Supply Chain Finance for Inclusive Growth and Sustainable Food System

This chapter explores how supply chain finance (SCF) addresses capital constraints for SMEs and simultaneously drives innovation within agri-food value chains. In contrast to traditional supply chain management (SCM), SCF prioritizes the financial interdependencies among trading partners, offering mechanisms such as receivable-based collateral and inventory financing that enhance liquidity for small and medium enterprises (SMEs) unable to meet the rigid requirements of conventional bank loans. China provides a compelling illustration of SCF’s success, where partnerships among banks, logistics service providers, and SMEs create a “triple win”: SMEs access affordable funding, banks diversify revenue streams while minimizing non-performing loans, and logistics service providers expand their range of collateral oversight services. Regulatory support and a distinctive market context have further fuelled SCF’s adoption, making it a strategic lever for industrial and rural development. Beyond the manufacturing sector, the chapter broadens the focus to agriculture, an arena in urgent need of financial and operational efficiencies given the volatility of crop yields, climate impacts, and market fluctuations. Both China and India exemplify how SCF can mitigate persistent bottlenecks in agri-food value chains, including limited financing channels, high transaction costs, and post-harvest losses. By leveraging digital technologies, from artificial intelligence (AI)-driven credit scoring to blockchain-based recordkeeping, SCF initiatives can reduce information asymmetry and distribute risk more evenly among stakeholders.