Value chain financing model on shallot commodities using system thinking approach

Shallot is one of the strategic food commodities in Indonesia with high economic-value and also a source of raw material supply to the food processing industries. The facts show that shallot is one of the commodities which has high price fluctuations and lack of acceptance credits. To get a stable price, farmers should establish partnerships with structured markets. However, to meet with structured market, they face several hindrances such as lack of farmer's knowledge about food safety, limited economic scale, and lack of application technology. Value chain financing (VCF) model could be an alternative system that can reduce fluctuation price of shallots. System thinking is used as a paradigm, seeing things interconnected and holistically in supply chain shallot commodity. Result indicated that VCF in shallot commodity is a unity system which has several interconnecting structures between production, market, financing linkages, market performance and the ability of farmers' payment. Technology also has a role to develop VCF model. The VCF model in shallot commodity needs collaboration and integration action from all the stakeholders such as university, local government, Central Bank of Indonesia, banks, markets, and also farmers group.