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Horticulture Projects

Financing of. Horticulture Projects. Dr. Diwakar Hegde, AGM NABARD Maharashtra Regional Office, Pune. Structure of the Session. Brief Introduction Horticulture Development Programmes Credit Requirement and GLC Feasible Projects Technical Appraisal Financial Appraisal

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Horticulture Projects

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  1. Financing of Horticulture Projects Dr. Diwakar Hegde, AGM NABARD Maharashtra Regional Office, Pune

  2. Structure of the Session Brief Introduction Horticulture Development Programmes Credit Requirement and GLC Feasible Projects Technical Appraisal Financial Appraisal Commercial Appraisal Entrepreneurial Appraisal Issues Schemes of NHB & NMPB

  3. Horticulture POMOLOGY (Fruits)– Mango,Grapes etc. OLERICULTURE(Vegetables) – Potato, Tomato etc. FLORICULTURE(Flowers) – Rose, Gerbera etc. PLANTATION CROPS – Tea, Coffee, etc., MEDICINAL AND AROMATIC PLANTS – Tulsi, Aloe vera, Lemongrass etc. SPICES AND CONDIMENTS – Pepper, Chillies etc. HORTICULTURE PROCESSING – Jams, Jellies, Pickles, Juices etc. OTHERS – Sericulture, Mushroom & Bee Keeping

  4. STATUS OF HORTICULTURE ( Area – Million Ha , Production – Million T )

  5. CREDIT REQUIREMENT FOR HORTICULTURE CROPS PRODUCTION CREDIT FOR SEASONAL AGRICULTURAL OPERATIONS : Eg : Vegetables, some flower crops, MACs INVESTMENT CREDIT: Most fruit crops, plantation crops, vegetables and floriculture under polyhouse, MACs WORKING CAPITAL REQUIREMENT: For Mushroom, Commercial Floriculture, fruit and vegetable processing units etc.

  6. GROUND LEVEL CREDIT FLOW FOR HORTICULTURE

  7. POSSIBLE PROJECTS Planting Material Supply – Commercial Nurseries and Tissue Culture Units Horticulture development projects – Predominantly for raising orchards, growing vegetable,flowers etc. as a single crop/composite venture in few acres/ha with minimum required infrastructure facilities Large scale projects with comprehensive infrastructure development for production, irrigation, packhouse, transportation etc. Large scale integrated projects for production and processing Hi- Tech/ Green House Horticulture Stand alone processing facilities Small estates for growing plantation crops Large estates with processing factories Mixed / Integrated Farming systems

  8. Role of project appraisal To stop bad projects. To prevent good projects from being destroyed To determine if components of project are consistent To assess the sources and magnitude of the risk To determine how to reduce risks and efficiency share risks

  9. APPRAISAL OF HORTICULTURE PROJECTS Technical Appraisal – Technical Feasibility Financial Appraisal – Financial Viability & Bankability Commercial Aspects - Marketability Entrepreneurial Appraisal – Management of the project

  10. TECHNICAL APPRAISAL Suitability of the area Agro climatic factors Topography of the land Protection from animals plan, layout, spacing package of practices requirement of intercultural operations (training, pruning etc.) crops requiring support (grapes, betelvine, citrus, vegetables etc.)

  11. TECHNICAL APPRAISAL monocrop - inter crop mixed crop - mixed farming extension support availability of inputs estimation of yields marketing supply of power

  12. FINANCIAL APPRAISAL PROJECT COST arrive at item wise cost & total cost cost for machinery supported by invoice, civil structures supported by estimates PHASING physical Financial FINANCIAL ANALYSIS NPW BCR IRR DSCR RATIO ANALYSIS RISK AND SWOT ANALYSIS

  13. FINANCIAL APPRAISAL RATE OF INTEREST & SECURITY as per RBI guidelines REPAYMENT PERIOD gestation period /Economic life repayment based on cash flow realistic estimations of income

  14. COMMERCIAL APPRAISAL Marketability of the produce/ product Competing products Marketing Arrangements/ tie ups Price Spread available

  15. ENTREPRENEURIAL APPRAISAL Background Experience Financial strength Supporting Technical Manpower

  16. Issues Long Gestation Period Likelihood of inflated Costs. Cost of Planting Material Marketing Arrangements

  17. NHB: Development of Commercial Horticulture through Production and Post Harvest Management Back ended subsidy Production related components – General : 20% (max. limit of Rs 25 lakh/ project) NER/Hilly areas : 25 % (max. subsidy of Rs.33 lakh) For capital intensive and high value crops under protected cultivation and open air cultivation of date palm, olive and saffron - 25 % (max. subsidy of Rs.50 lakh) – 33 % (max. of Rs.60 lakh) for Scheduled and hilly areas) Projects covering area above four hectares (above 10 acres) in case of open cultivation, and more than 1000 sq. meter in case of protected cultivation PHM/Primary Processing related components). General : 40% (max. limit of Rs 50 lakh/ project) Hilly and scheduled areas : 55 % (max. subsidy of Rs.60 lakh) Eligible activities : Production of crops, seed, nursery, biotechnology, tissue culture, bio-pesticides, processing, market yard, ancilliary industry, agri-clinics, consultancy services, etc.

  18. Production and supply of planting material – Small nurseries (1 ha – 60-70000 plants per year) – 50 % subsidy with ceiling of Rs.2 lakhs Setting up of value addition and processing unit Subsidy of 25 % of the project cost subject to a maximum of Rs.50 lakh NMPB – National Mission on Medicinal Plants

  19. Area expansion for select species Species in CITES list (16 sp.) – 75 % subsidy Critical species (32 sp.) – 50 % subsidy Other species (45 sp.) – 20 % subsidy Back ended credit linked subsidy Min. bank loan for individuals – 20 % NMPB – National Mission on Medicinal Plants

  20. Thank You

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