Agri Value Chain - BASIX

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Presentation Fin4Ag S22 by B. L. Parthasarathy

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Agri Value Chain - BASIX

  1. 1. Agri Value Chain - BASIX Fin4ag Conference Nairobi, 16th. July 2014 1
  2. 2. The BASIX Mission….. To promote a large number of sustainable livelihoods, including for the rural poor and women, through the provision of financial services and technical assistance in an integrated manner BASIX will strive to yield a competitive rate of return to its investors so as to be able to access mainstream capital and human resources on a continuous basis.
  3. 3. Evolution of Financial Structure Soft Loans from Donors & Development Banks (GTB, CIDA-DID, CordAid, SIDBI, ICICI, HDFC) 1996-98 Grants and Soft Loans from Donors (Sir Ratan Tata Trust, Ford Foundation, Swiss Agency for Development Cooperation) 1998-2000 2001 2001 onwards 2007-08 Equity Investment (IFC, Shore Bank, Hivos Triodos, ICICI and HDFC) Loans from Commercial Banks (ICICI Bank, HDFC Bank, ABN Amro, ING Vysya) Mainstream Equity
  4. 4. Context.. Indian Market Research Bureau (IMRB) impact assessment study (2001) on credit customers revealed that – 52% showed increase in the income – 25 % reported no change in the income levels – 23% reported decline in their income levels Review of BASIX Work The reasons • Low Productivity • Un-managed Risk • Low Price Realization / Access to Market. Credit is necessary but not a sufficient condition for livelihood promotion
  5. 5. BASIX framework BASIX utilizes financial, human and intellectual capital to work towards brining equality of opportunity and social justice
  6. 6. Collaborative Polygon We propose collaborating with players having domain expertise to provide ……… Financial Services Linkages with Banks & MFI’s Training & Extension Agril Universities, Ag. Research Stations, Agril Departments, Digital Green, Agriwatch, Institutions NGO’s, village govt. & other village level community Institutions Service Providers Artificial Insemination, Vaccination, Soil testing, Insurance Output Market Linkages to organised buyers, processors etc.. Input Supply Agri Input companies, wholesalers', dealers, Enhance competencies, Reduce transaction costs and Reduce risk for farmers by integrating all services FARMERS The task is too complex for any single actor. Hence there is a need for multilateral partnerships or “Collaborative Polygon”. However, it is useful for one actor to be the anchor, who understands both development & finance markets for the Collaborative Polygon to work. BASIX tries to play that role.
  7. 7. BASIX Approaches in Agri Value Chain Identify the Sub Sector / Value Chain Undertake Action Research / Study • Livelihood Profiling • No of HH’s engaged • Economic contribution from that subsector • Strengths and Weaknesses Identify & Address the Bottlenecks • Establish collaboration • Develop successful intervention on revenue model Scaling up Phase • Scale up the intervention • Undertake impact assessment • Improve the design
  8. 8. Enterprises/ Commercial Farmers Direct Loans Joint Liability Groups / Farmers Producer Organizations Farmers Producer Organizations Micro-Enterprises/ Small Farmers Marginal Producers Market Segment Method 8 Credit Delivery Channel
  9. 9. Farmers’ Producers’ organization (FPO) Cereals /Vegetable / Pulse growers Farmers Interest Group (FIG) Farmers Interest Group (FIG) Farmers Interest Group (FIG) Cluster Committee Cluster Committee B L O C K FPO D I S T R I C T • One FIG = 10-20 Farmers. • One village = 1- 4 FIG (15 to 60 Farmers) • One FPO = 15-20 Villages (45-60 FIG with 600 to 1200 farmers).
  10. 10. Package of Services to Crop customers • Productivity Enhancement through Package of Practices – Soil testing, Vermicompost and Integrated Nutrient Management • Risk Mitigation – Seed treatment, Stem application, Integrated Pest Management • Local Value Addition – Semi-processing (e.g. ginning of cotton, shelling of groundnut pods) • Alternate Market Linkages for better prices (Super Spinning Mills, NCDEX) • Establishing/strengthening farmers’ cooperatives for input/output marketing Enhanced Production in Cotton Linked with Market
  11. 11. Livelihood Financial Services Cotton crop technical Services Institutional Development Services Farmers Ginning BASIX – Cotton Value Chain Lint Pressing unit- Conversion to Bales Farmers Farmers National Commodity Derivatives Exchange (NCDEX ) Trading Platform Formed into cotton Producer Group BASIX Warehouse Receipt BANK Loan Assured PriceSeeds, Fertilizers, Pesticides NCMSL Godowns Supper Spinning Mill
  12. 12. Dairy Value Chain: BASIX - Reliance Dairy Company Collaboration DAIRY FARMERS INPUTSUPPLY BASIX OUTPUTMARKET RELIANCE Milk supplied to Bulk Milk Coolers Financial & Dairy Extn Services
  13. 13. Potato Value Chain Frito Lays India Limited Potato Growers BASIX Credit Ext. services Gr. formation Potato Seed Buy back arrangement
  14. 14. Some other Value Chain Interventions 1. Dairy Value Chain Intervention – Reliance Dairy Foods – 1000 farmers; 30 villages – 50 Producer Groups formed – Credit, Vet. Services, Market linkages 2. Vegetables Intervention – ITC – Push carts were provided by ITC – Credit, Crop extension services – Market Linkages 3. Sweet Orange Market Linkages – Reliance Fresh – Credit – Extension services – Market Linkages 4. Mango Market Linkages – Jain and Other players – Mango cluster developed – Credit – Extension services – Market linkages
  15. 15. BASIX Outreach – Agri Value Chain Finance •No. of customers: 1.05 million •Amt. disbursed (million USD): 230 •Repayment: 97%
  16. 16. • Input Side – Lack of quality seeds – Timely access to inputs • Production – Lack of improved Farm Equipment use – Production volumes Vs. price – Lack of improved PoP – Weather, Diseases • Post Harvest – Transport and handling related losses – Lack of Storage facilities – Lack of primary sorting, grading Major Constraints
  17. 17. • Markets – Distress sales – Distant markets leading to middlemen – Internal finance based sales – Lack of market information • Processing – Quality adherence – Technology and Equipment aspects – Assured supply and Inventory management – Branding and Marketing Major Constraints – contd..
  18. 18. BASIX Collaborators
  19. 19. 19 Head Office 3rd Floor, Surabhi Arcade, Bank Street, Koti, Hyderabad 500 001 Telengana Phone: + 91-40-3917-2500 Fax: + 91-40-3917-2502 Website : www.basixindia.com Registered Office D 9, First Floor, Greater Kailash Enclave - I, New Delhi 110 0 48. Ph: 011 4173 0252 , 011 4173 0454 Website : www.basixindia.com

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