acknowledged leader in rural and agricultural finance agricultural value chain financing: a strategy...
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Acknowledged leader in rural and agricultural finance Agricultural Value Chain Financing:
A strategy towards replacing OR
complementing conventional financing
Prasun Kumar DasAsia-Pacifi c Rural & Agricultural Credit Association (APRACA)BANGKOK, THAILAND
International Conference on Innovative Agricultural FinancingState Bank of Pakistan and FAOIslamabad, April 28-29. 2015
Acknowledged leader in rural and agricultural finance
1. Retailers/Wholesalers2. Community enterprises3. AMCs4. Supermarkets5. Exporters
PREOCESS FOLLOWED:1. Search for MAIN ACTIVITIES in the Up/Middle/Downstream2. Search for main actors of each activity in AgVCF3. 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 Enterprises2. Agri Coops (AMCs)3. Logistics4. Processors5. Buyers
1. Input Producers2. Input sellers3. Farmers/Growers
Upstream
actors
Middle stream
actors
Downstream
actors
• 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 overseeingAIM:1. Increase productivity& develop efficiency of the actors throughout the agriculture value chain.2. Supply premium grade commodities to the market3. Satisfaction of consumers for product and service4. To strengthen its role as a public bank to facilitate sustainable rural finance 5. Targeted disbursement
Integrated AgVCF Framework : BAAC, Thailand
Acknowledged leader in rural and agricultural finance
Palm Oil Value Chain Finance: BAAC, Thailand
Palm Oil plantation
102,710 acresYield =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 marketin
g
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
CoopBAAC
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
Acknowledged leader in rural and agricultural finance
Kalasag Farmer’s Producers’ Cooperative: ASKI, Philippines
Small Onion Producing
Farmers (Luzon Province)
Jollibee Foods
Corporation
ASKI (MFI)
NLDC&
CRS
1. Strong Commitment of the Stakeholders
2. Capacity building of small farmers
3. Lending ++ approach
4. Linking with Institutional Market
1. High Risk financing by ASKI
2. Lack of Infrastructural facilities
3. Quality of produces
4. Sustainability of the collaboration
Acknowledged leader in rural and agricultural finance
Alcoy Coffee Project: PhilippinesCHMI Agro-Forest
Development Corporation
Farmer Groups
Smal Coffee
Farmers
ALCOY Coffee Coop
Importers
Domestic Coffee Traders
Domestic Consumers
Overseas Consumers
Flow of Funds
Flow of Tech Assistance
Flow of Products
Commercial Banks
Acknowledged leader in rural and agricultural finance
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
Facilitating Role in Potato Value Chain : BRAC, Bangladesh
Acknowledged leader in rural and agricultural finance
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 aggregatorsFinancing models to Small Tea Leaf Growers
Acknowledged leader in rural and agricultural finance
Small Ruminant Value Chain Finance: ADBL, Nepal
Input suppliers Goat Producers Traders Butchers/ Processors
ADBL ADBL
ADBL
3-Party agreement
RETAIL MARKRTA. Individual ConsumerB. Institutional Buyers (Hotels, Restaurants, Offices, Hostels etc)
EXPORT MARKETA. Processed meatB. Meat Products
A. KidsB. FeedsC. Fodder
Acknowledged leader in rural and agricultural finance
Rural finance is unwieldy as long as value chains are weak. With weak value chains, rural finance cannot be viable or sustainable.
A value chain is only as strong as its weakest link. Even if there are many players, the weakest link determines the strength of the whole chain.
Moreover, a value chain can be enhanced or damaged by external environment whether natural or man-made. The effects of the environment are created by the players of the value chain.
Financial institutions must have a healthy risk appetite. Risk avoidance will not bring about any improvement
Lessons From the Experiences
Acknowledged leader in rural and agricultural finance
Thanks for your patience listening!
Time for Q & A??