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INNOVATIONS IN AGRICULTURAL SUPPLY CHAIN
FINANCE
17th March 2007Presentation byKishore Kumar N.S.Executive Vice President(Agriculture Business & Microfinance)HDFC Bank Ltd
Supply Chain output leakages and price inefficiency.
Small and marginal farmers Fragmentation of land Dependence on traditional revenue
streams.
KEY CONCERNS
KEY REQUIREMENTS FOR KEY REQUIREMENTS FOR EFFECTIVENESS OF SUPPLY EFFECTIVENESS OF SUPPLY
CHAIN FINANCINGCHAIN FINANCING
Scale of operation Production flexibility Assured input supplies Strategic tie-ups Quality control and traceability Communication and transparency
INNOVATIONS TO COUNTER INNOVATIONS TO COUNTER / MITIGATE CONCERNS/ MITIGATE CONCERNS
Non-cash disbursals of crop loans - for direct input supplies from manufacturers of fertilisers, seeds, etc., as part of channel finance for Corporates.
Financing based on contracts through large retailers / processors / exporters.
Huge scope in horticulture, where cold chain is extended by buyers
Formation of small / marginal farmers into SHGs to absorb microfinance, not merely from growing crops but for agri trade
INNOVATIONS TO COUNTER INNOVATIONS TO COUNTER / MITIGATE CONCERNS/ MITIGATE CONCERNS
Contd…
SUPPLY OF SERVICES Financing agricultural extension
From Source - UniversitiesTo User - Farmers
INNOVATIONS TO COUNTER INNOVATIONS TO COUNTER / MITIGATE CONCERNS/ MITIGATE CONCERNS
Contd…
EVOLVED FINANCING MODELS
INNOVATIONS TO COUNTER INNOVATIONS TO COUNTER / MITIGATE CONCERNS/ MITIGATE CONCERNS
Contd…
Farmer Credit Risk
Supply Chain asset backed
Cash flow financing
Financing ICT innovatives / delivery channels servicing farmers. Integrated effort to rural “family” financing - one family, multiple enterprises,
reducing dependence on farm income - intra family supply groups.
INNOVATIONS TO COUNTER INNOVATIONS TO COUNTER / MITIGATE CONCERNS/ MITIGATE CONCERNS
Contd…
SUCCESS STORIESSUCCESS STORIES
Agglomeration of tribals for microfinance in organic farming for exports.
Engagement of NGOs to coordinate groups of small farmers to identify crop surpluses, grade, store, transport and collect payments.
SUCCESS STORIESSUCCESS STORIES
Customised financing for Micro Dairy farming and logistics through corporate tie-ups.
Marketing linkage of sericulturists with weavers, backed by firm offtake by textile company.
Contd…
