Transcript Slide 1
A
Presentation
on
EMERGING OPPORTUNITIES IN
AGRICULTURAL FINANCE
By
Sri S S BHAT
General Manager
Priority Credit & Financial Inclusion Wing,
H.O. Bangalore
1
Overview of Indian Agriculture
.
Our Food Production has been stagnating
since 2001-02
It is time we started the next round of green
revolution
Agri Business and Agri Processing should
drive the second round of “Green revolution”
with diversification of crop production
Developed countries have converted their
agriculture into Agri-Business
2
Contd…..
India is in the threshold of
transforming its Agriculture into AgroProcessing due to;
-
Huge emerging domestic market with
change of lifestyle of people
High potential for exports to developing/
developed countries
Agri-Business
to
create
opportunities in Rural Areas
job
3
Agri credit-as enabler of increased farm productivity
Outline of Issues
Agriculture growth, an urgent priority
-Flow of credit to agriculture is critical & closely monitored
Reducing size of land holdings- affecting
viability of farming
Poor capital formation at farm level-little credit
beyond production credit
Emerging opportunities – give the edge for
building viable models
Much criticism-Bank’s predominant short term
Production credit & a little term loan
4
Canara Bank’s initiatives in agricultural finance
• Delivery initiativesHi-Tech Agri Finance branches, Agri focus branches
with AEO’s & Agri Finance Cells
• Agri-Business Marketing Units
Marketing & reaching Corporate managements
• Agriculture Consultancy Services
– To
provide
Consultancy
services
for
formulation/appraisal of projects
– To take up viability study-of existing projects
/stimulus/rehabilitation packages
5
STRATEGIES FOR INCREASING AGRICULTURE LENDING
Identify borrowers through Extensive Credit Camps.
Cluster Approach to be adopted.
More thrust to Term Loans and investment loans
under Agri Projects
Garner Agri-Corporate accounts by involving ABMOs.
Popularise Value Chain Finance, Contract Farming
and Hire Purchase of Farm Machineries
Encourage post harvest finance.
6
Indian Agri- Business as an investment
Corporates – Both Indian and Multinational
–identifying
agro
processing
as
an
opportunity.
Scope for Joint ventures with global players.
Huge potential for infrastructure creation
like cold storages, chilling plants, market yards
and handling facilities.
Encouraging Contract Farming including
organic farming.
7
Investment by venture capitals.
Channel financing and financing modern
retail outlets
Private Agri -extension initiatives
Organic farming
Going for
Hi-Tech Agriculture like
Floriculture, Tissue Culture, Aquaculture.
8
STRATEGIES FOR CHOOSING
PROJECTS
Individual would chose a project
which….
- Gives more benefit than cost
- Maximum rate of return among alternatives
- Adequate return in quickest possible time
Banks would choose projects which would....
Give enough incremental income to repay principal &
interest
Leave some surplus to improve standard of living of
farmers
Give quicker return to borrowers
Sufficient Cash Generation for repayment obligation.
9
Agro Based Industries
Project Financing
Appraisal of Projects & Syndication of Loans
Long term Loans in local currency and foreign
currency for buildings, machinery, technology
upgradation.
Working capital facilities
Export financing
Term Loans for Upgradation of existing units to
adopt modern technology/ Standards
10
Financing opportunities for Commercial Banks
Post harvest management
1/3rd of fruits and vegetables produced in the
country are wasted due to poor cold storage and
handling facilities.
Cold Chains – controlled atmosphere cold storages
for fruits and vegetables, Milk chilling plants,
Refrigerated vehicles
Creation of market yards and other infrastructure
Financing quality testing and certifying agencies
Labeling and Packaging industry
11
Food parks with common facilities for storage,
effluent treatment etc.
Finance against goods stored in warehouses – in
association
with
Collateral
Management
Companies.
Bill discounting facilities to agriculturists against
acceptance of Bill of Exchange by the purchasing
company.
Opportunities in price risk mitigation using
commodity derivatives.
12
FINANCING OPPORTUNITIES
Contract Farming / Tie-up arrangements
Sugar cane
Cotton
Broiler Poultry
Seed Production
Grapes
Vegetables
Gherkins
Dairy
Aqua Ventures
Spices Processing
Rubber Farming
Winery Units
13
Agro Based Industries
Some examples
Seed production
Fruits and vegetables processing & Vineries
Food grain processing
Meat and meat products, Egg powder
Marine exports
Extraction of oleoresins, Natural dyes
Extraction of aromatic compounds
Bio fertilizers, Bio pesticides
Bio Technology
14
AGRO BASED INDUSTRIES
–FOOD GRAIN PROCESSING
- Flour Mills, Wheat atta/suji, Rice Mill, Corn flakes
– PROCESSING OF FRUITS & VEGETABLES
- Mango, Pineapple, Litchi, Guava etc. for pulp
production with aseptic packaging for exports
– FREEZE DRYING OF PRODUCTS (IQF)
- Potato chips, French fries, Peas, Culinary Herbs
15
WINERY UNITS
- French varieties of grapes
SEA FOOD PROCESSING
- Tiger prawns, Shrimps & other fish products
PROCESSING OF MILK
- Processed Milk, Cheese, Butter, Ice Cream etc.
PROCESSING OF MEAT & MEAT PRODUCTS
- Poultry, Lamb, Pork etc
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Aromatic & Medicinal Plants
- Extraction of essential oils / compounds viz.
Ashwagandha, Rosemary, Coleus, Patchouli
Spices & Condiments
- Extraction of Oleoresins
Bio Diesel Production
- Jatropha, Pongamia
Natural Dyes
- Annato
17
POST HARVEST MANAGEMENT
- Rural Godowns, Warehouses promoted by Govt.
Cold Chains
-Controlled Atmosphere Cold Storages
- Milk Chilling Plants
- Refrigerated Vehicles
Irradiation Plants – Use of gama rays to
improve shelf life - Cereals, Pulses, Meat,
Onion, Potato etc.
18
Capital Investment Assistance (Subsidy)
- National Horticulture Board (NHB)
- Agricultural and Processed Foods Export
Development Authority (APEDA)
- Department of Agriculture & Co-operation
- National Horticulture Mission
19
To sum up• Agriculture growth, a priority for an inclusive
growth.
• The road ahead offers a promising opportunity as
well as challenge for Indian Agriculture.
• The role of banks more specifically the Field level
Officers ( AEOs/ROs) is crucial in providing the
much needed credit for capital investment and
meeting the need of Rural Poor.
• Visualise the emerging business opportunities
and be a proud partner in ushering in another era
of excellence in agriculture production.
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