building successful agvcf business models: lessons from india, bangladesh and thailand
DESCRIPTION
Presentation Fin4Ag S21 by Prasun Kumar DasTRANSCRIPT
Building successful AgVCF Business Models: lessons from India, Bangladesh and Thailand
PRASUN KUMAR DAS, Asia-Pacific Rural & Agricultural Credit Association (APRACA) BANGKOK, THAILAND
AGENDA 1. Business models in AgVCF 2. Indicators of successful business models 3. Steps to build successful value chain financing models 4. Successful cases from India, Bangladesh and Thailand
Business Models in AgVCF
DEFINITION: In agricultural value chains, the business model refers to the drivers, processes and resources for the whole system, even if the system comprised of multiple businesses.
TYPES: In General 4 types of Business Models Producer-driven Buyer-driven Facilitator-driven Integrated
1. Producer-Driven Business Model Facilitator-Driven Business Model
Integrated Business Model 2. Buyer-Driven Business Model
Drivers Objectives
• Small Scale producers especially when formed into groups such as association or cooperatives
• Large Scale Farmers
• New Markets • Higher Market Price • Stabilize market position
Drivers Objectives
• Processors • Exporters • Retailers • Traders, wholesalers and
other traditional market actors
• Assure supply • Increase supply volumes • Supply more discerning
customers
Drivers Objectives
• NGOs & other technical support agencies
• National & Local Governments
• Make markets work for the poor
• Regional & Local development
Drivers Objectives
• Lead Firms • Supermarkets • Multi-nationals
• New & higher value markets
• Low prices for good quality
• Market monopolies
Business Models in AgVCF
5 Indicators of successful business models
1. Enhance efficiency of the value chain and all of its actors. 2. Ensure all actors in the value chain are integrated and avail the
higher-value market opportunities 3. Make the value chain more inclusive by making resources available
for small-holders to improve their income and reduce costs and risk 4. Mandated for customer focus (both backward and forward) and
rural development by increasing the scope of its operations 5. Innovations in product, systems and process to foster public interest
and awareness
Producer-driven business model: Tapioca in Thailand
Village Enterprises
Individual Farmers Production
Support Services
Value Chain Activities Value Chain Actors
Export
Primary Processing &
Marketing
Aggregation
Processing
Kasetsart University
BAAC
Provincial Office,
Yasothorn
R & D to support producers and processors
Credit + Research Funds + Capacitation
Admin cooperation +Technical support
Village Enterprises
Sub-District Enterprises
Sub-District Enterprises
Agri Marketing Cooperatives
Ethanol Refinery
Animal Feed
Flour Factory
Snack Factory
EXPORTERS
Producer-driven business model: Palm Oil
Palm Oil plantation
102,710 acres Yield =522,000 MT
Thasae Land Settlement Cooperative with 3,700 Coop Members
Appropriate Farm
Practices
Scientific Harvesting &
Collecting
Production loan and input supply by
Cooperative
Farm Practices
Supervision by coop
Farmer/Coop collection
center
Coop crude Palm Oil
extraction facility
Coop crude
Palm Oil marketing
Waste water
treatment
Private Refining Factory
Coop biogas
power (1.82 KW/hr)
Provincial Electricity Authority
Financial Support to coop for on-lending (working capital and investment)
Capacity building of coop International banking services
Coop BAAC
Profit from CPO Business: US$3.7 million Produce price gain to members US$1.6 million Organic manure returned : US$0.8 million Substantial return from electricity generation Job creation: 218 employees Welfare measures for members
Buyer-driven business model: Doi Chaang Coffee Doi Chaang Foundation
Farmer Groups
AMC
Coffee Farmers
Doi Chaang Coffee
Company
Oversea Importers
Domestic Coffee Traders
Domestic Consumers
Oversea Consumers
Bank For Agriculture and Agricultural cooperatives
Flow of Funds Flow of Tech Assistance Flow of Products
BRAC, Bangladesh
Contract farming with marginal farmers to grow
potato seeds
Technical support and working capital
POTATO SEED DEALERS
Grading, Packaging and
selling
Payment made directly
to BRAC
Payment made to farmers after deducting the cost
COMMERCIAL BANKS
Working capital loans
Direct Repayments
Buy back the seed produced
Facilitator-driven business model: BRAC
1. Retailers/Wholesalers 2. Community enterprises 3. AMCs 4. Supermarkets 5. Exporters
PREOCESS FOLLOWED: 1. Search for MAIN ACTIVITIES in the Up/Middle/Downstream 2. Search for main actors of each activity in AgVCF
3. Search for appropriate VCF Products (Savings, Credit, Insurance)
4. Search for factors of success and failure to come up with correction and prevention measures
1. Community Enterprises 2. Agri Coops (AMCs) 3. Logistics 4. Processors 5. Buyers
1. Input Producers 2. Input sellers 3. Farmers/Growers
• Savings Product • SMART FARMER Credit • Crop Insurance • Production Credit • Machinery Credit
• Consumption Credit
• Entrepreneur Credit (Legal Entity) • Logistic/Warehouse Credit
• Credit for Postponement of Sale of Produce
• Investment Credit
• Packing Stock Credit • Credit for Export Business
• Credit for gathering + buying of produce
• Credit for improvement, maintenance of quality, environment overseeing
AIM: 1. Increase productivity& develop efficiency of the actors throughout the agriculture value chain. 2. Supply premium grade commodities to the market 3. Satisfaction of consumers for product and service 4. To strengthen its role as a public bank to facilitate sustainable rural finance 5. Targeted disbursement
Integrated AgVCF Framework of BAAC, Thailand
Tea Processing company
YES Bank Ltd
Small Tea Growers
Bank provides loans (4)
Bank conduct due diligence (3)
Supply green tea leaves (5)
Pay rest of the money (8)
Provide information on due diligence (2)
Repayment of loans taken by small farmers are made based on their authorization (7)
Conduct due diligence (1)
Submit authorization(6)
Milk CompanyYES Bank Ltd
Milk Aggregators
Bank opens SB account with debit mandate(4)
Bank conduct due diligence(3)
Supply milk (6)
Pay rest of the money (8)
Recommends to the bank regarding credit worthiness(2)
Milk company deposit the value of milk supplied and the commission to savings account of aggregators (7)
Identify aggregators(1)
Bank provide loans and transfer to SB account (5)
Bank deduct loan amount from savings account of
aggregators (8)
Innovative Models of AgVCF: YES Bank Ltd., India
Customized financial product for milk aggregators Financing models to Small Tea Leaf Growers
Thanks for your patience listening!