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INNOVATIONS IN AGRICULTURAL SUPPLY CHAIN FINANCE 17th March 2007

INNOVATIONS IN AGRICULTURAL SUPPLY CHAIN FINANCE 17th March 2007. Presentation by Kishore Kumar N.S. Executive Vice President (Agriculture Business & Microfinance) HDFC Bank Ltd. KEY CONCERNS. Supply Chain output leakages and price inefficiency. Small and marginal farmers

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INNOVATIONS IN AGRICULTURAL SUPPLY CHAIN FINANCE 17th March 2007

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  1. INNOVATIONS IN AGRICULTURAL SUPPLY CHAIN FINANCE 17th March 2007 Presentation by Kishore Kumar N.S. Executive Vice President (Agriculture Business & Microfinance) HDFC Bank Ltd

  2. KEY CONCERNS • Supply Chain output leakages and price inefficiency. • Small and marginal farmers • Fragmentation of land • Dependence on traditional revenue streams.

  3. KEY REQUIREMENTS FOR EFFECTIVENESS OF SUPPLY CHAIN FINANCING • Scale of operation • Production flexibility • Assured input supplies • Strategic tie-ups • Quality control and traceability • Communication and transparency

  4. INNOVATIONS TO COUNTER / MITIGATE CONCERNS • Non-cash disbursals of crop loans - for direct input supplies from manufacturers of fertilisers, seeds, etc., as part of channel finance for Corporates. • Financing based on contracts through large retailers / processors / exporters.

  5. INNOVATIONS TO COUNTER / MITIGATE CONCERNS Contd… • Huge scope in horticulture, where cold chain is extended by buyers • Formation of small / marginal farmers into SHGs to absorb microfinance, not merely from growing crops but for agri trade

  6. INNOVATIONS TO COUNTER / MITIGATE CONCERNS Contd… SUPPLY OF SERVICES • Financing agricultural extension From Source - Universities To User - Farmers

  7. INNOVATIONS TO COUNTER / MITIGATE CONCERNS Contd… EVOLVED FINANCING MODELS Supply Chain asset backed Cash flow financing Farmer Credit Risk

  8. INNOVATIONS TO COUNTER / MITIGATE CONCERNS Contd… • Financing ICT innovatives / delivery channels servicing farmers. • Integrated effort to rural “family” financing - one family, multiple enterprises, reducing dependence on farm income - intra family supply groups.

  9. SUCCESS STORIES • Agglomeration of tribals for microfinance in organic farming for exports. • Engagement of NGOs to coordinate groups of small farmers to identify crop surpluses, grade, store, transport and collect payments.

  10. SUCCESS STORIES Contd… • Customised financing for Micro Dairy farming and logistics through corporate tie-ups. • Marketing linkage of sericulturists with weavers, backed by firm offtake by textile company.

  11. Thank You

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