Transcript Yes Bank Approach to Agribusiness

Conference of in-Charges of Priority Sector Advances of
Commercial Banks
Presentation on
Approaches to Financing Agribusiness in India
26-07-2008
Gopi Krishna Swarangi
Vice President
Food & Agribusiness Strategic Advisory & Research
Knowledge Banking in Food and
Agribusiness sector
YES BANK is focused on being “The Bank for Businesses of
the Future”
In the Indian context – Food and Agri is an inescapable
value driver for the economy and hence for YES BANK
Agriculture is the backbone of the Indian Economy
Contributes ~ 25% to the GDP
Employs ~ 60% of the work force
Contributes ~ 15% of exports
However the value added in Indian Agriculture is still low as
compared to international standards
Transforming AGRICULTURE to AGRIBUSINESS will lead to a quantum
jump in value added from a "supply-driven” low-volume situation to a
“demand-driven” high-value business
Our unique “Knowledge–banking” approach to
doing business in the F&A sector…
Numerous sub-sectors across the Agri-value-chain…
…right from the “Farm gate” to “Food plate”…
Agri & Food
Inputs
Seeds
Prodn. and
Warehousing
Food Corporation
Logistics &
Distrbn.
Ports
Trading
Edible Oil
Processing
Food Retail &
Food Service
Primary Process
Super Markets
of India
Fertilizers
Reefer Transport
Grain
Grain Milling
Hyper Markets
State
Agro-chemicals
Caterers
Spices
Edible Oil
Fast Food &
Warehousing
Beverage Chains
Agri-biotech
Fruits & Veg
Dairy
Corporation
Irrigation
Meat/ aqua
Fruits & Veg
Central
Farm Machinery
Commodity
Sugar
Warehousing
Exchanges
Poultry Feed &
High Value
Corporation
Equipment
Processing
Pvt. Warehouses
Dairy Feed &
Confectionery
Cold Storages
Equip
Bakery
Floriculture
Aqua & Fishery
Beverages
Greenhouses
FeedA&dedicated
Equipment Food
and Agribusiness Strategic Advisory and Research
team consisting of
Dairy
Food Packaging
sector experts has been domiciled within the Development and
Knowledge
Banking
Meat
& Poultry
Food Ingredients
Division of the bank
Marine & Fishery
Knowledge Banking helps us offer customized
products to stakeholders across the value chain
SEEDS
Lending against
offtake contract
Contract Seed Growers
Term lending/ WC
Seed Company
Contractual
agreement
Lending against stop
sales agreement
Distributor
Preferred
distributors
Short term lending
against liquid collateral
Credit sales
Dealer
Crop loans
EDIBLE OIL
Credit/
forward
contract
Crop loan
Farmer
Farmer
Spot market
price
Village level CA
WR finance
Warehouse
Receipt
Mandi/ Warehouse
Warehouse
Receipt
Wholesaler
Credit
Vendor bill
discounting
Miller
Need for a Holistic Development Approach
– along the Agri Value Chain
Consumer
Orientation
Market Linkage
Commodity Trading
Agri Infrastructure
& Logistics
Financial
Services
Research &
Extension
Farmer
linkages
Traceability
Action steps
AEZ
Geographic appellation
Retailer
Market
Development
Wholesaler
Price competitiveness
Processing
Streamlined
supply chain
Handling
& Mrktg.
Production
Select Initiatives in the Food and Agribusiness space
Knowledge Reports
FASAR – Key Government Assignments
Ministry of
Agriculture
Govt. of Rajasthan
and NIAM
Govt. of Orissa and
NIAM
Optimal Operational &
Ownership Model of
Modern Terminal
Markets
National Consultants for
Developing Framework
for Selection of Private
Enterprises for Setting
up of Modern Terminal
Markets
Feasibility Study for
Setting up of Modern
Terminal Market in
Jaipur
Preparation of Detailed
Project Reports for
Modern Terminal
Markets in Cuttack and
Berhampur
Govt. of UT of
Chandigarh
Govt. of
Punjab
Govt. of
Maharashtra
Govt. of Orissa and
NIAM
Consultants for
Selection of Private
Enterprises for Setting
up Modern Terminal
Market in Chandigarh
Consultants for
Selection of Private
Enterprises for Setting
up Modern Terminal
Market in Punjab
Consultants for
Selection of Private
Enterprises for Setting
up Modern Terminal
Market in Mumbai
Consultants for
Selection of Private
Enterprises for Setting
up Modern Terminal
Market in Sambalpur
National Institute of
Agricultural
Marketing
FASAR – Key Government Assignments
Govt. of Andhra
Pradesh
Govt. of Rajasthan
and NIAM
Govt. of West
Bengal
Govt. of
Gujarat
Assessment of
Infrastructure of Existing
APMCs and
Development of
Strategy for their
Modernization
Assessment of
Infrastructure of Existing
APMCs and
Development of
Strategy for their
Modernization
Preparation of
“Agricultural Marketing
– Vision 2011”
Document
Advisory for
Development of Modern
Fruits & Vegetables
Market in Surat, Gujarat
IFFCO-Greenport
JVC
Govt. of Gujarat
HAFED
MoU for Development of
Integrated Agro Food
Park on PPP basis
Preparation of Vision
and Comprehensive
Business Plan
National
Horticulture Board
Implementation of
Integrated Agro Food
Park in Nellore, Andhra
Pradesh
Evaluation of Role,
Structure and
Continuation of National
Horticulture Board
during XI Five Year Plan
FASAR – Key Government Assignments
APEDA
APEDA
APEDA
APEDA
Streamlining of Existing
Procedures and
Documentation for
Agricultural Produce
Exports
Restructuring of APEDA
in order to Confirm to
the Proposed APEDA
Amendment Bill 2007
Study on Dwell Time of
Agricultural Produce
and Meat Products at
Delhi’s IGI Airport and
ICD, Dadri
Advisors on Fast Track
Development of AEZs
through PPP in India
Government of
Uttaranchal
Ministry of
Agriculture (World
Bank Project)
UNIDO
Cane & Bamboo
Technology Centre
Floriculture Project on
PPP Basis
Role of Centre and State
Systems in Agriculture
under NAIP
Market Study for
Shortening of Supply
Chain and Enhancement
of Value for the Farmers
in Vidharbha,
Maharasthra
Market Assessment,
Channel Study and
Mapping of Consumer
Preference for Select
Bamboo Products in NE
FASAR – Key Corporate Assignments
North India based
Large Corporate
Group
Entry Strategy for Fresh
Produce Business and
Securing Backward and
Forward Linkages
Leading Indian
Corporate
Leading Indian
Conglomerate
Leading Indian
Corporate
Diversification into
Organic Farming of
Fruits & Vegetables and
Entry into Bio fuels
Roping in a Strategic
Partner for Distribution
of Fruits & Vegetables in
European Markets
Entry into Rural
Retailing with Special
Attention to Agri Inputs
Setting up the first “state of the art” Integrated AgroFood Park in the Country in Andhra Pradesh
Leading Indian
Seed Company
Leading Food
Ingredients Player
Leading Shipping
Conglomerate
South India based
Project Developer
Raising Growth Capital
for Fresh Produce and
Retail Business
Formulating India
Strategy
Business Potential for
Gamma Irradiation
Application in Food
Industry in India
Implementation of
Integrated Agro Food
Parks in Andhra
Pradesh, Tamilnadu,
Karnataka, Kerala,
Pondicherry and
Maharashtra
Integrated Agro Food Park - Concept
Unique first of its kind integration of various
agribusiness value chain components
Spatial clustering of different agro-production
chains
Spatial combination of agro-processing and
non-agro functions (building, industrial estate
or region)
Scale increase in production further enables
industrial processing
Application of principles of industrial ecology,
i.e. mutual use of waste and by-products
Clustering approach to attract leading foreign
retail chains to anchor and plan their supply
chain at and through the Agro Food Parks
Township model approach to attract Indian
MNCs
and
foreign
food
processing
companies
Tremendous scope for Rural transformation
and rural employment generation
RT
C
RT
C
RT
C
AGRO FOOD
RT
C
PARK
RT
C
RTC
Consolidation Centre
Consumers
Clustering and Networking
provides context for sustainable innovations
Rural
Transformation
Centre
Agroproductionand processing
Park
METROPOLE
Consolidation
Centre
METROPOLE
Intelligent Agrologistic Networks combining
Consolidation Centres, Agroparks and RTCs
Concept (contd.)
Rural
Transformation
Centers
Utilities &
Services
Modern Farm Clusters
Green Houses
Livestock farms
Mushroom Nursery
Common
Infrastructure
FP Zones
R&D
Incubation
QCL
Agro tourism
Wellness &
Nutrition
Agribusiness
Mgt. Trg. Inst
AFP
R
&
D
Convention Center
IT/ Library
Training Center
Cold Stores
Ripening Chambers
Warehousing
Commissaries &
Packaging
Terminal Markets
Logistics
Rural
Transformation
Centers
Rural
Transformation
Centers
Production
Commercial
Complex
Trade
Rural
Transformation
Centers
Concept (contd.)
Village
Village
Village
Agri Clinic
Food &
Entertainment
Realty
Primary Health
Center
Collection Center
Rural
Transformation
Centers
At Mandal Level
Popln: 5000 - 10000
Commercial
Rural Mart
Office Space
Mentoring
Training
Farm Credit
Micro Finance
Smart Card
Green Port
Village
Village
Village
Market-Oriented Food Production
Chains
Distribution
Centre
Retail
Primary
processing
Centres
Collection
Points
Domestic
markets
Collection
Centres
Farmers
Collection - Value Adding Distribution Centres:
Increase employability
Add quality and value
Link farmers to retail
Open new markets
Export markets
Market-Oriented Food Production
Chains (contd.)
Distribution
Centre
Retail
Primary
Processing
Centres
Collection
Points
Domestic
markets
Collection
Centres
Export markets
Farmers
Primary processing centre:
Cooling, sorting, grading, packaging and storing
Collection from max. 50 - 100 km
Backward chain optimisation from farm to fork (incl. seeds and tissues);
farmers become preferred suppliers
Reduce shrinkage by expanding cool chain
Increase quality (+price)
Extend potential market
Add Agro-production to Processing and
Trade
Distribution
Centre
Retail
Value Adding
Centres
Collection
Points
Domestic
markets
Collection
Centres
Export markets
Farmers
Land-independent agriculture in Agro Food Parks adds opportunities,
mainly in new markets
Case Study - Integrated Dairy Farms –
Linked to AFP
Information Flow
Veterinary Services, Training,
Technical Knowledge, Market
Information
Retail
Product Flow
}
Cattle +
Fodder
Dairy
Product
Milk
{
Payment
(Milk+FodderModern
Loan-Feed)
Livestock Farm
Cattle Loan
Farmers
Margin Money
Distribution
Centre
Payment
from the
market
Feed
Payment of Milk
(Market Price)
Payment Of Cattle
Feed (Market Price)
Consumers
Domestic
Markets
AFP
Cattle Loan
Repayment
Export
Markets
Financial Flow
Bank
Strategic Partnerships
Strategic alliance with
Alterra, a leading
international
knowledge institution
and part of
Wageningen
University Research
Center, Netherlands
For implementation of
Integrated Agro Food Parks
MoU with National
Institute of
Agricultural
Marketing (Ministry of
Agriculture, GoI)
For undertaking Strategic
Advisory and Consultancy
MoU with NABARD
Consultancy Services
(NABCONS)
For jointly carrying out
Strategic Advisory
assignments in the areas
of Food & Agribusiness,
Agri Infrastructure, etc.
Strategic Alliance
with Agriculture
Insurance
Corporation of India
(AIC)
For co-developing
insurance products
suitable for the farming
community across India
Conceptualization to Implementation
Dedicated state level initiative to enable “project development”
Public Private Finance Initiative (PPFI)
Work with state governments to accelerate implementation of preapproved projects
YES BANK will incur initial developmental expenses
We propose to work with external consultants for developing DPR,
finding private sector partners, developing the capital structure and
achieving financial closure
Assists Governments to analyse and develop a number of projects
without incurring costs on initial project development
YES BANK will recover costs from project success
Bid Process Assistance is built within the frame-work
Sectors PPFI will cover
Agri-Infrastructure Projects
Other important rural and urban infrastructure projects
Water Supply and Micro Irrigation
Thanks for your attention !