Global value chain financing: context and sector

Agricultural value chain finance (AVFC) is one of the fastest-growing segments of development finance, driven by the need to close persistent funding gaps for small and medium-sized farmers. The World Bank and international financial institutions estimate that agricultural SMEs in emerging markets face an annual financing gap exceeding USD 100 billion, while globally over 500 million smallholder farmers remain underserved by formal banking systems. Traditional agricultural lending has often struggled because farmers lack hard collateral, audited financial statements, or formal credit histories. AVCF addresses this problem by linking finance directly to commercial relationships between farmers, processors, exporters, traders, and input suppliers.

Under AVCF models, credit is structured around future production and supply contracts rather than land ownership alone. Large agro-industrial companies frequently act as intermediaries, extending pre-harvest advances, trade credit, or input financing to farmers, supported by bilateral credit facilities, guarantees, and risk-sharing arrangements from banks and development finance institutions. In many emerging economies, these structures have significantly lowered default rates because buyers maintain close operational relationships with producers and can monitor crop performance throughout the production cycle.

Digitalization is accelerating growth across the sector. Agricultural fintech platforms increasingly automate farmer onboarding, credit scoring, contract management, and repayment tracking. Digital registries and electronic collateral systems, including warehouse receipts and agrarian notes, are expanding the use of future harvests as enforceable collateral. In Ukraine alone, the agricultural financing gap has been estimated at approximately USD 19 billion, while agriculture contributes more than 10% of GDP and around 40% of exports. The Agri Vision framework proposes mobilizing up to USD 1 billion in financing over five years to support more than 6,000 farmers through blended finance structures involving agroholdings, IFIs, and digital credit infrastructure.

Globally, value chain financing is increasingly tied to ESG and climate objectives. Donors and lenders are using these mechanisms to promote sustainable farming practices, improve supply-chain traceability, and strengthen food security resilience amid climate volatility and geopolitical disruptions. As agricultural supply chains become more digitized and transparent, value chain finance is expected to play a central role in integrating millions of informal farmers into formal economies and global food systems.

By Tetiana Tomash, Michael Cottakis, and Kristjan S. Guri