Case study-1 : Mango value chain financing.

Background : A commercial bank financed mango garden owners in Rajshahi and linked them-with a processing company producing juice and dried mango. The bank' diburse loans for fertilizer, insecticides and irrigation for 350.gardens-nót less than 100 decimals in size. The principals along with interest will be collected just after the harvesting mango from gardens.

Financing structure :

-Loan size Tk. 60,000 per garden
-Tenure'l season (07 months)
-Interest rate 11% per annum
-processor paid farmers after procurement and repaid loans directly

Challenges :

-Cyclone damaged 15% of mango trees.
-Local wholesalers offered immediate cash, pushing farmers toward side-selling.
-Price fluctuation discouraged commitment to the processor.

Outcome :

-Recovery rate 80%
-Bank introduced crop insurance for next season.
-Processor planned to expand capacity

Task to do :

(a) Explain how weather risk affects credit risk.
(b) Identify incentives needed to ensure loyalty to the value chain.
(c) Discuss the role of crop insurance.
(d) Calculate total disbursed amount and interest revenue.
(e) Propose a more resilient contact farming model.