Many have been requesting the firm to explain the term ‘Agricultural Value Chain (AVC)’ and Agricultural Value Chain Finance (AVCF). The concept has been used since the beginning of the millennium, by people mostly financiers and development agencies involved in the growth and development of the agricultural and Industrial sectors in developing countries.
There is no universally accepted definition of AVC but it usually refers to the whole range of goods and services an agricultural product goes through from the farm till it gets to the final consumer/customer.
For example, the Cocoa beans is processed into a range of products
– Cocoa Powder
– Chocolate bars and so many products.
The term Value Chain was first popularized in 1985 by Michael Porter. In his book, he illustrated in detail how companies can achieve competitive advantage by adding value within their organization.
Subsequently, the term was adopted for agricultural development purposes. Farmers in developing countries are encouraged add value to their products. On a macro level, developing countries are encouraged to process raw goods into semi-finished and finished goods before exporting. By so doing, they will earn more foreign exchange.
Consequently, many development partners adopt Value chain finance to guide their development interventions and foreign aid.