Page 233 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

It is important to note that commercial value chains vary in terms of formality and sophistication. At one end of
the commercial spectrum are ‘loose’ value chains in which growers sell excess crops primarily in local markets.
2
Figure 3 – Loose value chain

At the other end are ‘tight’ value chains typically focused on exports and cash crops (e.g., coffee, tea, sugar).
These value chains tend to be more complex. For example, the value chain for Indonesia palm oil involves
multiple input suppliers, post-harvest processing, and private sector and government roles.

Figure 4 – Tight value chain

Actors within tight value chains tend to have strategic goals in mind, such as improving their bargaining
power or ensuring a reliable crop supply. Accordingly, these value chains are more formally organized and
sophisticated. SHF financing is often a key component in the overall design. These tight value chains are good
for effecting change because of their overall sophistication and the availability of aggregation points where
services can be delivered or managed.

2 Although these farmers do not participate in sophisticated commercial value chains, they can adopt best practices such as form-
ing farmers’ groups to share learning and enable group lending, or storing crops in warehouses for sale in the off-season when
prices are higher.

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