Technology, feed and health product input supply chain analysis

Farmers will source their material or products from a local workshop, dealer or factory. Workshops are mostly shared by multiple farmers and are located in the neighbouring towns. When a farmer buys new material, they will source it from a regional dealer or directly from the factory.

Prior to being purchased by farmers, the origin of materials and products can vary depending on the country. New material can either be imported from neighbouring or overseas countries. In some cases imported parts are purchased by factories and then repackaged or assembled locally. Alternatively new material is manufactured and sold in local domestic regions.

Most farmers will buy their hardware and other equipment using a direct payment using cash or a bank transfer while their feed and health products can be purchased on credit. 

An example of the credit system can be found in India. Dealers of shrimp post-larvae, feed, or health products in India will provide their raw material on credit to farmers with an agreement that the farmers pay 20% interest in addition to the initial price. The agreement also states that the dealer has direct access to collect the harvested crop at a fixed priced and then sell it to the processor at a marked up price. Once the processor pays the dealer, the dealer takes their cut of the profits from selling the crop to the processor and returns the remaining monies back to the farmer. In most cases, the processor does not pay the dealer immediately and only does so after 20 to 30 days. This means that oftentimes, the farmer waits 30 to 40 days after their harvest to receive money. 

Farmers who can afford to pay in cash are able to buy material from dealers at a 20% discount. The dealer then collects the shrimp and sells the crop to the processor. Following which, processor pays the dealer and the dealer returns the money back to the farmer minus interest and a harvesting fee.

Below is a summary of where farmers in each country buy their equipment and material from, the origin of the equipment and material, and the methods farmers use to make purchases.

In general, all hardware is purchased using direct cash payments while feed and health products are bought with credit.  Small farmers in Indonesia, India, Ecuador and China do have access to credit services for feed and health products while smaller farmers in Thailand and Vietnam are generally limited to cash payments for feed and health products. This is the case unless they sign an agreement with suppliers. if these farmers decide not to be bound to a contract with feed and health suppliers, they run the risk of not being able to finance follow on cycles after one or two poor crops.