a presentation on emerging opportunities in agricultural finance by sri s s bhat general manager...
TRANSCRIPT
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A Presentation
on
EMERGING OPPORTUNITIES IN EMERGING OPPORTUNITIES IN AGRICULTURAL FINANCEAGRICULTURAL FINANCE
By
Sri S S BHATGeneral Manager
Priority Credit & Financial Inclusion Wing,H.O. Bangalore
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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
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India is in the threshold of transforming its Agriculture into Agro-Processing due to;
- Huge emerging domestic market with change of lifestyle of people
- High potential for exports to developing/ developed countries
Agri-Business to create job opportunities in Rural Areas
Contd…..
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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
Agri credit-as enabler of increased farm productivity
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Canara Bank’s initiatives in agricultural finance
• Delivery initiatives- Hi-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
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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.
STRATEGIES FOR INCREASING AGRICULTURE LENDING
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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.
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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.
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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.
STRATEGIES FOR CHOOSING STRATEGIES FOR CHOOSING PROJECTS PROJECTS
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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
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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
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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.
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Contract Farming / Tie-up arrangements Sugar cane
Cotton
Broiler Poultry
Seed Production
Grapes
Vegetables
Gherkins
Dairy
Aqua Ventures
Spices Processing
Rubber Farming
Winery Units
FINANCING OPPORTUNITIES
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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
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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
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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
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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.
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Capital Investment Assistance (Subsidy)
- National Horticulture Board (NHB)
- Agricultural and Processed Foods Export Development Authority (APEDA)
- Department of Agriculture & Co-operation
- National Horticulture Mission
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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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