG
• $OWHUQDWLYHWHFKQRORJ\XVHG
• 3HRSOHWUDLQHGLQHQYLURQPHQWDOPDQDJHPHQW
• &RQVXPHUDZDUHQHVVDERXWVLWXDWLRQLQWKHFKDLQ

$OOVWDNHKROGHUVLQFOXGLQJWKH1LJHULDQJRYHUQPHQWKDYHDSSUHFLDWHGWKHGHFOLQLQJVWDWHRIWKH
SDOP RLO VHFWRU LQ 1LJHULD 7KH 1DWLRQDO 3DOP 3URGXFH $VVRFLDWLRQ RI 1LJHULD 133$1 KDV
FDOOHGRQWKHJRYHUQPHQWWRPDNHGHOLEHUDWHHIIRUWVWRUHJHQHUDWHWKHVHFWRUWRPHHWORFDODQG
LQGXVWULDOGHPDQG
7KHSUREOHPRIODFNRIDYDLODEOHDQGDIIRUGDEOHILQDQFHKDVUHPDLQHGDJUHDWFKDOOHQJHIRUWKH
SDOPRLOVHFWRU7KHDFWLYLWLHVRIWKH1LJHULDQ$JULFXOWXUDO&RRSHUDWLYHDQG5XUDO'HYHORSPHQW
%DQN1$&5'%KDYHQRWLPSDFWHGSURGXFWLRQVPDOOVFDOHIDUPHUVKDYHUHPDLQHGGLVLOOXVLRQHG
DERXW REWDLQLQJ WKH UHTXLUHG ILQDQFH WR HQDEOH WKHP WR SURGXFH FRPSHWLWLYHO\ $FFRUGLQJ WR
133$1LQ$NZD,ERPVPDOOVFDOHIDUPHUVDUHVXSSRUWHGZLWKIUHHVHHGOLQJVPRQH\DURXQG
IRUODQGFOHDULQJDQGVXEVLGL]HGIHUWLOL]HU1RWZLWKVWDQGLQJWKLVWKH\IDFHRWKHUFKDOOHQJHV
VXFK DV ODFN RI DFFHVV URDGV WR IDUPODQGV DQG KDUYHVWLQJ LQFOXGLQJ HYDFXDWLRQ RI SDOP IUXLWV
GXULQJKDUYHVW3ULYDWHSODQWDWLRQRZQHUVGRQRWQHFHVVDULO\H[SHULHQFHVXFKFKDOOHQJHVDVWKHLU
VFDOHRIRSHUDWLRQVLVKLJKHU
7KHDERYHDQDO\VLVZDVDLPHGDWUHYHDOLQJDQXDQFHGLGHQWLILFDWLRQRIILQDQFLDOUHTXLUHPHQWVLQ
WKHYDULRXVVHJPHQWVRIWKHYDOXHFKDLQVHH7DEOH$
64
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHSDOPRLOYDOXHFKDLQ
Secondary Processing
Commercial Farming
Primary Processing
Small scale farming
Input industry
middlemen
Export
Working Working Working Working Working Working
Need/ capital, capital, fixed capital, capital, capital, capital (pre-
equipment assets vehicles equipment equipment and post-
(machinery) (property/ shipment)
Purpose
land),
equipment
Volume none high high low high high medium
needed (through
processors)
Risks high medium medium high high low
Interest low low medium low medium high
65
A.7 Poultry
Mapping the chain

7ZRGLVWLQFWVXEYDOXHFKDLQVFDQEHLGHQWLILHGLQWKH1LJHULDQSRXOWU\VHFWRU7UDGLWLRQDOVHFWRU
DQG FRPPHUFLDO VHFWRU 7KH FRPPHUFLDO VHFWRU LV FRPSULVHG RI FRPPHUFLDO IDUPV DQG WKH
LQGXVWULDOVHFWRUVHH)LJXUH$7KHLQGXVWULDODQGFRPPHUFLDOVHFWRUVDUHLQWHUZRYHQZKLOHWKH
WUDGLWLRQDO VHFWRU FDQ UHO\ RQ LWV RZQ PXOWLSOLFDWLRQ RI FKLFNHQ DOVR RIWHQ XVLQJ H[RWLF EUHHGV
7KH VWDUWLQJ SRLQW IRU WKH FRPPHUFLDO VHFWRU LV WKH SURGXFWLRQ RI GD\ROG FKLFNHQ '2& WKDW
DUH VROG WR FRPPHUFLDO IDUPV DQG EDFN\DUG SURGXFHUV &RPPHUFLDO IDUPV HQJDJH LQ HJJ
SURGXFWLRQ ZKLOH DOVR PDUNHWLQJ WKH VSHQW OD\HUV %DFN\DUG SURGXFHUV UDWKHU HQJDJH LQ EURLOHU
SURGXFWLRQ%RWKSURGXFWVDUHFKDQQHOOHGWKURXJKZHHNO\DQGGDLO\PDUNHWVWRFRQVXPHUV7KH
VLPSOLILHG PDS LQ )LJXUH $ GRHV QRW LQFOXGH WKH SRXOWU\ IHHG LQGXVWU\ DQG WKH DQLPDO KHDOWK
DQG YDFFLQDWLRQV VHUYLFHV %RWK DUH LPSRUWDQW LQSXWV DQG FRQVWLWXWH D VXEVWDQWLDO DPRXQW RI
SURGXFWLRQFRVWVH[FHHGLQJWKRVHRIGD\ROGFKLFNHQ)XUWKHUDFWRUVWRPHQWLRQDUHWUDQVSRUWHUV
PLGGOHPHQDQGUHWDLOHUVZKRDUHDOVRLQVWUXPHQWDOLQWKHGLVWULEXWLRQWRWKHILQDOSURGXFHUV
)LJXUH$0DSSLQJRISRXOWU\YDOXHFKDLQLQ1LJHULD

6RXUFH7KHDXWKRUV

%HIRUHWKHRXWEUHDNRI+LJK3DWRJHQLRXV$VLDQ,QIOXHQFLD+3$,LQSRXOWU\SRSXODWLRQLQ
1LJHULDZDVHVWLPDWHGDWDURXQGPLOOLRQZLWKDODUJHPDMRULW\RIORFDOEDFN\DUGEUHHGV
DQGDPLQRULW\RIH[RWLFEUHHGV([RWLFELUGVFRXQWZLWKKLJKHUSURGXFWLYLW\DQGSURYLGH
WKHRSSRUWXQLW\IRUDKLJKHUDQQXDORIIWDNHHVSHFLDOO\ZKHQUHDUHGXQGHULQWHQVLYHFRPPHUFLDO
66
SURGXFWLRQ V\VWHPV 7RGD\ FRPPHUFLDO SRXOWU\ SRSXODWLRQ LV HVWLPDWHG WR EH DERXW PLOOLRQ
OD\HUVDQGPLOOLRQEURLOHUV
8SWRSHUFHQWRIWKHGD\ROGFKLFNHQDUHSURGXFHGDQGXVHGLQWKHVRXWKZHVWRIWKHFRXQWU\
WKH VRXWKHDVW DQG QRUWKZHVW UHJLRQV VRXUFH DOO GD\ROG FKLFNHQ IURP RWKHU UHJLRQV $ IHZ
KDWFKHULHVLQ3ODWHDX6WDWHQRUWKHDVWVXSSO\GD\ROGFKLFNHQIRUWKDW]RQHDQGVHQGDVXEVWDQWLDO
TXDQWLW\ WR .DQR 6WDWH LQ WKH QRUWK FHQWUDOQRUWKZHVW DUHD )LJXUH $ VKRZV D PDS ZLWK WKH
VXEVWDQWLDOGLVSHUVLRQRISRXOWU\SURGXFWLRQZLWKDFRQFHQWUDWLRQDURXQGXUEDQFHQWUHV
)LJXUH$3RXOWU\UDLVLQJKXEVLQ1LJHULD

6RXUFH3UHSDUHGE\,,7$*HRVSDWLDOODEIRU86$,'
%RWK PDMRU EUDQGHG IHHG PLOOHUV DQG VPDOOHU WROO PLOOLQJ FRPSDQLHV DUH LPSRUWDQW DFWRUV
KDQGOLQJ DERXW SHUFHQW RI DERXW PLOOLRQ WRQV SHU \HDU RI FRPSRXQG IHHG SURGXFHG LQ
1LJHULD 7KHUH DUH WKUHH W\SHV RI IHHG PLOOHUV QDPHO\ FXVWRP WROO DQG LQWHJUDWHG IDUPV 7KH
FXVWRP PLOOHUV PLOO DQG PDUNHW WKHLU IHHGV XQGHU UHJLVWHUHG WUDGH QDPHV 7KH GRPLQDQW WUDGH
QDPHVLQWKHPDUNHWLQFOXGH$PR6DQGHUV*XLQHD)HHG7RS)HHGDQG/LYHVWRFN)HHGDPRQJVW
RWKHUV 6RPH RI WKHVH FXVWRP PLOOHUV KDYH DGRSWHG IUDQFKLVLQJ DV DQ RSHUDWLRQDO PHWKRG IRU
DFKLHYLQJDZLGHUUHDFKDFURVVWKHFRXQWU\
7KHWROOPLOOHUVDUHVSUHDGDFURVVPDMRUORFDWLRQVZLWKVLJQLILFDQWFRQFHQWUDWLRQVDURXQGVPDOO
WR PHGLXPVFDOH SRXOWU\IDUPV7KH\ RSHUDWH E\ PLOOLQJ IHHG WR WKH VSHFLILFDWLRQ RI FXVWRPHUV
SRXOWU\ DQG FDWILVK IDUPHUV DQG FKDUJH D IHH SHU TXDQWLW\ PLOOHG 7KH FXVWRPHUV HLWKHU EULQJ
WKHLURZQIHHGLQJUHGLHQWVRUSXUFKDVHWKHPIURPWKHPLOOHUVLIWKHPLOOHUVKDYHWKHPLQVWRFN
7KH WKLUG FDWHJRU\ RI IHHG PLOOHUV LV WKH LQWHJUDWHG SRXOWU\ IDUPV ZKLFK RZQ IHHG PLOOV DQG
SURGXFH IHHG IRU WKHLU RZQ XVH 7KH IHHG PLOOHUV DFTXLUH WKHLU JUDLQV IURP JUDLQV
PHUFKDQWVEX\LQJDJHQWVZKRVRXUFHWKHLUJUDLQVPRVWO\IURPWKHQRUWKHUQSDUWVRIWKHFRXQWU\
7KHVHPHUFKDQWVKDYHHVWDEOLVKHGQHWZRUNVIRUDJJUHJDWLQJJUDLQVIURPVPDOOKROGHUIDUPHUVDQG
KDYH PDVWHUHG WKH ORJLVWLFV RI JUDLQ WUDQVSRUWDWLRQ DFURVV WKH FRXQWU\ 7KH IHHG PLOOV PRVWO\
67
GHSHQG RQ LPSRUWHUV IRU WKH VXSSO\ RI LPSRUWHG IHHG LQJUHGLHQWV VXFK DV ILVK PHDO O\VLQH
PHWKLRQLQHDQGVR\PHDOHWF7KHVHLPSRUWHUVDOVRXVHLQWHUPHGLDULHVWRUHDFKWKHIHHGPLOOHUV
WKHVHDUHVSUHDGDFURVVWKHFRXQWU\EXWKDYHDKLJKHUFRQFHQWUDWLRQLQWKHVRXWK
3RXOWU\VKRSVJHQHUDOO\PDUNHWYDULRXVLQSXWVRIWKHSRXOWU\VXEVHFWRURQHRIZKLFKLVEUDQGHG
IHHGV REWDLQHG IURP FXVWRP IHHG PLOOHUV 3RXOWU\ IDUPV WKDW GR QRW KDYH WKHLU RZQ IHHG PLOOV
WKHUHIRUHKDYHWKHRSWLRQVRISDWURQL]LQJWKHWROOPLOOHUVFXVWRPPLOOHUVRUSRXOWU\VKRSV
7KH 1LJHULDQ SRXOWU\ VHFWRU GHVSLWH PDQ\ SUREOHPV VXFK DV D ULVH LQ WKH SULFH RI IHHG DYLDQ
LQIOXHQ]DWKHJOREDOILQDQFLDOFULVLVDQGLQDGHTXDWHFUHGLWLVVWLOOLQH[SDQVLRQ7KLVZLOOOHDGWR
DQ LQFUHDVH LQ EDFN\DUG DQG VPDOOVFDOH SURGXFHUV SDUWLFXODUO\ LQ XUEDQ DQG SHULXUEDQ ]RQHV
LQFUHDVLQJ WKH FRQFHQWUDWLRQ RI SRXOWU\ DQG UDLVLQJ FRQFHUQ DERXW KXPDQ DQG SRXOWU\ KHDOWK
%UHHGHUVDQGKDWFKHULHVSOD\FULWLFDOUROHVLQWKHFRPPHUFLDOSRXOWU\LQGXVWU\EHFDXVHWKH\VXSSO\
GD\ROGFKLFNVWRDOOFRPPHUFLDOIDUPV

7KHUHDUHGHVLJQDWHGDEDWWRLUVLQPDMRUWRZQVDQGFLWLHVDFURVV1LJHULD,QPRVWFDVHVLWLVWKH
ODUJHVFDOH SRXOWU\ IDUPV WKDW SURFHVV WKHLU WDEOH ELUGV LQWR IUR]HQ FKLFNHQ DQG FKLFNHQ DQG
WXUNH\ SDUWV ,QGXVWU\ H[SHUWV LQGLFDWH WKDW DERXW RI EURLOHU SURGXFWLRQ LV VODXJKWHUHG
SURFHVVHG DQG VROG DV IUR]HQ FKLFNHQ ZKLOH WKH UHVW DUH VROG OLYH RQ WKH RSHQ PDUNHW DQG
VODXJKWHUHG LQ KRXVHKROGV $ERXW RI EURLOHUV SURGXFHG DUH SURFHVVHG LQ DXWRPDWHG
VODXJKWHULQJSODQWVDQGVWRUHGLQFROGURRPVEHIRUHGLVWULEXWLRQDQGVDOH
7KHWUDQVSRUWDWLRQRISRXOWU\SURGXFWVLVPDLQO\E\URDGDOWKRXJKRFFDVLRQDOO\WKHDLUIUHLJKWLQJ
RIGD\ROGFKLFNVLVFDUULHGRXWRYHUORQJGLVWDQFHV8VXDOO\WKHELJKDWFKHULHVWUDQVSRUWGD\ROG
FKLFNV LQ DSSURSULDWHO\ GHVLJQHG YDQV 2WKHUZLVH RWKHU W\SHV RI YHKLFOHV FDUV EXVHV WUXFN
PRWRUF\FOHV HWF DUH XVHG )UR]HQ FKLFNHQ DUH XVXDOO\ WUDQVSRUWHG E\ SURFHVVRUV WR WKHLU VDOHV
RXWOHWVVXSHUPDUNHWVDQGPDMRUFXVWRPHUVLQFRROYDQVDQGUHIULJHUDWHGWUXFNV5HWDLOHUVXVHDOO
W\SHVRIYHKLFOHVLQFOXGLQJPRWRUF\FOHV

/LYH WDEOH ELUGV DUH SXW LQ SODVWLF DQG FDQH EDVNHW FDJHV DQG WKHQ WUDQVSRUWHG LQ DOO W\SHV RI
YHKLFOHV 7DEOH HJJV DUH SDFNHG LQ FUDWHV 7KH FUDWHV DUH VWDFNHG LQ FDUWRQV WKDW DUH WKHQ
WUDQVSRUWHGLQDOOW\SHVRIYHKLFOHV/LYHELUGVIURPWKHUXUDOVHFWRUDUHVROGPDLQO\E\ZRPHQ
DQG FKLOGUHQ RQ YLOODJH PDUNHW GD\V ZKLFK RIWHQ DWWUDFW EX\HUV IURP RWKHU YLOODJHV DQG XUEDQ
PDUNHWDJHQWV6RPHRIWKHVHDJHQWVDVVHPEOHODUJHQXPEHUVRIFKLFNHQVERXJKWIURPDQXPEHU
RIPDUNHWVDQGFRQYH\WKHPLQODUJHEDVNHWVLQWUXFNVWRVRXWKHUQFLWLHVDQGWRZQVIRUVDOH
7KHUHLVDFRQFHQWUDWLRQRIFRPPHUFLDOSRXOWU\IDUPVEDVHGRQH[RWLFSRXOWU\LQWKH6RXWKRIWKH
FRXQWU\ HVSHFLDOO\ WKH 6RXWK:HVW ZKLOH PRVW RI WKH UXUDO SRXOWU\ VHFWRU EDVHG RQ
´LQGLJHQRXVµ FKLFNHQ DQG JXLQHD IRZO LV IRXQG LQ 1RUWKHUQ 1LJHULD 7KHVH UHJLRQDO
VSHFLDOLVDWLRQV IRUP WKH EDVLV RI WKH LQWHUUHJLRQDO WUDGH 7KH SURGXFWV RI FRPPHUFLDO SRXOWU\
HVSHFLDOO\IUR]HQFKLFNHQDUHPRYHGIURPWKH6RXWKZHVWWRWKH1RUWKLQPRVWFDVHVWKURXJK
WKH)HGHUDO&DSLWDO7HUULWRU\2QWKHRWKHUKDQGWKHSURGXFWVRIUXUDOSRXOWU\OLYHFKLFNHQDQG
JXLQHDIRZOVDUHPRYHGIURPWKH1RUWKWRWKH6RXWKHVSHFLDOO\WKH6RXWKZHVW
7KLV LQWHUUHJLRQDO WUDGH LQ SRXOWU\ SURGXFWV KDV LPSOLFDWLRQV IRU WKH WUDQVPLVVLRQ RI SRXOWU\
GLVHDVH 7KH PRYHPHQW RI VLJQLILFDQW QXPEHUV RI OLYH SRXOWU\ IURP WKH 1RUWK WR WKH 6RXWK
SURYLGHV D SRWHQWLDO URXWH IRU WKH WUDQVPLVVLRQ RI DYLDQ LQIOXHQ]D DQG RWKHU SRXOWU\ GLVHDVHV
3RXOWU\SURGXFWVIURPWKH6RXWKWRWKH1RUWKDUHPRVWO\SURFHVVHGIUR]HQDQGFRQWDLQHUL]HG
WKXVPLQLPL]LQJWKHSRWHQWLDORIGLVHDVHVSUHDGIURPWKH6RXWKWRWKH1RUWK
68
,QWKHYDULRXVSRXOWU\YDOXHFKDLQVJRYHUQDQFHUHODWLRQVKLSVW\SLFDOO\LQYROYHUHODWLRQVKLSEDVHG
LQWHUDFWLRQVDPRQJDFWRUV7KH\WHQGWREHFRGLILHGWKURXJKWKHDFWLRQVRIWUDGHUVDQGFROOHFWRUV
ZKLFK PHGLDWH WKH H[FKDQJH EHWZHHQ SURGXFHUV DQG UHWDLOHUV ,QIRUPDQW LQWHUYLHZV UHYHDOHG
OLPLWHG FRPSHWLWLRQ DPRQJ OLYH ELUG WUDGHUV DQG FROOHFWRUV ZLWK D VPDOO SRZHUIXO JURXS RI
FROOHFWRUV DQG GLVWULEXWRUV FRUQHULQJ ODUJH SRUWLRQV RI WKH EXVLQHVV 7UDGHUV DOVR SOD\ DQ
LPSRUWDQW UROH LQ SURYLGLQJ FUHGLW WR UHWDLOHUV ORFNLQJ WKHP LQWR D UHODWLRQVKLS DQG OLPLWLQJ
UHWDLOHUV·EDUJDLQLQJSRZHU
)RUPDOL]HG VWDQGDUGV LQ WKH SRXOWU\ VHFWRU DUH RIWHQ DGKRF ZLWK OLPLWHG FRRUGLQDWLRQ DPRQJ
FKDLQ DFWRUV WR SURYLGH FRQVLVWHQF\ LQ WKH TXDOLW\IRRG VDIHW\ RU GLVHDVH VWDWXV RI SRXOWU\ DQG
SRXOWU\SURGXFWV(QGFRQVXPHUVKDYHOLWWOHLQSXWRQWKHTXDOLW\DQGVDIHW\EDVHGDWWULEXWHVRI
OLYHELUGVDQGSRXOWU\PHDWDQGWKHLUZLOOLQJQHVVWRSD\IRUKLJKHUTXDOLW\SUREDEO\LVTXLWHORZ
7KHJRYHUQPHQWDQGLQGXVWU\DVVRFLDWLRQVSOD\DQLPSRUWDQWUROHLQWKHSRXOWU\VHFWRUXQLI\LQJ
LQWHUHVWVRIFRPPHUFLDOIDUPV7KH\KDYHEHHQDEOHWRDFHUWDLQH[WHQWWRFORVHO\PRQLWRUWKH
LQGXVWU\ WR HQVXUH WKDW UXOHV DUH IROORZHG 7KH JRYHUQPHQW FRQWUROV WKH LPSRUWDWLRQ RI
JUDQGSDUHQWDQGSDUHQWVWRFNVHWVUXOHVIRUKDWFKHU\RSHUDWRUVEDQVWKHLPSRUWDWLRQRIYDULRXV
SRXOWU\SURGXFWVLQVLVWVRQK\JLHQHDQGELRVHFXULW\DQGVDQFWLRQVSURGXFHUVHVSHFLDOO\WKHQRW
VRSRZHUIXORQHVWKDWDUHQRWLQFRPSOLDQFH$NLQZXPLHWDO
7KH SRXOWU\ VHFWRU KDV EHHQ DEOH WR DWWUDFW ILQDQFLQJ IURP WKH IRUPDO VHFWRU *LYHQ WKH
SURILWDELOLW\RIWKHVHFWRUPHGLXPWRODUJHHJJSURGXFHUVGD\ROGFKLFNHQSURGXFHUVDVZHOODV
IHHGVWXII SURGXFHUV KDYH EHHQ DEOH WR DFTXLUH ILQDQFH IURP YDULRXV ILQDQFLDO LQVWLWXWLRQV
+RZHYHUSURVSHFWVIRUJURZWKVXJJHVWWKDWWKHQHHGIRUILQDQFHLVVXEVWDQWLDO
2Q WKH EDVLV RI WKH DERYH DQDO\VLV WKH ILQDQFLDO UHTXLUHPHQWV LQ WKH YDULRXV VHJPHQWV RI WKH
SRXOWU\YDOXHFKDLQDUHLGHQWLILHGDVIROORZVVHH7DEOH$
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHSRXOWU\YDOXHFKDLQ
Commercial poultry
Traditional poultry
Feedstuff industry
Industrial poultry
wholesale retail
Marketing,,
sector
sector
sector
Need/ Working Working Working Working Fixed assets

Purpose capital capital, capital, capital, fixed (wholesale
equipment equipment, assets (plant), warehouses/ storage)
vehicles equipment,
vehicles
Volume needed high high high low low
Risks low high medium low low
Interest low low Low low high
69
A.8 Rice
5LFHLVRQHRIWKHPDMRUIRRGFRPPRGLWLHVDQGLVRIJURZLQJLPSRUWDQFHLQ1LJHULDLQWHUPVRI
FRQVXPSWLRQ DQG SROLF\ 5LFH SURGXFWLRQ LQ 1LJHULD KDV QRW EHHQ DEOH WR PDWFK WKH JURZLQJ
GHPDQGVWLPXODWHGE\LQFUHDVLQJSRSXODWLRQJURZWKUDSLGXUEDQL]DWLRQLQFUHDVLQJLQFRPHVDQG
FRQVXPHUV·FKDQJLQJSUHIHUHQFHLQWHUPVRIFRVWHDVHDQGVKRUWWLPHRISUHSDUDWLRQ$OWKRXJK
ULFHSOD\VDUHODWLYHO\PLQRUUROHLQWKHGLHWRIPDQ\1LJHULDQVFRPSDUHGWRRWKHUFDUERK\GUDWH
VRXUFHVFDVVDYDPDL]HDQG\DPVXSSO\LQJOHVVWKDQSHUFHQWRIGDLO\FDORULHV1LJHULDLVWKH
ODUJHVWULFHLPSRUWLQJFRXQWU\LQ:HVW$IULFD(VWLPDWHVIURP:$5'$LQGLFDWHWKDWSHUFDSLWD
ULFH FRQVXPSWLRQ KDV LQFUHDVHG VWHDGLO\ VLQFH WKH V LQFUHDVLQJ IURP NJ\HDU LQ WKH
VWRNJ\HDULQUHFHQW\HDUV:$5'$
Mapping the chain

9DOXHFKDLQDFWRUVDUHIDUPHUVWKUHVKHUVPLOOHUVSROLVKHUVZKROHVDOHUVUHWDLOHUVDQGLPSRUWHUV
VHH)LJXUH$5LFHIDUPHUVWHQGWRSHUIRUPPRVWRIWKHVHIXQFWLRQVH[FHSWPLOOLQJZKLFKLV
XVXDOO\GRQHE\DFRWWDJHLQGXVWU\RUODUJHVFDOHULFHPLOO7KUHVKLQJLVXVXDOO\GRQHRQWKHILHOG
HLWKHUE\PDFKLQHRUE\KDQGZKLOHGU\LQJLVXVXDOO\GRQHRQGU\LQJIORRUVRUWDSHOLQHVRIIIDUP
0DQ\ IDUPHUV DQG IDUP JURXSV DUH QRZ DFTXLULQJ PHFKDQLFDO WKUHVKHUV 5LFH FRQVXPHUV DUH
LQFUHDVLQJO\GHPDQGLQJTXDOLW\SROLVKHGULFHZLWKRXWLPSXULWLHV7KXVWKHUHLVJURZLQJGHPDQG
IRUPRGHUQFRVWHIIHFWLYHWKUHVKHUV
)LJXUH$0DSRI1LJHULDQ5LFH9DOXH&KDLQ

6RXUFH86$,'
0LOOLQJ DQG WUDQVSRUW DUH WKH DFWLYLWLHV RI WKH QH[W DFWRUV LQ WKH YDOXH FKDLQ 5LFH IDUPHUV DUH
JHQHUDOO\UHOXFWDQWWRKDYHWKHLUULFHVWRUHGDWDQ\SODFHEXWRQWKHIDUPRUDWWKHLUKRPH7KLV
KDV LPSOLFDWLRQV IRU ZDUHKRXVLQJ ,Q WKH FDVH ZKHUH ULFH LV VWRUHG E\ WKH IDUPHU PLOOLQJ WDNHV
SODFH DW D ORFDO PLOO RQ D IHH EDVLV 2WKHU ODUJHU SURGXFHUV WDNH WKH ULFH WR EH SURFHVVHG LQ
FRPPHUFLDOPLOOVWKDWDUHRIYDULRXVVL]HVDQGKDYHTXLWHGLIIHUHQWHIILFLHQF\OHYHOVWKRXJKODUJHU
VFDOH PLOOV DUH JHQHUDOO\ PRUH HIILFLHQW 0RVW IDUPHUV VHOO WKH PLOOHG ULFH WR ZKROHVDOHUV LQ WKH
PDUNHW /LNH ZLWK SDGG\ IDUPHUV JHQHUDOO\ GR QRW VWRUH PLOOHG ULFH EXW VHOO LW DW WKH RSHQ
70
PDUNHWV WR ORFDOZKROHVDOHUVZKR ODWHU VHOO WR UHWDLOHUV LQ WKH FRPPXQLW\ DQG QHDUE\ SODFHV RU
WUDQVSRUWLWWRODUJHUFRPPXQLWLHVIRUVDOHWRUHWDLOHUV

5LFH LV FXOWLYDWHG ERWK RQ XSODQG DQG LQ LUULJDWHG VFKHPHV LQ 1LJHULD %R[ $ SURYLGHV DQ
RYHUYLHZRQPDMRUORFDWLRQVRIULFHSURGXFWLRQLQWKHFRXQWU\8SODQGULFHSURGXFWLRQUHTXLUHV
ORZHUODERXULQSXWDQGJHQHUDOO\SURGXFHVORZHU\LHOGV2YHUWKHODVW\HDUV\LHOGVURVHLQUDLQ
IHG DQG LUULJDWHG ORZODQG HQYLURQPHQWV EXW UHPDLQHG YHU\ ORZ LQ XSODQG HQYLURQPHQWV
DYHUDJLQJDERXW07SHUKHFWDUH6PDOOVFDOHIDUPHUVLQWKHXSODQGVWKHPDMRULW\RIZKRPDUH
ZRPHQGRQRWXVXDOO\KDYHDFFHVVWRLUULJDWLRQDQGIDUPLQKLJKO\YDULDEOHFRQGLWLRQV8SODQG
ULFHFXOWLYDWLRQLVFKDUDFWHUL]HGE\VODVKDQGEXUQSUDFWLFHVSULPDULO\LQWKHKXPLGIRUHVW]RQH
7KLV SURGXFWLRQ V\VWHP LV XQVXVWDLQDEOH GXH WR LQFUHDVLQJ SRSXODWLRQ SUHVVXUH RQ ODQG IRUFLQJ
XSODQG ULFH IDUPHUV WR GUDVWLFDOO\ UHGXFH IDOORZ SHULRGV RU H[SDQG FXOWLYDWLRQ WRZDUG PDUJLQDO
VRLOVOHDGLQJWRLQFUHDVLQJHURVLRQDQGGHJUDGLQJVRLOVDQGFRQVHTXHQWO\OHDGLQJWRVLJQLILFDQWO\
UHGXFHG\LHOGV
5LFHSURGXFWLRQXQGHULUULJDWLRQVFKHPHVKDVSURYHQWREHWKHPRVWLGHDOLQ$VLDWKLVKDVQRW
EHHQ WKH FDVH LQ 1LJHULD ODUJHO\ GXH WR SRRU SODQQLQJ ZHDN LQIUDVWUXFWXUH PDQDJHPHQW DQG
LQDGHTXDWH IXQGLQJ IRU RSHUDWLRQV DQG PDLQWHQDQFH 7KH SUREOHPV ZLWK PDLQWDLQLQJ DQG
RSHUDWLQJ LUULJDWLRQ VFKHPHV DUH QXPHURXV DQG YDU\ E\ ORFDWLRQ $JURQRPLF FRQVWUDLQWV
LGHQWLILHGLQWKHODUJHVFDOHLUULJDWLRQVFKHPHVLQ1LJHULDLQFOXGHDONDOLQLW\VDOLQLW\QLWURJHQXVH
HIILFLHQF\ LURQ PLFURQXWULHQW WR[LFLW\ GLVHDVH DQG SHVW PDQDJHPHQW 7KHUH DUH DOVR SUREOHPV
DVVRFLDWHG ZLWK WKH ORZ OHYHOV RI PHFKDQL]DWLRQ ODFN RI LQYROYHPHQW RI IDUPHUV H[WUHPH
WHPSHUDWXUHVDFFHVVWRLQSXWVDQGFUHGLWDQGSRSXODWLRQIDFWRUV$OVRWKHLUULJDWHGVFKHPHVDUH
PRVWO\PDGHXSRIVPDOOVFDOHIDUPHUVZLWKOLPLWHGDELOLW\WRILQDQFHQHHGHGLQYHVWPHQWV
%R[$0DMRUULFHSURGXFWLRQHFRORJLHVDQGVWDWHV
3URGXFWLRQ 0DMRU6WDWHV&RYHUHG 6KDUHRI 6KDUHRI $YHUDJH 3RWHQWLDO
(FRORJ\ WRWDO 7RWDO <LHOG+D <LHOG+D
5LFH 3URGXFWLRQ DXWKRU
$UHD HVW
5DLQIHG 2JXQ2QGR$EXD2VXQ(NLWL2\R(GR 07 07
'HOWD1LJHU.ZDUD.RJL6RNRWR.HEEL
8SODQG .DGXQD)&7DQG%HQXH
5DLQIHG $GDPDZD(ERQ\L2QGR(NLWL(GR'HOWD 07 07
/RZODQG 5LYHUV%D\HOVD&URVV5LYHU$NZD,ERP
´)DGDPDµ /DJRVDQGDOOPDMRUULYHUYDOOH\V
,UULJDWHG $GDPDZD1LJHU6RNRWR.HEEL%RUQR 07 ²07
%HQXH.RJL$QDPEUD(QXJX(ERQ\L&URVV
5LYHU.DQR/DJRV.ZDUD$NZD,ERP2JXQ
'HHS:DWHU )ORRGHGDUHDV5LPD9DOOH\LQ.HEEL6WDWHDQG 07 07
)ORDWLQJ GHHSIORRGHGDUHDVRI'HOWD6WDWH
0DQJURYH 2QGR'HOWD(GR5LYHUV%D\HOVD&URVV5LYHU 07 07
6ZDPS $NZD,ERP
6RXUFH(]HGLQPD
$PRQJ WKH ULFH SURGXFLQJ VWDWHV .DGXQD LV WKH ODUJHVW SURGXFHU RI ULFH LQ WKH FRXQWU\
JHQHUDWLQJ VXIILFLHQW VXUSOXVHV RI SDGG\ WR VXSSO\RWKHU VWDWHV 'HPDQG IRU ULFH LV VWURQJ DV D
UHVXOWRIKLJKLQFRPHHODVWLFLW\DQGLWVFRQYHQLHQFHWRSUHSDUH$VWKHIRXUWKODUJHVWFURSJURZWK
RIWKHULFHYDOXHFKDLQVKRXOGKDYHDQLPSDFWRQDJULFXOWXUDOJURZWKLQWKHFRXQWU\5LFHWUDGLQJ
SURFHVVLQJ SDUERLOLQJ GU\LQJ PLOOLQJ SDFNDJLQJ DQG IDUPLQJ SURYLGHV D PDMRU VRXUFH RI
HPSOR\PHQWDQGLQFRPHIRUODUJHQXPEHUVRISHRSOHWKXVKDYLQJDVWURQJGHYHORSPHQWLPSDFW
$ PDMRU LVVXH WKDW UHTXLUHV DWWHQWLRQ LV LQFUHDVLQJ ULFH SURGXFWLYLW\ DQG HQKDQFLQJ TXDOLW\ RI
GRPHVWLF ULFH 3ODQWLQJ RI KLJK \LHOGLQJ YDULHWLHV E\ IDUPHUV DSSOLFDWLRQ RI \LHOG HQKDQFLQJ
71
WHFKQRORJLHV EHWWHU PDQDJHPHQW SUDFWLFHV DQG WKH LQWURGXFWLRQ LPSURYHG GU\LQJ DQG PLOOLQJ
WHFKQRORJLHVDUHUHTXLUHGIRUXSJUDGLQJWKHULFHYDOXHFKDLQ(TXDOO\LPSRUWDQWDEXVLQHVVPRGHO
WKDW LQWHJUDWHV WKH PDQ\ VPDOOKROGHU ULFH IDUPHUV LQ D FRPPHUFLDOO\ RULHQWHG SURGXFWLRQ DQG
SURFHVVLQJV\VWHPLVUHTXLUHG
5LFH FXOWLYDWLRQ DOVR WDNHV SODFH LQ UDLQIHG ORZODQGV )DGDPD ZKLFK LQFOXGHV LQODQG EDVLQV
ULYHUIORRGSODLQVDQGLQODQGYDOOH\V7KHVHSURGXFWLRQHFRV\VWHPVDUHYXOQHUDEOHWRIORRGVDQG
GURXJKWV WKXV ZDWHU FRQWURO WHFKQRORJLHV ZKLFK FDQ VLJQLILFDQWO\ LQFUHDVH \LHOGV DUH UHTXLUHG
7KHUH LV D VLJQLILFDQWO\ KLJKHU SRWHQWLDO WR LQFUHDVH ULFH SURGXFWLRQ LQ WKLV DUHD GXH WR
JRYHUQPHQWHIIRUWVWKURXJKWKH)DGDPDSURMHFW
1LJHULDQ ULFH FRQVXPHUV SUHIHU SDUERLOHG ULFH ,PSRUWHG ULFH ODUJHO\ IURP $VLD GRPLQDWHV WKH
PDUNHW7KHORFDOO\FRPPHUFLDOULFH2IDGD5LFHLVDURPDWLFULFHJDLQLQJLQFUHDVHSUHIHUHQFHE\
ORFDOFRQVXPHUVSDUWLFXODUO\LQWKH/DJRVDUHD

'RPHVWLFSURFHVVLQJLQ1LJHULDLVFRQVWUDLQHGE\ODFNRIDGHTXDWHWHFKQRORJLHVDQGHTXLSPHQW
IRUWKUHVKLQJSDUERLOLQJPLOOLQJGHVWRQLQJDQGSROLVKLQJUHVXOWLQJLQUHGXFHGTXDOLW\7KHUHLV
JUHDW RSSRUWXQLW\ WR LQFUHDVH TXDOLW\ VWDQGDUGV WKURXJK LQYHVWPHQWV LQ LPSURYHG SRVWKDUYHVW
KDQGOLQJDQGSURFHVVLQJSUDFWLFHVLQWKHULFHYDOXHFKDLQ7KHUHLVOLWWOHPHFKDQL]DWLRQLQSRVW
KDUYHVWKDQGOLQJ0DQXDOWKUHVKLQJE\VPDOOKROGHUVLVLQHIILFLHQWDQGOHDGVWRSRRUJUDLQTXDOLW\
,QUHVSRQVHWRWKHJURZLQJORFDOGHPDQGIRUULFHVHYHUDOSULYDWHULFHFRPSDQLHVKDYHSODQQHG
IXWXUH LQYHVWPHQWV LQ ULFH SURFHVVLQJ 7KHVH FRPSDQLHV LQWHQG WR LQFUHDVH PLOOLQJ FDSDFLW\
VLJQLILFDQWO\ +RZHYHU WKH SUREOHP RI RUJDQL]LQJ VXSSOLHV DQG HQVXULQJ TXDOLW\ RI SDGG\
REWDLQHGIURPWKHVPDOOKROGHUIDUPHUVUHPDLQDSUREOHP,QVRPHVWDWHVHIIRUWVDUHEHLQJWDNHQ
E\WKHVWDWHJRYHUQPHQWWRUHYLWDOL]HVRPHROGPLOOLQJIDFLOLWLHVWRVWLPXODWHSURGXFWLYLW\
7KH PDMRULW\ RI VPDOO VFDOH PLOOHUV SURFHVV SDGG\ RQ D IHH EDVLV UDWKHU WKDQ SXUFKDVLQJ SDGG\
DQGVHOOLQJULFH3DUERLOLQJ³DQH[SHQVLYHSURFHGXUHIRUSURFHVVRUVORFDWHGLQSHULXUEDQDUHDV
DV D UHVXOW RI WKH KLJK FRVWV RI ILUHZRRG ³ LV JHQHUDOO\ FRQGXFWHG E\ WKH SURGXFHUV RU D
VSHFLDOL]HGUXUDOEDVHGDJHQW7KHGLVWULEXWLRQRIWKHYDULRXVSURFHVVLQJWDVNVDPRQJGLIIHUHQW
RSHUDWRUV UHGXFHV ULVN WR HDFK LQFUHDVLQJ WKH UHVLOLHQFH RI WKH YDOXH FKDLQ +RZHYHU
LPSURYHPHQWV LQ ULFH TXDOLW\ FRQVHTXHQWO\ UHTXLUH VLPXOWDQHRXV XSJUDGLQJ E\ DFWRUV DW VHYHUDO
VWDJHVLQWKHFKDLQ

7KHUHDUHWZRGLVWLQFWPDUNHWVIRUULFHLQ1LJHULD)DUPHUVDUHHVVHQWLDOO\VXEVLVWHQFHSURGXFHUV
DQGFRQVXPHPRVWRIWKHULFHWKDWWKH\SURGXFH7KHPDUNHWHG´VXUSOXVµLVVROGWRPLOOHUVDW
ORFDO PDUNHW SODFHV RU LQ XUEDQ DUHDV ZKHUH FRQVXPSWLRQ RI GRPHVWLFDOO\ SURGXFHG ULFH LV RI
JURZLQJ LPSRUWDQFH 1LJHULD LPSRUWV VXEVWDQWLDO YROXPHV DQG YDOXH RI ULFH DQQXDOO\ 7KHVH
LPSRUWV KDYH LQ IDFW VHW WKH GRPHVWLF ULFH SULFH LQ UHFHQW \HDUV ,Q RUGHU WR PHHW WKH VRDULQJ
GHPDQGIRUULFHRYHUWKH\HDUVWKHFRXQWU\KDVUHVRUWHGWRLPSRUWVWREULGJHWKHGHILFLW$SDUW
IURPRIILFLDOLPSRUWVWR1LJHULDLWLVUHSRUWHGWKDWVXEVWDQWLDOULFHLPSRUWHGWR%HQLQ5HSXEOLFLV
UHH[SRUWHGWR1LJHULD,WLVDOVRUHSRUWHGWKDWLQUHFHQW\HDUVSDGG\ULFHLVEHLQJLPSRUWHGWREH
PLOOHG LQ WKH FRXQWU\ 0RVW RI WKH PLOOHG ULFH LV WUDQVSRUWHG WR XUEDQ DUHDVZKHUH GHPDQG IRU
ULFHLVRQWKHLQFUHDVH
6XSSRUWLQJPDUNHWVDUHPDQ\IRUULFHDQGLQFOXGLQJVHHGSHVWLFLGHIHUWLOL]HUZDUHKRXVHUHFHLSWV
FURSLQVXUDQFHHWF7KRXJKLPSRUWDQWLQVXSSRUWRIDYLDEOHULFHHFRQRP\WKHVHPDUNHWVQHHG
WREHGHYHORSHGWREHWWHUVHUYHWKHYDOXHFKDLQDFWRUHIIHFWLYHO\
&RPSHWLWLRQ IRU GRPHVWLF ULFH FRPHV IURP LPSRUWHG ULFH FRPLQJ PRVWO\ IURP $VLD ,PSRUWHG
ULFHLVLQPRVWFDVHVRIKLJKHUTXDOLW\DQGEHWWHUSUHVHQWHGWKDQORFDOULFHWKXVXUEDQFRQVXPHUV
72
SUHIHUWRSXUFKDVHLPSRUWHGULFH6PXJJOHGULFHIURPDFURVVWKH%HQLQERUGHULVDPDMRUFRQFHUQ
IRULQYHVWRUVLQGRPHVWLFULFHSURGXFWLRQDQGPLOOLQJ

9HUWLFDOFURVVUHODWLRQVKLSVLQYROYHDFWLYLWLHVIURPWKHIDUPWRWKHGRPHVWLFPDUNHW$SDUWIURP
WKH ODUJHVFDOH ULFH SURFHVVLQJ PLOOV ZKLFK WHQG WR LQWHJUDWH SURGXFHUV LQ WKH SURFHVVLQJ
DFWLYLWLHV WKH VPDOO ULFH SURGXFWLRQ V\VWHPV DUH OHVV LQWHJUDWHG $V WKHVH EHFRPH LQWHJUDWHG
ZDUHKRXVH IDFLOLWLHV ZRXOG QHHG WR EH PDGH DYDLODEOH $W WKH PLOOLQJ DQG ZKROHVDOH OHYHOV
LPSURYHG WHFKQRORJLHV ZLOO KDYH WR EH GHYHORSHG DQG LPSOHPHQWHG WR LQVXUH WKDW WKH ULFH IRU
GRPHVWLFPDUNHWLVRIKLJKJUDGH$PRQJRWKHUWKLQJVWKLVLPSOLHVWKHFRQVLGHUDWLRQRIDJUDGLQJ
V\VWHPZKLFKKDVLQWHJULW\DQGWKDWLVFRQVLVWHQWZLWKLQWHUQDWLRQDOVWDQGDUGV,QRUGHUWRPDNH
WKLV HIIHFWLYH WKHVH JUDGHV ZLOO KDYH WR SHUPHDWH WKH ULFH SURGXFWLRQ DQG GLVWULEXWLRQ V\VWHP
7KLVZRXOGKDYHWREHOLQNHGDQGDOVRDSSOLHGDWWKHSURGXFHUOHYHO$WWKLVOHYHOFRRSHUDWLRQ
EHWZHHQULFHSURGXFHUVDQGSURFHVVRUVLVUHTXLUHGWRHQVXUHWKDWSURGXFHUVJHWEHWWHUVHHGVDQG
RWKHU LQSXWV VR WKDW WKH\ SURGXFH SDGG\ WKDW PHHW WKH VWDQGDUGV DQG UHTXLUHPHQWV RI WKH
SURFHVVRUV3XEOLFVHFWRUDFWLRQVWRHQFRXUDJHDQGIDFLOLWDWHDFWLYHSDUWLFLSDWLRQRISULYDWHVHFWRU
SURYLGHUVRIVHUYLFHVOLNHWUDFWRUVHUYLFHVDUHUHTXLUHG
7KHULFHPDUNHWLVODUJHO\LQIOXHQFHGE\LPSRUWHGULFHIURP$VLD,QWKLVFDVHHYHQWKHODUJHVFDOH
ULFHPLOOVGRQRWFRQWUROWKHPDUNHW8SJUDGLQJRSSRUWXQLWLHVH[LVWVDWYDULRXVVHJPHQWVRIWKH
ULFH YDOXH FKDLQ ,Q SDUWLFXODU XSJUDGLQJ LV UHTXLUHG DW WKH OHYHO RI LQSXW VXSSOLHUV SURGXFWLRQ
RUJDQL]DWLRQ DQG PDQDJHPHQW SURFHVVLQJ LQ WHUPV RI HTXLSPHQWV DQG SDFNDJLQJ LI GRPHVWLF
ULFHLVWRIDYRXUDEO\FRPSHWHZLWKLPSRUWHGULFH
,Q RUGHU WR LQFUHDVH WKH HIILFLHQF\ RI WKH GRPHVWLF ULFH SURGXFWLRQ ILUP OHYHO XSJUDGLQJ LV
HVVHQWLDO)LUVWWKHSURGXFHUVPXVWILQGWKHPVHOYHVLQDQHQYLURQPHQWWKDWHQFRXUDJHVDGRSWLRQ
RIQHZVHHGDQGPRGHUQLQSXWSDFNDJHV)DUPUHFRUGVDUHDQLPSRUWDQWSDUWRIWKLVWUDQVLWLRQ
7KLV ZLOO UHTXLUH D FUHGLW V\VWHP DQG SHUKDSV D FURS LQVXUDQFH V\VWHP WR KHOS WKH SURGXFHUV
PDQDJHWKHULVNOHYHOVRIWKHFKDQJH
$SDUW IURP WKH PRUH UHFHQW PLOOV VHYHUDO RI WKH 1LJHULDQ ULFH PLOOV DUH XVLQJ RXWGDWHG
WHFKQRORJLHV ,Q WKLV UHVSHFW SURFHVVLQJ ILUPV PXVW EH XSJUDGHG DQG XVH PRGHUQ DQG PRUH
HIILFLHQWWHFKQRORJLHVDQGRSHUDWLRQV7KLVGRHVQRWPHDQWKDWIDFLOLWLHVPXVWEHODUJHMXVWWKDW
WKH\PXVWRSHUDWHHIILFLHQWO\3URGXFHUVPLGGOHPHQZKROHVDOHUVWUDGHUVDQGUHWDLOHUVPXVWDOO
SDUWLFLSDWH LQ WKHVH XSJUDGLQJ HIIRUWV ³ DQG QRW WR IRUJHW WKH IRUHLJQ VHFWRU ZKLFK VKRXOG EH
ZHOFRPHGWRSDUWLFLSDWHLQWKHQHFHVVDU\LQYHVWPHQWV
7KH VWRUDJH LQGXVWU\ PXVW FKDQJH DV ZHOO DQG JDLQ WKH FRQILGHQFH RI WKH PDUNHW SDUWLFLSDQWV
7KLV ZLOO UHTXLUH JUDGLQJ JXDUDQWHHG VWRUDJH ZDUHKRXVH UHFHLSWV DQG DFWLYH WUDGLQJ VR WKDW DOO
PHPEHUV RI WKH LQGXVWU\ FDQ SDUWLFLSDWH LQ WKLV IXQFWLRQ RI D VXFFHVVIXO YDOXH FKDLQ 7KH
XSJUDGLQJRIILUPVPXVWEHLQILQDQFLDOPDQDJHPHQWDVZHOODVLQHTXLSPHQWDQGRWKHUDWWULEXWHV

5LFHLVDZDWHUORYLQJFURSWKXVJRRGDQGHIILFLHQWLUULJDWLRQJRRGVHHGVIHUWLOL]HUDQGUHODWHG
PDQDJHPHQWSUDFWLFHVDUHUHTXLUHGWRLQFUHDVH\LHOGDQGFRPSHWLWLYHQHVVRIULFHSURGXFWLRQ5LFH
UHVHDUFKHUV HVWLPDWH WKDW ZLWK WKH DGGLWLRQ RI SHVWLFLGHV DQG IHUWLOL]HU DQG DJDLQ PDQDJHPHQW
PHWKRGV WKH SRWHQWLDO \LHOGV FRXOG EH LQFUHDVHG WR WRQVKD ,UULJDWLRQ VFKHPHV DUH QRW
HIILFLHQWZKLOHLQSXWVSDUWLFXODUO\JRRGVHHGVIHUWLOL]HUVSHVWLFLGHDUHQRWUHDGLO\DYDLODEOHLQWKH
UHTXLUHG TXDQWLWLHV DQG DW DIIRUGDEOH SULFHV &RQWUDFW ODZV DUH ZHDN PDNLQJ LW GLIILFXOW WR
SURPRWHFRQWUDFWIDUPLQJ$OVRWKHIDLOXUHRIWKHFUHGLWV\VWHPZKLFKLVXVXDOO\VHJPHQWHGWR
VHUYH IDUPHUVPDUNHW OLQNDJHV OLPLWV WKH SURILWDELOLW\ RI ULFH SURGXFWLRQ ZKHQ FRPSDUHG WR
LPSRUWHGULFH
73
,QFUHDVLQJ GRPHVWLF ULFH \LHOGV ZRXOG PDNH LW SRVVLEOH IRU WKH IDUPHUV DQG WKH PLOOHUV DQG
VWRUDJHILUPVWRREWDLQEHWWHUHTXLSPHQW%\LQFUHDVLQJWKHXWLOL]DWLRQFDSDFLW\RIH[LVWLQJULFH
PLOOV SURILW PDUJLQV FRXOG EH LQFUHDVHG LQ WKLV SDUW RI WKH YDOXH FKDLQ 7KXV IRU LQVWDQFH
GRXEOLQJ WKH PLOOLQJ FDSDFLW\ XWLOL]DWLRQ RU VWRUDJH ZRXOG PDNH WKHVH DFWLYLWLHV YHU\ SURILWDEOH
DQG HQFRXUDJH WKH SXUFKDVH RI EHWWHU DQG PRUH HIILFLHQW PDFKLQHV 0DNLQJ WKLV SDUW RI WKH
LQGXVWU\PRUHHIIHFWLYHDQGHIILFLHQWZLOOEHYHU\LPSRUWDQWLQWKHIXWXUH

7KHULFHYDOXHFKDLQLVH[WUHPHO\VHQVLWLYHWRJRYHUQPHQWSROLF\,QOLJKWRIWKHJURZLQJLPSRUWV
WKH)HGHUDO*RYHUQPHQWUHFHQWO\LQFUHDVHGWKHEHQFKPDUNIRUULFHLPSRUWDWLRQIURPWRQ
DERXW1WRWRQ1ZKLOHGXWLHVSD\DEOHRQWKHPLQFUHDVHGWRSHUFHQW
:KLOH WKLV SROLF\ DFWLRQ LV LQWHQGHG WR SURPRWH GHYHORSPHQW RI WKH GRPHVWLF ULFH LQGXVWU\ LW
OHDGV WR LQFUHDVH LQ VPXJJOLQJ DFWLYLWLHV WKRXJK HIIRUWV DUH WDNHQ WR FXUWDLO VPXJJOLQJ E\ WKH
)HGHUDO*RYHUQPHQW
7KHUHFHQWSULFHKLNHVLQLQWHUQDWLRQDOULFHSULFHVKDVSURYLGHGDQRSSRUWXQLW\IRUWKHGRPHVWLF
ULFH PDUNHW E\ FORVLQJ WKH KXJH JDS GRXEOH EHWZHHQ GRPHVWLF DQG LQWHUQDWLRQDO SULFHV
+RZHYHUSURGXFWLYLW\\LHOGVRIGRPHVWLFULFHSURGXFHUVUHPDLQVORZ
)HGHUDODQGVWDWHSROLFLHVDQGLQVWLWXWLRQVWRLQFUHDVHULFHSURGXFWLYLW\KDYHODUJHO\IDLOHG8QWLO
UHFHQWO\ WDULII SURWHFWLRQ KDV EHHQ H[WUHPHO\ KLJK 7KRXJK WKH KLJK WDULIIV KDYH HQFRXUDJHG
GRPHVWLFSURGXFWLRQDVXEVWDQWLDOVPXJJOLQJRSHUDWLRQKDVGHYHORSHGWRVXSSO\ZKDWLVFRPHWR
EHNQRZQDV¶&RWRQRX5LFH·7KLVVPXJJOHGULFHVHWVWKHEHQFKPDUNSULFHIRUGRPHVWLFULFH
7KHULFHPDUNHWLVFRQWUROOHGE\ODUJHVFDOHULFHLPSRUWHUV7KHUHIRUHDQ\PDMRULQYHVWPHQWVLQ
WKHULFHYDOXHFKDLQQHHGWRDVVHVVWKHLPSOLFDWLRQVIRUWKHLPSRUWHUV$OVRWKHUHPD\EHDQHHG
WRGHYHORSDVWUDWHJ\WRHQFRXUDJHWKHLQFUHDVHGSURGXFWLRQPLOOLQJDQGSURSHUVWRUDJHRIULFH
SURGXFHGORFDOO\
)LQDQFLDO PHFKDQLVPV FDQ EH GHYHORSHG IRU SURGXFWLRQ SURFHVVLQJ DQG VWRUDJH RI ULFH WKDW
SHUPLWDOOSDUWLFLSDQWVLQWKHVHFWRUWRSDUWLFLSDWH,QWKHFDVHRISURGXFWLRQILQDQFLDOSURGXFWVWR
IDFLOLWDWHLQSXWDFFHVVWRIDUPHUVSURFHVVLQJWHFKQRORJ\ERQGHGVWRUDJHDQGZDUHKRXVHUHFHLSWV
FRXOG DOVR EH D SRVVLELOLW\ IRU ULFHYDOXH FKDLQ 7KHVH FDQ EH GHVLJQHG VR WKDW DOO LQ WKHYDOXH
FKDLQ FDQ SDUWLFLSDWH DQG WDNH WKH ULVNV WKDW WKH\ DUH FRPIRUWDEOH ZLWK )LQDQFH IRU ZRUNLQJ
FDSLWDO DQG WKH SXUFKDVH RI VPDOO XWLOLW\ HTXLSPHQW IRU IDUPHU JURXSV FRRSHUDWLYHV DQG
LQGLYLGXDOIDUPHUVJURXSVRULQGLYLGXDOVLVYLUWXDOO\QRQH[LVWHQW*LYHQWKHKLJKSURILWDELOLW\RI
ULFH SURGXFWLRQ SURFHVVLQJ DQG VDOHV SURYLGHV DQ DWWUDFWLYH ILQDQFLDO EXVLQHVV 7KHUH LV KXJH
ILQDQFLQJSRWHQWLDOLQSURGXFWLRQIRUWKHVXSSO\RILQSXWVWRIDUPHUV,QWKHDUHDRISURGXFWLRQ
LQYHVWPHQWRSSRUWXQLWLHVH[LVWLQODQGSUHSDUDWLRQHTXLSPHQWVZKLOHLQWKHHTXLSPHQWVIRUSRVW
KDUYHVW DOVR SURYLGHV RSSRUWXQLW\ IRU ILQDQFLQJ 8SJUDGLQJ RI SURFHVVLQJ HTXLSPHQWV WR PRUH
PRGHUQDQGHIILFLHQWRQHVDOVRSURYLGHVEXVLQHVVRSSRUWXQLWLHVWKDWUHTXLUHILQDQFH
6RPHODUJHUSURFHVVLQJSODQWVDOVRKDYHDFFHVVWRILQDQFLQJZKLFKWKH\H[WHQGWRSURGXFHUV,Q
WKH FDVH ZKHUH WKH SURFHVVRU SURYLGHV ORDQ WR SURGXFHUV SD\PHQW LV XVXDOO\ LQ WKH IRUP RI
SDGG\GHOLYHUHGWRWKHPLOO,QVXFKFDVHVWKHSURFHVVRUSUHILQDQFHSURGXFWLRQSDUWLFXODUO\IRU
WKHVXSSO\RILQSXWV2/$0SURYLGHVVXFKVXSSRUWIRULWVQHWZRUNRIULFHSURGXFHUVVXSSOLHUV
2QWKHEDVLVRIWKHDERYHDQDO\VLVDQGLQWHUYLHZVZLWKNH\ULFHYDOXHFKDLQDFWRUVWKHILQDQFLDO
UHTXLUHPHQWVLQWKHYDULRXVVHJPHQWVRIWKHYDOXHFKDLQDUHLGHQWLILHGDVIROORZVVHH7DEOH$
74
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHULFHYDOXHFKDLQ
Packaging bags & labelling

Rice parboiling and drying
Rice processing - milling

Input industry/irrigation
Commercial Farming
Small scale farming
Rice storage
middlemen
Wholesale
Export
Need/ Workin Working Working Working Working Working Working Working Working Pre-
purpose g capital capital capital capital capital, capital capital, capital, capital, and
(inputs), (inputs) equipment (supplier equip- fixed fixed post-
equip- equip- credit), ment assets assets shipme
ment ment equip- nt
(tech- ment
nology)
Volume high low high low low high medium medium low low
needed (through
processors)
Risks high high medium medium low low low medium low high
Interest low low low medium low medium high high high high
75
A.9 Soybean
6R\EHDQLVDUHODWLYHO\QHZFURSLQ1LJHULDZKLFKLVPRVWO\FXOWLYDWHGLQWKH1RUWK:HVW1RUWK
(DVW DQG 1RUWK &HQWUDO SDUWV RI WKH FRXQWU\ 1LJHULD
V GRPHVWLF SURGXFWLRQ RI VR\EHDQV LV
FRQWLQXLQJ WR LQFUHDVH EXW VWLOO GRHV QRW PHHW WKH UDSLGO\ JURZLQJ GHPDQG IURP WKH SRXOWU\
LQGXVWU\DQGYHJHWDEOHRLOSURGXFHUV7KHUDSLGJURZWKLQWKHSRXOWU\VHFWRULQWKHSDVWILYH\HDUV
KDVERRVWHGGHPDQGIRUVR\EHDQPHDOLQ1LJHULD+RZHYHUDOWKRXJKGRPHVWLFSURGXFWLRQKDV
EHHQ ULVLQJ LW KDV EHHQ XQDEOH WR VDWLVI\ ORFDO GHPDQG 1LJHULD
V VR\EHDQ RXWSXW LQ LV
HVWLPDWHGDWWRQV
Mapping the chain

6R\EHDQYDOXHFKDLQIROORZVDIDLUO\OLQHDUSDWKIURPLQSXWFRPSDQLHVVHHGIHUWLOL]HUVPRGHUQ
ODQG SUHSDULQJ HTXLSPHQWV HWF WKURXJK SURGXFHUV WUDGHUV XS WR SURFHVVRUV DQG HQG SURGXFW
FRQVXPHUV:LWKLQ WKLV IORZ WKHUH LV D VHTXHQWLDORUGHU RI SDUWQHUV WKDWZRUN WRJHWKHU WR WDNH
VR\EHDQVIURPRQHOLQNLQWKHFKDLQWRWKHQH[W+RZHYHURQFHVR\EHDQVUHDFKWKHSURFHVVLQJ
VWDJH WKH SRVVLELOLW\ IRU XVH H[WHQG LQ PDQ\ GLIIHUHQW GLUHFWLRQV VXFK DV RLO PHDO RU FDNH
SURWHLQSURGXFWVDQGWKHQLQPRUHVSHFLILFXVHVRIHDFKRIWKRVHVR\EHDQSURGXFWFRPSRQHQWV
)LJXUH $ EHORZ SUHVHQWV D VLPSOLILHG IORZ RI VR\EHDQ IURP LQSXW PDUNHW WR HQG SURGXFW
FRQVXPHUV
)LJXUH$0RYHPHQWDQGWUDQVIRUPDWLRQRI6R\DYDOXHDFURVVWKHFKDLQ

6RXUFH7KHDXWKRUV
7KH1LJHULDQVR\EHDQFKDLQLVGRPLQDWHGE\JUDLQPHUFKDQWVZKRWUDGHLQDQ\DYDLODEOHSURGXFW
GHSHQGLQJRQWKHVHDVRQ7KHWUDGHUVFROOHFWVR\EHDQVIURPORFDOPDUNHWSODFHVLQWKHPDMRUVR\
SURGXFWLRQ DUHDV7KH\DUH VXSSRUWHG E\ FRPPLVVLRQDJHQWV DQGYLOODJH WUDGHUV IRU DVVHPEOLQJ
WKHFRPPRGLW\7KHPHUFKDQWVWKHQFROOHFWDQGVHOOWRSURFHVVLQJSODQWV7KHWZRPDLQSURGXFWV
IURPSURFHVVLQJSODQWVRLODQGPHDODUHVROGWKURXJKPDMRUPDUNHWVZKROHVDOHUVZKRLQWXUQ
VHOO WR GLVWULEXWRUV DQG VXSHUPDUNHWV 7KH PHDO LV ERXJKW E\ IHHG PLOOHUV GLUHFW IURP WKH
SURFHVVRUVDQGWUDQVSRUWHGWRWKHIHHGPLOOVDQGXVHGDVSURWHLQLQJUHGLHQWLQWKHIHHGPL[WXUH
DQG VROG WR OLYHVWRFN SURGXFHUV ² SDUWLFXODUO\ WKH SRXOWU\ VXEVHFWRU 7KXV WKH GHPDQG IRU
VR\EHDQIRUFRPPHUFLDOSURFHVVLQJLVGHULYHGIURPWKHGHPDQGIRUOLYHVWRFNIHHGZKLFKLQWXUQ
LV GHULYHG IURP WKH GHPDQG IRU OLYHVWRFN SURGXFWV 0RVW VLJQLILFDQW YDOXH LV DGGHG E\ WKH
SURFHVVRUDQGWKHIHHGPLOOHUZKRXVHVR\EHDQFDNHDVLQSXWIRUIHHGIRUPXODWLRQ
76
0RVWRIWKHVR\EHDQSURGXFHGLQ1LJHULDLVE\VPDOOKROGHUIDUPHUVZLWKOHVVWKDQKDODQGDUHD
7KH\ FXOWLYDWH VR\EHDQ LQ DVVRFLDWLRQ ZLWK FHUHDOV PRVWO\ PDL]H VRUJKXP RU PLOOHW 0RUH
IDUPHUV DUH FXOWLYDWLQJ VR\EHDQ EHFDXVH RI WKH VXUJLQJ GHPDQG RI LQGXVWU\ IRU SURFHVVLQJ LQWR
GHRLOHGFDNHDQGVR\EHDQHGLEOHRLOLQWKHGRPHVWLFPDUNHW+RZHYHUWKHVXSSO\FKDLQLVQRW
RUJDQL]HGDQGQRWZHOOLQWHJUDWHGZLWKWKHHPHUJLQJLQGXVWULDOSURFHVVLQJ)DFWRUVDIIHFWLQJWKH
SHUIRUPDQFH RI WKH FRPPRGLW\ VXEVHFWRU LQFOXGH XQGHUXWLOL]DWLRQ RI LQVWDOOHG FDSDFLW\ RI
YHJHWDEOH RLO PLOOV WKDW SURFHVV VR\EHDQV ODFN RI WKH VWDWHRIWKH DUW VR\EHDQ UHILQHULHV 0RVW
SUROLILF UHJLRQV IRU SURGXFWLRQ LV .DGXQD DQG %HQXH 6WDWH ZKLOH UHJLRQV LQ WKH 6RXWK 6RXWK
:HVWDVZHOODV1RUWK(DVWDUHOHVVDGDSWHGWRVR\EHDQSURGXFWLRQVHH)LJXUH$
)LJXUH$6R\EHDQSURGXFWLRQLQ1LJHULDLQ
6RXUFH3UHSDUHGE\,,7$*HRVSDWLDOODE1LJHULD

/DFNRIVWDWHRIWKHDUWYHJHWDEOHRLOUHILQHULHVWKDWXVHHIILFLHQWPHDQVRIH[WUDFWLQJRLOIURPWKH
FUXVKHGVR\EHDQVLVDQRWKHULPSRUWDQWFRQVWUDLQW7KH7DUDNX0LOOVLQ0DNXUGLLVWKHRQO\RQH
HTXLSSHG ZLWK VROYHQW H[WUDFWLRQ HTXLSPHQW EXW QRW RSHUDWLQJ RSWLPDOO\ GXH WR LQVXIILFLHQW
VXSSO\RIVR\EHDQV$OVRTXDOLW\RIVR\EHDQVGHOLYHUHGWRWKHSURFHVVLQJSODQWVLVRIORZTXDOLW\
ZKLFKGRHVQRWSURGXFHKLJKTXDOLW\HGLEOHRLOV$VVHPEOLQJRIVR\EHDQRYHUORQJGLVWDQFHVIRU
PDQ\ VPDOOKROGHU IDUPHUV PRVW RI WKH WLPH ZLWK YDU\LQJ TXDOLW\ LV DQ LVVXH RI FRQFHUQ 7KLV
FRXOGEHVROYHGWKURXJKFRQWUDFWIDUPLQJDQGZLWKVXSSRUWIURPSURFHVVRUV

1LJHULD
VLQVWDOOHGDQQXDOVR\EHDQSURFHVVLQJFDSDFLW\LVHVWLPDWHGDWDSSUR[LPDWHO\07
'XHWROLPLWHGSURGXFWLRQRQO\SHUFHQWRILQVWDOOHGSURFHVVLQJFDSDFLW\LVXWLOL]HGDQQXDOO\,W
77
LVUHSRUWHGWKDWWKHUHDUHHLJKWODUJHSURFHVVRUVLQ1LJHULDDFFRXQWLQJIRUQHDUO\SHUFHQWRI
1LJHULD
VVR\EHDQSURFHVVLQJLQGXVWU\
7KH ODUJHVW DPRQJ WKHP DUH *UDQG &HUHDOV 2LO 0LOOV DQG (&:$ )HHGV DOO ORFDWHG LQ -RV
2WKHUV DUH ORFDWHG LQ .DQR 0DNXUGL DQG .DWVLQD 0RVW RI WKH ROGHU PLOOV XVH VFUHZ SUHVV
WHFKQRORJ\ ZKLFK LV LQHIILFLHQW LQ H[WUDFWLQJ RLO IURP WKH FUXVKHG FDNH 7KXV ILQDQFLQJ WR
DFTXLUHQHZWHFKQRORJ\DQGPDFKLQHVFRXOGEHDSRWHQWLDOEXVLQHVVIRUEDQNVZLOOLQJWRILQDQFH
WKHVHFWRU$VGHPDQGIRUVR\EHDQLVQRWWKHSUREOHPHIIRUWVVKRXOGIRFXVRQLQFUHDVLQJVXSSO\
RI TXDOLW\ VR\EHDQ LQYHVWLQJ LQ PRUH HIILFLHQW SURFHVVLQJ HTXLSPHQWV ERWK IRU VR\EHDQ
SURFHVVLQJDQGIHHGPLOOV

/LYHVWRFNIHHGSDUWLFXODUO\SRXOWU\PDUNHWLVWKHPRVWLPSRUWDQWPDUNHWIRUVR\EHDQFDNHZKLOH
WKHYHJHWDEOHRLOREWDLQHGIURPVR\EHDQLVODUJHO\IRUKXPDQFRQVXPSWLRQ5HJDUGLQJWKHFDNH
WKH OLYHVWRFN IHHG LQGXVWU\ LQ 1LJHULD GHFOLQHG LQ WKH V DQG V UHVXOWLQJ LQ WKH H[LW RI
PDMRU PXOWLQDWLRQDOV RSHUDWLQJ LQ WKH LQGXVWU\ OHDYLQJ EHKLQG ILUPV WKDW WKH\ KDG VROG WR
PDQDJHPHQW RU WR WKLUG SDUWLHV7KHVH ILUPV VWUXJJOHG WR VXUYLYH DQGZHUHLQ GHFOLQH XQWLO WKH
SRXOWU\ LPSRUW EDQ ZDV LPSRVHG E\ WKH *RYHUQPHQW RI 1LJHULD OHDGLQJ WR VLJQLILFDQW
FRPPHUFLDOLQYHVWPHQWDQGFRQVHTXHQWUDSLGJURZWKRIFRPPHUFLDOSRXOWU\SURGXFWLRQ2YHUDOO
WKH GHPDQG IRU SRXOWU\ SURGXFWV DQG PHDW LV LQFUHDVLQJ UDSLGO\ GULYHQ E\ ULVLQJ LQFRPHV
DPRQJVW PLGGOHLQFRPH FRQVXPHUV DQG D KLJKLQFRPH HODVWLFLW\ &RQVHTXHQWO\ WKH PDUNHW IRU
SRXOWU\IHHGLVJURZLQJGRPLQDWHGE\GLUHFWVDOHVWRWKHODUJHFRPPHUFLDOIDUPV+RZHYHUWKH
VWURQJ VXSSO\ UHVSRQVH KDV PHDQW WKDW SULFHV RI IUR]HQ FKLFNHQV KDYH QRW NHSW SDFH ZLWK
LQIODWLRQ
6R\EHDQLVXVHGDVDPDMRUSURWHLQLQJUHGLHQWLQEUHDNIDVWDQGEDE\IRRGV7KHPHDOLVDOVRXVHG
WRLPSURYHWKHSURWHLQFRQWHQWLQFDUERK\GUDWHIRRGVVXFKDV´JDULµDIRRGVWDSOHPDGHIURP
SURFHVVHGFDVVDYDZKLFKLVZLGHO\FRQVXPHGLQWKHUHJLRQ6R\EHDQLVDOVRXVHGLQPDNLQJVR\
FKHHVHLQQRUWKHUQ1LJHULDORFDOO\FDOOHG´ZDUDµDQGFRQVXPHGDVDVXEVWLWXWHIRUPHDWDQGILVK
LQORFDOGLVKHV/DUJHVFDOHGHPDQGIRUVR\EHDQVDULVHVPDLQO\IRUWKHRLODQGSURWHLQULFKPHDO
GHULYHG IURP VR\EHDQ FUXVKLQJ 6R\EHDQ PHDO GHULYHG IURP LQGXVWULDO SURFHVVLQJ JRHV WR WKH
DQLPDOIHHGLQGXVWU\DVDKLJKTXDOLW\DQGHIILFLHQWSURWHLQVRXUFH

$VVXSSO\RIVXIILFLHQWDQGTXDOLW\VR\EHDQVWRWKHSURFHVVLQJPLOOVLVWKHPDMRUSUREOHPWKHUHLV
QROHDGILUPLQWKHVR\EHDQYDOXHFKDLQ6R\EHDQSURGXFHUVDUHSRRUO\RUJDQL]HGDQGLQWHJUDWHG
LQWKHHQWLUHYDOXHFKDLQ&RQWUDFWIDUPLQJEHWZHHQSURGXFHUVDQGPLOOHUVGRHVQRWVHHPWREH
ZRUNLQJ ODUJHO\ GXH WR WKH LQDELOLW\ WR VXSSO\ VXIILFLHQW EHDQV WR WKH SURFHVVLQJ PLOOV :KHUH
WKHUHKDVEHHQVRPHVXFFHVVLQWHJUDWLQJSURGXFHUVDQGSURFHVVRUFUHGLWVDQGVHUYLFHVKDYHEHHQ
SURYLGHGE\WKHWRSUHILQDQFHSURGXFWLRQDFWLYLWLHV3URGXFHUVZRXOGWKHQUHSD\DWWKHWLPHRI
VDOHWRWKHSURFHVVRU
&RRUGLQDWLRQ DPRQJ FKDLQ DFWRUV LV SRRU FKDUDFWHUL]HG E\ PDQ\ VPDOOKROGHU IDUPHUV IHZ
EX\HUVDQGRYHUFDSDFLW\RISURFHVVLQJPLOOV&KDLQXSJUDGLQJRSSRUWXQLWLHVH[LVWLQRUJDQL]LQJ
WKH PDQ\ VPDOOKROGHU SURGXFHUV LQWR SURGXFWLRQ XQLWV PDNLQJ DYDLODEOH TXDOLW\ VHHGV DQG
EXLOGLQJ WKHLU FDSDFLW\ WR SURGXFH DQG VXSSO\ TXDOLW\ VR\EHDQV WR WKH SURFHVVLQJ PLOOV 2WKHU
RSSRUWXQLWLHVH[LVWLQWHFKQRORJ\XSJUDGLQJRIH[LVWLQJSURFHVVLQJPLOOV+RZHYHUDQ\DFWLRQWR
HIIHFW WKLV XSJUDGLQJ ZRXOG UHTXLUH D SUHFLVH DVVHVVPHQW RI WKH ORFDWLRQ DQG VL]H RI H[LVWLQJ
SODQWVDVZHOODVGHWHUPLQDWLRQRIWKHW\SHVRIWHFKQRORJ\LQXVHDQGQXPEHURISURGXFHUVWKDW
FRXOGDGHTXDWHO\DQGHIILFLHQWO\VXSSO\VR\EHDQVWRWKHSURFHVVLQJSODQ
78
'HVSLWH WKH KLJK SRWHQWLDO IRU H[WHQGLQJ VR\EHDQ SURGXFWLRQ DQG PDUNHWLQJ WR WKH IRRG DQG
IHHGVWXIIVHFWRULQ:HVW$IULFDWKHUHLVFXUUHQWO\DOLPLWHGXQGHUVWDQGLQJDERXWPHDVXUHVWKDWDUH
DEOHWRKHOSUHDOL]HWKLVSRWHQWLDO*RYHUQPHQWVDQGDJULFXOWXUDODQGDJURLQGXVWU\GHYHORSPHQW
DJHQWVDUHRIWHQLQYROYHGRQO\LQLQVLJQLILFDQWDFWLYLWLHVZKLFKDUHJHDUHGWRLPSURYHGDGYLVRU\
VHUYLFHVIRUVPDOOVFDOHIDUPHUVDQGVRPHFUHGLWVXSSRUWIRUDJULSURFHVVRUV:KDWLVQHHGHGLVD
PRUH KROLVWLF XQGHUVWDQGLQJ RI WKH IXQFWLRQLQJ RI WKH YDOXH FKDLQ WR EH DEOH WR LGHQWLI\ WKH
YDULRXVSDUDOOHOH[LVWLQJERWWOHQHFNVLQGHYHORSPHQWDQGWKHGHVLJQRISURJUDPPHVWKDWDUHDEOH
WRUHPRYHWKHPDQGUHVSRQGWRWKHH[LVWLQJGHYHORSPHQWRSSRUWXQLWLHV
,PSRUWRIYHJHWDEOHRLOVDQGSRXOWU\DUHRQWKHOLVWRIEDQQHGSURGXFWVWR1LJHULD7KLVVLWXDWLRQ
SURYLGHV DQ DVVXUHG PDUNHW IRU ORFDOO\ SURGXFHG YHJHWDEOH RLO DQG VR\EHDQ FDNH IRU VDOH WR
SRXOWU\IHHGPLOOV7KH,,7$DQG,$5=DULD,EDGDQDUHOHDGLQJUHVHDUFKLQVWLWXWLRQVGHYHORSLQJ
LPSURYHGVR\EHDQYDULHWLHVIRUUHOHDVHDQGFXOWLYDWLRQLQWKHFRXQWU\
Availability of Finance and attractiveness

7KHUH DUH QR IRUPDO ILQDQFLDO DUUDQJHPHQWV LQ VXSSRUW RI PDUNHW GHYHORSPHQW IRU VR\EHDQV
7KXV WKH SURGXFHUV DQG WKH PLOOHUV ODFN WKH QHHGHG FDSLWDO WR HIILFLHQWO\ OLQN DQG PDQDJH WKH
FKDLQ+RZHYHUVR\EHDQSURYLGHVDQDWWUDFWLYHEXVLQHVVIRUSURGXFHUVSURFHVVRUVDQGSRXOWU\
IHHG PLOOHUV 7KXV LQYHVWPHQWV LQ FHUWDLQ VHJPHQWV RI WKH FKDLQ FRXOG SURYH SURILWDEOH 0DMRU
GHPDQGIRUVR\EHDQPHDOFRPHVIURPWKHSRXOWU\IHHGPLOOHUVZKLFKLVGHULYHGODUJHO\IURPWKH
GHPDQG IRU SRXOWU\ DQG RWKHU OLYHVWRFN DQG OLYHVWRFN SURGXFWV 'HPDQG IRU WKHVH SURGXFWV LV
LQFUHDVLQJ ODUJHO\ GXH WR LQFUHDVLQJ LQFRPHV DQG WKH KLJK UDWH RI XUEDQL]DWLRQ LQ 1LJHULD ,W LV
UHSRUWHGWKDWVRPHVR\EHDQRUIHHGVDUHH[SRUWHGWRQHLJKERXULQJFRXQWULHV
6R\EHDQ SURFHVVLQJ UHTXLUHV D QXPEHU RI HTXLSPHQWV VXFK DV VFUHZ SUHVVHV DQG VROYHQW
H[WUDFWRUVDQGIHHGPLOOV7KHH[LVWLQJRQHVPD\QHHGWHFKQRORJ\XSJUDGLQJWRPHHWTXDOLW\DQG
VDIHW\UHTXLUHPHQWVDVZHOODVHIILFLHQF\$OORIWKHVHUHTXLUHDFFHVVWRILQDQFH(TXLSPHQWDQG
PDFKLQHU\ IRU ODUJHU SURFHVVLQJ SODQWV DUH VXEVWDQWLDO DQG JLYHQ WKHLU VWDWLRQDU\ FKDUDFWHU DUH
PRUHVXLWDEOHIRUVHFXULQJORDQV+RZHYHUEDQNVZRXOGDOZD\VUHTXLUHDGGLWLRQDOJXDUDQWHHVDQG
FROODWHUDOV
7DEOH$)XQGLQJUHTXLUHPHQWVLQWKHVR\EHDQYDOXHFKDLQ
Food Processing
Local sourcing,
Input industry
Commercial
trading and
Small scale
middlemen
Wholesale
Farming
farming
Export
Need/ Working Working Working Working Fixed Pre- and

purpose capital capital, capital, capital, assets post-
(inputs, fixed assets vehicles equipment (storage), shipment
labour) (land, (medium- vehicles
equipment) long term)
Volume none high high low high medium medium
needed (through
processors)
Risks high medium medium medium low low
Interest low low medium high high high
79
A.10 Tomatoes
7RPDWRKDVEHHQLQFXOWLYDWLRQLQ1LJHULDIRUDYHU\ORQJWLPH,WLVDQLPSRUWDQWFRPSRQHQWRI
WKHGDLO\GLHWFRQVXPHGERWKIUHVKDQGLQSDVWHIRUP
Mapping the chain

0DLQDFWRUVLQWKHFKDLQLQFOXGHLQSXWSURYLGHUVVHHGVIHUWLOL]HUSHVWLFLGHVLUULJDWLRQV\VWHPV
SURGXFHUVVPDOOVFDOHSURFHVVRUVDQGUHWDLOHUVDQGWRDOLPLWHGGHJUHHLQGXVWULHVWKDWHQJDJHLQ
WKH SURGXFWLRQ RI WRPDWR SDVWH DQG FDQQHG WRPDWRHV 3URGXFWLRQ LV GRPLQDWHG E\ VPDOO WR
PHGLXP IDUPHUV WKDW KDYH UHDFKHG D VXEVWDQWLDO OHYHO RI PDUNHW RULHQWDWLRQ$OVR D QXPEHU RI
ODUJHUVFDOHFRPPHUFLDOIDUPVRSHUDWHLQWKHVHFWRURIWHQZLWKGLUHFWOLQNVWRSURFHVVRUV)LJXUH
$SURYLGHVDQRYHUYLHZRIWKHPDLQVHJPHQWVRIWKHYDOXHFKDLQ,QDGGLWLRQWKHUHDUHDOVR
SULYDWHVHUYLFHSURYLGHUVLQFOXGLQJPLGGOHPHQWUDGHUVDQGWUDQVSRUWHUVVXSSOLHUVRISURFHVVLQJ
HTXLSPHQWVXSSOLHUVRISDFNDJLQJPDWHULDOVDQGWRDOLPLWHGGHJUHHILQDQFLDOVHUYLFHSURYLGHUV
3XEOLF DQG GHYHORSPHQW FRRSHUDWLRQ VXSSRUW LV DOVR SURYLGHG YLD UHVHDUFK DQG H[WHQVLRQ
DJHQFLHVPRVWRIZKRIRFXVRQSULPDU\SURGXFWLRQDQGVPDOOVFDOHSURFHVVLQJ
Ǥͳͳǣ

6RXUFH$PXQLDQG0XVLQRGDWH

7KH YDOXH RI DQQXDO WRPDWR SURGXFWLRQ LQ 1LJHULD LV HVWLPDWHG WR EH DURXQG 0LR 86'
)$267$7 7KLV PHDQV WKDW WRPDWRHV UDQNV WK LQ WKH OLVW RI PRVW LPSRUWDQW DJULFXOWXUDO
FRPPRGLWLHVLQ1LJHULD3URGXFWLRQKDVDOPRVWGRXEOHGRYHUWKHODVW\HDUVUHDFKLQJ0LR
80
WRQVLQ+RZHYHURYHUWKHVDPHSHULRG\LHOGVKDYHUDWKHUVWDJQDWHGRUHYHQGHFOLQHG,Q
DYHUDJH \LHOGV SHU KHFWDUH RI WRPDWR SURGXFWLRQZHUHDURXQG WRQV7KH SURGXFWLRQ LV
EHVHWZLWKPDQ\SUREOHPVVXFKDVGLVHDVHVQHPDWRGHVLQVHFWSHVWVKLJKIORZHUGURSDOOWKHVH
UHVXOWLQJLQORZ\LHOGDQGSRRUTXDOLW\IUXLWV
)LJXUH$SURYLGHVLQIRUPDWLRQRQWRPDWRSURGXFWLRQLQWKHFRXQWU\7RPDWRHVDUHSURGXFHG
DURXQGXUEDQFHQWUHVLQWKH6RXWKZKHUHWKHFRVWVRIWUDQVSRUWDQGPDUNHWLQJDUHORZ+RZHYHU
IRU PRUH FRPPHUFLDO SURGXFWLRQ 1RUWKHUQ VWDWHV VXFK DV 6RNRWR *RPEH <REH .DQR DQG
%HQXHSURYLGHJRRGRSSRUWXQLWLHVGXHWRIDYRXUDEOHZHDWKHUFRQGLWLRQV
)LJXUH$)UHVK7RPDWR3URGXFWLRQLQ1LJHULD

6RXUFH$PLQXDQG0XVDQRGDWH

7KHUHDUHHVWLPDWLRQVWKDWDERXWRIWRWDOWRPDWRHVSURGXFHGLQ1LJHULDDQQXDOO\DUHZDVWHG
EHFDXVH RI WKH ODFN RI SURFHVVLQJ IDFLOLWLHV DQG SUHVHUYDWLRQ PHFKDQLVPV (YHQ ODUJHVFDOH
WRPDWR IDUPHUV ODFN DSSURSULDWH SURFHVVLQJ RU SUHVHUYDWLRQ IDFLOLWLHV WR NHHS WUDQVSRUW DQG
WUDQVIRUP ODUJHU YROXPHV RI WRPDWRHV 3URFHVVLQJ PDFKLQHV DUH PDQXDOO\ RSHUDWHG ZLWK DQ
RSHUDWRU DW HYHU\ SRLQW WKHUHE\ LQFUHDVLQJ SHUVRQQHO FRVW 6RPH SURFHVVLQJ PDFKLQHV DUH HYHQ
REVROHWH ZLWK VSDUH SDUWV XQDYDLODEOH LQ WKH PDUNHW 7KH DFFHVV WR VWDEOH SRZHU LV DQRWKHU
FKDOOHQJH7KHUDZPDWHULDOVXSSO\LVLQWHUUXSWHGZKHQHYHUWKHSULFHRIWRPDWRULVHVDQGIDUPHUV
VHOOWRWKHIUHHPDUNHW)LQDOO\FKHDSLPSRUWVRIWRPDWREDVHGSURGXFWVFRPSHWHZLWKWKHORFDOO\
SURFHVVHGSURGXFWV
7R VHW XS DQ HIIHFWLYH DQG HIILFLHQW WRPDWR SDVWH DQG FDQQLQJ SODQW DQ LQYHVWRU QHHGV WKH
H[SHOOLQJPDFKLQHEOHQGLQJPDFKLQHILOOLQJPDFKLQHSDVWHXUL]HUZDVKLQJPDFKLQHVWDLQOHVVWRS
ZRUNLQJ WDEOH DQG FDQQLQJ PDFKLQH 0RVW RI WKHVH PDFKLQHV FDQ EH VRXUFHG ORFDOO\ WKRXJK
LPSRUWHG PDFKLQHU\ PD\ EH RI KLJKHU TXDOLW\ ,Q DQ\ FDVH WKHUH DUH VXEVWDQWLDO DPRXQWV RI
ILQDQFHUHTXLUHGWRREWDLQVXFKHTXLSPHQW

'HPDQG IRU SURFHVVHG WRPDWR SURGXFWV LQ WKH FRXQWU\ LV KLJK &XUUHQWO\ WKHUH DUH YDULRXV
EUDQGVRIWRPDWRSDVWHVDQGSXUHHVLPSRUWHGLQWRWKHFRXQWU\7KH\DUHXVHGLQWKHSUHSDUDWLRQ
RIGLIIHUHQWGHOLFDFLHVSDUWLFXODUO\VWHZDQGDUHXVHGH[WHQVLYHO\LQUHVWDXUDQWVERWKVPDOODQG
ODUJH7KHGHPDQGIRUWKHVHSURGXFWVLVLQFUHDVLQJ
81
7KHPDLQFKDQQHORIGLVWULEXWLRQLQYROYHVWKHSURGXFHUVWKHFRPPLVVLRQDJHQWVWKHDVVHPEOHUV
RU UHJLRQDO ZKROHVDOHUV WKH XUEDQ ZKROHVDOHUV DQG UHWDLOHUV DQG ILQDOO\ WKH FRQVXPHUV 7KH
SURGXFHUV VHOO WR WKH DVVHPEOHUV LQ WKH UXUDO DVVHPEO\ PDUNHW WKURXJK WKH FRPPLVVLRQ DJHQWV
ZKRUHFHLYHGDFRPPLVVLRQSHUEDVNHWRIWRPDWRVROG7KHDVVHPEOHUVRUUHJLRQDOZKROHVDOHUV
PRYH WKH SURGXFW WR WKH XUEDQ PDUNHWV ZKHUH WKH\ VHOO WR WKH XUEDQ WUDGHUV WKURXJK WKH
FRPPLVVLRQDJHQWVLQWKHXUEDQPDUNHWVDQGILQDOO\WKHSURGXFHUHDFKHVWKHXOWLPDWHFRQVXPHUV
$WDQ\OHYHODORQJWKHFKDLQRIGLVWULEXWLRQFRPPLVVLRQDJHQWVSOD\WKHUROHRILQWHUPHGLDWLRQ
EHWZHHQWKHPDUNHWPLGGOHPHQIRUDIHH
2WKHUUHJLRQDOSURGXFHUVRIWRPDWRHVLQFOXGH*KDQDDQG%XUNLQD)DVR7KHODWWHUKDVEHQHILWHG
IURPIRUHLJQLQYHVWRUVLQFOXGLQJ7DLZDQWREXLOGXSWKHLQGXVWU\SURYLGLQJWUDLQLQJDQGVHHGV
DQG VHWWLQJ XS LUULJDWLRQVFKHPHV 6RPH RI WKH SURGXFWV RI WKHVH LQGXVWULHV DOVR SDVV 1LJHULD·V
ERUGHUV ZKHUH WKHLU JRRG TXDOLW\ GXH WR WKH YDULHWLHV XVHG FRPSHWHV GLUHFWO\ ZLWK 1LJHULDQ
SURGXFWV
Tomato product consumption and preferences

&RQVXPSWLRQ RI IUHVK DQG SURFHVVHG WRPDWR DV ZHOO DV LPSRUWDWLRQ RI SURFHVVHG WRPDWRHV LQ
1LJHULDKDVLQFUHDVHGGUDPDWLFDOO\VLQFHWKHODWHV8UEDQFRQVXPHUVEX\WRPDWRHVLQWKUHH
GLIIHUHQWIRUPVIUHVKGULHGDQGFDQQHGWRPDWRSURGXFWV7KHSDWWHUQRIFRQVXPSWLRQDPRQJ
WKHFRQVXPHUVLQWHUYLHZHGLQGLFDWHGWKHIROORZLQJXVHGIUHVKWRPDWRRQO\XVHGIUHVK
DQGGULHGRQO\XVHGIUHVKGULHGDQGFDQQHGWRPDWRXVHGIUHVKDQGFDQQHGWRPDWR
RQO\
7KLVSDWWHUQVKRZVWKDWDOOWKHFRQVXPHUVXVHGIUHVKWRPDWRDQGWKXVLVPRVWSUHIHUUHGDPRQJ
XUEDQFRQVXPHUV&RQVXPHUVXVHGRWKHUIRUPVRIWRPDWRGULHGRUFDQQHGRQO\ZKHQWKHIUHVK
WRPDWRLVQRWHDVLO\DYDLODEOHDQGWKXVLWVSULFHLVUHODWLYHO\KLJKFRPSDUHGWRWKHRWKHUIRUPVRI
WRPDWR

)UHVK WRPDWR VXSSO\ LV VHDVRQDO &RQWUROOHG SURGXFWLRQ XQGHU JUHHQKRXVH FRQGLWLRQV LV QRW
FRPPRQ LQ 1LJHULD 3URYLGLQJ ILQDQFH IRU WKH SURYLVLRQ RI VHHGV IHUWLOL]HUV DQG KHUELFLGHV WR
IDUPHUV LV RIWHQ WKH RQO\ ZD\ RI JHWWLQJ IDUPHUV WR JURZ VXIILFLHQW TXDQWLW\ DQG TXDOLW\ RI
SULPDU\SURGXFWV&DSLWDOIRUWKLVW\SHRISUHILQDQFLQJRIDJULFXOWXUDOSURGXFWLRQLVXVXDOO\YHU\
VFDUFHDVZHOO6DYDQQDK,QWHJUDWHG([SRUW3URFHVVLQJ)DUPVLQ%RUQR VWDWHLVRQHRIWKHOHDG
ILUPVLQWKHVHFWRUWKDWKDVLQWURGXFHGRXWJURZHUVFKHPHVVHH%R[$
%R[$7RPDWR3URGXFWLRQLQ%RUQR6WDWH²7KH6,(3)VFKHPH
6DYDQQDK,QWHJUDWHG([SRUW3URFHVVLQJ)DUPV6,(3)LQ%RUQR6WDWHOHQGVODQGWRIDUPHUVWRSURGXFH
WRPDWRHVIRU LWV SURFHVVLQJSODQW 7KH FRPSDQ\ ZRUNVZLWK UHJLVWHUHG FRPPRGLW\ JURXSV DQG GRHV
QRW GHDO ZLWK LQGLYLGXDO IDUPHUV GLUHFWO\ 7KH FRPSDQ\ VXSSRUWV IDUPHUV WKURXJK SURYLGLQJ VHHGV DQG
H[WHQVLRQDGYLFHZKLOHDOVRKHOSLQJLQPHFKDQL]HGODQGSUHSDUDWLRQ,WSURYLGHVDJXDUDQWHHWRIDUPHUVWR
EX\WKHSURGXFWRIFHUWDLQTXDOLW\DWDIL[HGSULFH7KHFRPSDQ\SUHYLRXVO\HQJDJHGLQSURSHUSURGXFWLRQ
EXWIRXQGWKDWWKHXVHRIWKHRXWJURZHUVFKHPHUHGXFHVVWHDOLQJDQGLQFUHDVHVRXWSXW$PDMRUFKDOOHQJH
UHPDLQVZLWKUHJDUGWRWKHILQDQFHRILPSRUWDQWLQSXWVVXFKDVIHUWLOL]HUDQGKHUELFLGHVDVIDUPHUVKDYH
OLWWOH RU QR FROODWHUDO WR SURYLGH ILQDQFH LQVWLWXWLRQV GR QRW SURYLGH ORDQV WR SUHILQDQFH SURGXFWLRQ
)XUWKHU SUHILQDQFLQJ IDFLOLWLHV FDQ EH SURYLGHG E\ WKH FRPSDQ\ KRZHYHU OHDYLQJ WKH SUHILQDQFLQJ RI
IDUPHUV· SURGXFWLRQ HQWLUHO\ WR WKH EX\HUSURFHVVRUV VHHPV WR RYHUVWUHWFK WKH FRPSDQ\·V FDSDFLW\ WR
SURYLGHILQDQFHDVLWDOVRQHHGVWRLQYHVWLQH[SHQVLYHHTXLSPHQWWRLPSURYHWKHSRUWIROLRRISURGXFWVLW
SURFHVVHV
6RXUFH,QWHUYLHZZLWK6,())DQG)DUPHUV$VVRFLDWLRQ
82
(QYLURQPHQWDOFRQFHUQVSDUWLFXODUO\UHODWHWRWKHXVHRISHVWLFLGHVDQGKHUELFLGHVLQSURGXFWLRQ
DQGWKHH[WHQVLYHXVHDQGFRQWDPLQDWLRQRIZDWHULQSURGXFWLRQDQGSURFHVVLQJ(QYLURQPHQWDO
VWDQGDUGVWRZDUGVFOHDQHUSURGXFWLRQFRQWUROOLQJQHJDWLYHHQYLURQPHQWDOHIIHFWVDUHQRWLQSODFH
$OWHUQDWLYH WHFKQRORJLHV WR DYRLG FRQWDPLQDWLRQ DQG UHGXFH HQHUJ\ XVH DUH DYDLODEOH EXW DUH
PRVWO\ FRQVLGHUHG WRR H[SHQVLYH 7KHUH LV DOVR D ODFN RI WHFKQLFLDQV LQ WKH LQGXVWU\ ZKR DUH
WUDLQHGLQHQYLURQPHQWDOPDQDJHPHQW

:HVW$IULFDQ WUDGH ODZV LPSRVH QR GXWLHV RQ DJULFXOWXUDO SURGXFWV FURVVLQJ ERUGHUV PDNLQJ LW
FKHDSIRUEX\HUVWRSXUFKDVHDEURDG:LWK(XURSHDQ8QLRQ(FRQRPLF3DUWQHUVKLS$JUHHPHQWV
(3$VFXUUHQWO\EHLQJQHJRWLDWHGWKHUHLVVRPHULVNWKDW:HVW$IULFDQPDUNHWVDUHDERXWWREH
IORRGHG ZLWK KHDYLO\ VXEVLGL]HG (8 SURGXFWV XQOHVV (&2:$6 LQWURGXFHV D FRPPRQ SULFLQJ
SROLF\
7KHDERYHDQDO\VLVSRLQWVWRDQXPEHURIILQDQFLDOUHTXLUHPHQWVLQWKHYDULRXVVHJPHQWVRIWKH
YDOXHFKDLQVHH7DEOH$
7DEOH$)LQDQFLDO1HHGVLQWKH7RPDWR9DOXH&KDLQ
Food Processing (paste and

Commercial Farming
Small scale farming
canned tomatoes)
Input industry
Wholesale
Need/ purpose Working capital, Working capital Working capital Working Working capital,
fixed assets (plant) (inputs, labour) (inputs), capital, fixed assets (plant,
fixed assets equipment storage), vehicles
(short-medium (machinery)
term)
Volume none high high high medium
needed
Risks high medium medium low
Interest low low high high
83
Literature References
$GHQH')DQG$(2JXQWDGH3RXOWU\VHFWRUFRXQWU\UHYLHZ)$2$QLPDO3URGXFWLRQ
DQG+HDOWK'LYLVLRQ5RPH
$OOLDQFH IRU D *UHHQ 5HYROXWLRQ LQ $IULFD $*5$ DQG 3ULFH:DWHUKRXVH&RRSHUV $
5RDGPDSIRUPDNLQJDJULFXOWXUDOOHQGLQJDVWUDWHJLFDQGVXVWDLQDEOHDFWLYLW\IRU1LJHULDQ%DQNV
7KH FUHDWLRQ RI D 1LJHULDQ ,QFHQWLYHEDVHG 5LVN VKDULQJ 6\VWHP IRU $JULFXOWXUDO /HQGLQJ
1,56$/5HSRUWGHOLYHUHGWR&HQWUDO%DQNRI1LJHULDE\3ULFH:DWHUKRXVH&RRSHUV
$NLQZXPL-,2NLNH%%HWW7)5DQGROSKDQG.05LFK$QDO\VHVRIWKH3RXOWU\
9DOXH &KDLQ DQG ,WV /LQNDJHV DQG ,QWHUDFWLRQV ZLWK +3$, 5LVN )DFWRUV LQ 1LJHULD +3$,
5HVHDUFK%ULHI1R'),',)35,,/5,59&
$PLQX $ DQG 6$ 0XVD QR GDWH 7RPDWR &RPPRGLW\ &KDLQ $QDO\VLV LQ .DQR 5LYHU
,UULJDWLRQ 3URMHFW 1LJHULD 6WXG\ FRPPLVVLRQHG E\ WKH $JULFXOWXUDO 'HYHORSPHQW LQ 1LJHULD
$'(1,3URMHFW)UHQFK(PEDVV\1$(5/6
&HQWUDO%DQNRI1LJHULD0LFURILQDQFH3ROLF\5HJXODWRU\DQG6XSHUYLVRU\)UDPHZRUNIRU
1LJHULD&%1$EXMD1LJHULD
&KHPRQLFV,QWHUQDWLRQDO,QF$VVHVVPHQW RI7KH0LFUR6PDOODQG0HGLXP(QWHUSULVH
060(6HFWRULQ1LJHULD9ROXPH060($VVHVVPHQW
&RRQ & $ &DPSLRQ DQG 0 :HQQHU )LQDQFLQJ $JULFXOWXUH 9DOXH &KDLQV LQ &HQWUDO
$PHULFD,QWHU$PHULFDQ'HYHORSPHQW%DQN7HFKQLFDO1RWHV,'%71
(FRQRPLVW,QWHOOLJHQFH8QLW&RXQWU\UHSRUW1LJHULD-XQH
(&2:$6 )HGHUDO 5HSXEOLF RI 1LJHULD DQG &$$'3 QR GDWH 1LJHULD 6WUDWHJLF 2SWLRQV DQG
6RXUFHV IRU $JULFXOWXUDO *URZWK 3RYHUW\ 5HGXFWLRQ DQG )RRG 6HFXULW\ )HGHUDO 5HSXEOLF RI
1LJHULD$EXMD1LJHULD
(ILQ$ (QKDQFLQJ )LQDQFLDO ,QQRYDWLRQ $FFHVV (),Q$ 6XUYH\ ()LQ$ $EXMD
1LJHULD$YDLODEOHIURPKWWSHILQDRUJQJ
(0( (PHUJLQJ 0DUNHW (FRQRPLFV ,GHQWLI\LQJ *URZWK 3ROH 9DOXH &KDLQV IRU &URVV
5LYHU.DGXQD.DQRDQG/DJRV6WDWHV'HSDUWPHQWIRU,QWHUQDWLRQDO'HYHORSPHQW'),'DQG
:RUOG%DQN1LJHULD/RQGRQ8.
(]HGLQPD & ,PSDFW RI WUDGH RQ GRPHVWLF ULFH SURGXFWLRQ DQG WKH FKDOOHQJH RI VHOI
VXIILFLHQF\LQ1LJHULDLQ5LFH3ROLF\DQG)RRG6HFXULW\LQ6XE6DKDUDQ$IULFD3.RUPDZDDQG
$ $ 7RXUH HGV 3URFHHGLQJV RI D :RUNVKRS KHOG RQ ² 1RYHPEHU $IULFD 5LFH &HQWUH
:$5'$&RWRQRX%HQLQSS²
(]HGLQPD&,$2MLDNR582NHFKXNZX-5/HPFKL$08PDU/26DQQL02$NRURGD
)2JEH(2NRUR*7DUDZDOLDQG$*2'L[RQ7KH&DVVDYD)RRG&RPPRGLW\0DUNHW
DQG 7UDGH 1HWZRUN LQ 1LJHULD ,QWHUQDWLRQDO ,QVWLWXWH RI 7URSLFDO $JULFXOWXUH ,EDGDQ 1LJHULD
S
)$2 (QKDQFHPHQW RI LQODQG ILVKHULHV LQ 1LJHULD WKH LQVWLWXWLRQDOFRQWH[W SURYLGHG E\
WUDGLWLRQDODQGPRGHUQV\VWHPVRIILVKHULHVPDQDJHPHQW5RPH,WDO\
)$2)LVKHU\&RXQWU\3URILOH7KH)HGHUDO5HSXEOLFRI1LJHULD5RPH,WDO\
)$2)51$VVHVVPHQWRI&RPPXQLW\%DQNV)RRGDQG$JULFXOWXUH2UJDQL]DWLRQRIWKH
8QLWHG1DWLRQV)HGHUDO5HSXEOLFRI1LJHULD5RPH,WDO\
84
)$2'),' 6XVWDLQDEOH )LVKHULHV /LYHOLKRRGV 3URJUDPPH &RQWULEXWLRQ RI )LVKHULHV
5HVHDUFK WR WKH ,PSURYHPHQW RI /LYHOLKRRGV LQ :HVW $IULFDQ )LVKHULHV &RPPXQLWLHV &DVH
6WXG\1LJHULD5RPH,WDO\
),$6 0RYLQJ 7RZDUGV &RPSHWLWLYHQHVV $ 9DOXH &KDLQ $SSURDFK 7KH )RUHLJQ
,QYHVWPHQW$GYLVRU6HUYLFHV7KH:RUOG%DQN:DVKLQJWRQ'&86$
,)$' DQG )HGHUDO 5HSXEOLF RI 1LJHULD &RXQWU\ 6WUDWHJLF 2SSRUWXQLWLHV 3URJUDPPH
,)$'5RPH
,MHUH02&RORQLDO3ROLF\LQ1LJHULDQ$JULFXOWXUHDQG,WV,PSOHPHQWDWLRQ$JULFXOWXUDO
+LVWRU\
,QWHUQDWLRQDO&HQWHUIRU6RLO)HUWLOLW\DQG$JULFXOWXUDO'HYHORSPHQW,)'&'HYHORSLQJ
$JULFXOWXUDO ,QSXW 0DUNHWV LQ 1LJHULD (QG RI 3URMHFW 5HSRUW WR 86$,' 0XVFOH 6KRDOV
$ODEDPD86$
,VVHUQ-DQG*3HOOHJULQL'LDJQRVWLFRQ$FFHVVWR)LQDQFHLQ1LJHULD&*$3DQG:RUOG
%DQN:DVKLQJWRQ'&86$
.RUPDZD 30 &, (]HGLQPD . 0DNLQGH $ $GXNXQOH DQG - &KLDQX 1HHGV
$VVHVVPHQW6WXG\IRU0DUNHWGULYHQ$JULFXOWXUDO7HFKQRORJ\7UDQVIHUDQG&RPPHUFLDOL]DWLRQLQ
1LJHULD 5XUDO 6HFWRU (QKDQFHPHQW 3URJUDP 586(3 0RQRJUDSK 6HULHV ,QWHUQDWLRQDO
,QVWLWXWHRI7URSLFDO$JULFXOWXUH,,7$,EDGDQ1LJHULD
.XGL70$NSRNR-*DQG$EGXOVDODP=$VVHVVPHQWRI&RWWRQ,QGXVWU\8VLQJWKH
*OREDO &RPPRGLW\ &KDLQ $QDO\VLV $SSURDFK LQ .DWVLQD 6WDWH 1LJHULD -RXUQDO RI $SSOLHG
6FLHQFHV
0DQ\RQJ 90$ ,NSL -. 2OD\HPL 6$ <XVXI % 7 2PRQRQD 9 2NRUXZD DQG ) 6
,GDFKDED $JULFXOWXUH LQ 1LJHULD ,GHQWLI\LQJ RSSRUWXQLWLHV IRU LQFUHDVHG
FRPPHUFLDOL]DWLRQ DQG LQYHVWPHQW ,QWHUQDWLRQDO ,QVWLWXWH RI 7URSLFDO $JULFXOWXUH ,,7$
,EDGDQ1LJHULD
0DUNHWV86$,' 2SSRUWXQLWLHV IRU ,QYHVWPHQW LQ &DVVDYD 5LFH 6RUJKXP 1LJHULDQ
$JULFXOWXUDO6HFWRU:RUNVKRS/DJRV-XQH
0HULGLDQ ,QVWLWXWH QR GDWH ,QQRYDWLRQV IRU $JULFXOWXUDO 9DOXH &KDLQV LQ $IULFD $SSO\LQJ
6FLHQFH DQG 7HFKQRORJ\ WR (QKDQFH &DVVDYD 'DLU\ DQG 0DL]H 9DOXH &KDLQV &DVVDYD 9DOXH
&KDLQ2YHUYLHZ1RSODFHRISXEOLVKLQJ
0LVEDKX = 0 6WDWXV RI &RWWRQ DQG 7H[WLOH ,QGXVWU\ LQ 1LJHULD &RWWRQ DQG $OOLHG
3URGXFWV/LPLWHG&$3/=DULD1LJHULD
1DWLRQDO 3ODQQLQJ &RPPLVVLRQ 1,*(5,$ 1DWLRQDO (FRQRPLF (PSRZHUPHQW DQG
'HYHORSPHQW 6WUDWHJ\ 1(('6 7KH 1(('6 6HFUHWDULDW 1DWLRQDO 3ODQQLQJ &RPPLVVLRQ
)HGHUDO6HFUHWDULDW$EXMD1LJHULD
1ZDIRU 0 ; 'LDR DQG 9 $OSXHUWR $ 6RFLDO $FFRXQWLQJ 0DWUL[ IRU 1LJHULD
,)35,16635HSRUW,QWHUQDWLRQDO)RRG3ROLF\5HVHDUFK,QVWLWXWH:DVKLQJWRQ'&
2ODZDOH-2'HYHORSPHQWRID6\VWHPIRU)UHVK)UXLW-XLFH([WUDFWLRQDQG'LVSHQVDU\
3DSHUSUHVHQWHGDWWKH7URSHQWDJ*RHWWLQJHQ*HUPDQ\
2ORPROD $ 6 &RPSHWLWLYH &RPPHUFLDO $JULFXOWXUH LQ $IULFD 6WXG\ &&$$ 1LJHULD
&DVH6WXG\)LQDO5HSRUWVXEPLWWHGWRWKH&DQDGLDQ,QWHUQDWLRQDO'HYHORSPHQW$JHQF\&,'$
DQGWKH:RUOG%DQN
2QX -, 2NXQPDGHZD )< :KDW GRHV WKH &RQGXFW RI &RWWRQ 0DUNHW LQ 1LJHULD
5HYHDO":RUOG-RXUQDORI$JULFXOWXUDO6FLHQFHV
85
3DJDQL 3 -( <HULPD $ELPLNX DQG : (PHND2NROLH $VVHVVPHQW RI WKH 1LJHULDQ
SRXOWU\PDUNHWFKDLQWRLPSURYHELRVHFXULW\)$25RPH,WDO\
3DUNHV'7QRGDWH,QGLD
VWH[WLOHZHWSURFHVVLQJ4XR9DGLV"ZZZILEUHIDVKLRQFRP
3KLOLS7'7D\ORU/6DQQL52NHFKXNZX&(]HGLQPD0$NRURGD-/HPFKL3,ORQD)
2JEH ( 2NRUR DQG $*2 'L[RQ 7KH 1LJHULDQ &DVVDYD ,QGXVWU\ 6WDWLVWLFDO
+DQGERRN,QWHUQDWLRQDO,QVWLWXWHRI7URSLFDO$JULFXOWXUH,,7$,EDGDQ1LJHULD
3UHVLGHWLDO&RPPLVVLRQLRQ&DVVDYD3URJHVVLQ,PSOHPHQWDWLRQRI3UHVLGHQWLDO,QLWLDWLYH
RQ 5LFH &DVVDYD DQG 9HJHWDEOH 2LO 'HYHORSPHQW 3URJUDPPH ,QWURGXFWLRQ
86$,'0,672:$
6DQQL/&(]HGLQPD52NHFKXNZX-/HPFKL)2JEH0$GRURGD(2NRUR%0D]L\D
'L[RQ3,OORQDDQG$'L[RQ&DVVDYD3RVWKDUYHVW1HHGV$VVHVVPHQW6XUYH\LQ1LJHULD
6\QWKHVLV5HSRUW,QWHUQDWLRQDO,QVWLWXWHRI7URSLFDO$JULFXOWXUH,,7$,EDGDQ1LJHULD
6DQQL / 2 0$ $GHODMD & (]HGLQPD 58 2NHFKXNZX 0 3$WLQR 02 $NRURGD %
0D]L\D'L[RQ-/HPFKL3,ORQD(2NRUR*7DUDZDOL7$ZRGH\L%%DPNHID11QDML)
2JEH$*2'L[RQ2(2ELDQG$2]LJL&DWDORJXHRI3RVWKDUYHVW(TXLSPHQWIRU
&DVVDYD3URFHVVLQJ,QWHUQDWLRQDO,QVWLWXWHRI7URSLFDO$JULFXOWXUH,,7$DQG6PDOODQG0HGLXP
(QWHUSULVHV'HYHORSPHQW$JHQF\RI1LJHULD60('$1,EDGDQ1LJHULD
6ROXGR & $FFHVV WR )LQDQFH LQ 1LJHULD 0LFURILQDQFH %UDQFKOHVV %DQNLQJ DQG 60(
)LQDQFH&*$3
86$,' 0LFUR 6PDOO DQG 0HGLXP (QWHUSULVHV )LQDQFLDO 6HUYLFHV 'HPDQG 6XUYH\
86$,':DVKLQJWRQ'&86$
86$,'2SSRUWXQLWLHVIRU,QYHVWPHQWLQ&DVVDYD5LFH 6RUJKXP1LJHULDQ$JULFXOWXUDO
6HFWRU:RUNVKRS/DJRV-XQH
:RUOG %DQN $Q $VVHVVPHQW RI WKH ,QYHVWPHQW &OLPDWH LQ 1LJHULD :RUOG %DQN
:DVKLQJWRQ'&86$
86
Printed in Austria
November 2010
2nd edition
UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Vienna International Centre, P. O. Box 300, A-1400 Vienna, Austria
Telephone +43 1 26026-0, Fax +43 1 26926-69
E-mail: unido@unido.org, Internet: http://www.unido.org
CENTRAL BANK OF NIGERIA

Plot 33, Abubakar Tafawa Balewa Way, Abuja, Nigeria
Telephone +234 9 462 39701, Fax +234 9 462 36012
E-mail: info@cenbank.org, Internet: http://www.cenbank.org
BANK OF INDUSTRY
BANK OF INDUSTRY
BOI House, 23 Marina, P. O. Box 2357, Lagos, Nigeria
Telephone +234 1271 5077, Fax +234 1271 5088
E-mail: info@boinigeria.com, Internet: http://www.boinigeria.com

Nigeria Finance Diagnostics Final2 0 PDF

Uploaded by

Copyright:

Available Formats

Nigeria Finance Diagnostics Final2 0 PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Nigeria Finance Diagnostics Final2 0 PDF

Uploaded by

Copyright:

Available Formats

WORKING PAPER

Unleashing Agricultural Development in Nigeria

CENTRAL BANK OF NIGERIA

Working Paper, November 2010

Private Finance and Insurance Services

Private Services (Transport, Warehousing, Certification, etc..)

Public Services & Development Support (Policies, Regulations, Incentives, etc.. )

2.2 Spatial distribution of value chains

• $PHHWLQJZLWKWKH0DQXIDFWXUHUV$VVRFLDWLRQRI1LJHULD 0$1 6SHFLDOHPSKDVLVKHUH

4.1 Deciding where to invest

4.1.1 Development Potential

FDVVDYD          

4.1.3 Towards a Financing strategy

4.2.1 Primary Production and Sourcing of Inputs

4.2.2 Processing Capacity and Technology

4.2.3 End Markets and Trade

4.2.5 Resource Productivity and Environmental Performance

4.2.6 Macro Economic and Policy Context

4.2.7 Availability of Finance

5.1 Choosing where to invest

5.2 Agricultural value chains and their financial needs

5.3 Designing Value Chain Finance Support

Mapping the chain

Primary Production and Sourcing of Inputs

Processing Capacity and Technology

End-Markets and Trade

Chain Governance and Linkages

Resource Productivity and Environmental Performance

Macro Economic and Policy Context

Dry cassava processing

Trading & Transport

Mapping the chain

Primary Production and Sourcing of Inputs

Processing Capacity and Technology

End-Markets and Trade

Chain Governance and Linkages

Resource Productivity and Environmental Performance

Macro Economic and Policy Context

Interest low low medium low medium low high high

Primary Production and Sourcing of Inputs

Processing Capacity and Technology

End-Markets and Trade

Chain Governance and Linkages

Resource Productivity and Environmental Performance

Interest high medium medium medium low medium

Mapping the chain

Processing Capacity and Technology

End-Markets and Trade

Chain Governance and Linkages

Resource Productivity and Environmental Performance

Macro Economic and Policy Context

Breakfasts Food Processing

Maize milling (small-scale)

Maize milling (industrial)

Maize – Livestock feed

Mapping the chain

Primary Production and Sourcing of Inputs

Processing Capacity and Technology

• $PHHWLQJZLWKWKH0DQXIDFWXUHUV$VVRFLDWLRQRI1LJHULD0$16SHFLDOHPSKDVLVKHUH

FDVVDYD