Conference of in-Charges of Priority

Sector Advances of
Commercial Banks
Presentation on

Approaches to Financing Agribusiness in India

26-07-
2008

Gopi Krishna Swarangi

Vice President
Food & Agribusiness Strategic Advisory & Research
Knowledge Banking in Food and
Agribusiness sector

YES BANK is focused on being “The Bank for Businesses of the

Future”

In the Indian context – Food and Agri is an inescapable value

driver for the economy and hence for YES BANK
Agriculture is the backbone of the Indian Economy
Contributes ~ 25% to the GDP
Employs ~ 60% of the work force
Contributes ~ 15% of exports
However the value added in Indian Agriculture is still low as
compared to international standards

Transforming AGRICULTURE to AGRIBUSINESS will lead to a quantum

jump in value added from a "supply-driven” low-volume situation to a
“demand-driven” high-value business
 Our unique “Knowledge–banking” approach to
doing business in the F&A sector…

Numerous sub-sectors across the Agri-value-chain…

…right from the “Farm gate” to “Food plate”…

Agri & Prodn. and Logistics & Trading Processing Food

Food Warehousi Distrbn. Retail &
Inputs ng Food
Service
Seeds Food Ports Edible Oil Primary Super
Fertilizers Corporation Reefer Grain Process Markets
Agro- of India Transport Spices Grain Milling Hyper
chemicals State Caterers Edible Oil Markets
Fruits & Veg
Agri-biotech Warehousing Dairy Fast Food &
Meat/ aqua
Corporation Beverage
Irrigation Commodity Fruits & Veg
Central Chains
Farm Exchanges Sugar
Warehousing
Machinery Corporation High Value
Poultry Pvt. Processing
Feed & Warehouses Confectioner
Equipment Cold y
Dairy Feed
A dedicated Food and Agribusiness Strategic Advisory and Research
Storages Bakery team consisting of
& Equip Beverages
Aqua &
sector experts has been domiciled within the Development and
Floriculture Knowledge Banking
Greenhouse Division of the bank Dairy
Fishery Feed
s Meat &
& Equipment
Knowledge Banking helps us offer customized
products to stakeholders across the value chain

SEEDS Lending against

offtake contract
Contract Seed Growers Term lending/ WC

Contractual Seed Company

agreement Lending against stop
sales agreement
Distributor Short term lending
Preferred
against liquid collateral
distributors
Credit sales Dealer
Crop loans

Credit/
forward
Farmer
EDIBLE OIL contract
Crop loan
Farmer

Spot market
Village level CA
price
WR finance
Warehouse
Receipt Mandi/ Warehouse

Warehouse Wholesaler Vendor bill

Receipt discounting

Credit Miller
Need for a Holistic Development Approach
– along the Agri Value Chain
Handling
Production Processing Wholesaler Retailer
& Mrktg.

s
nt

Development
r m e
fo m Consumer

Market
R e p
y e lo g Orientation
r ev e lin
a to D nc e
g ul re er
a od Market Linkage Geographic appellation
u v M
Re uct e li
s s
tr tD e

Price competitiveness
as d i s in
fr e
Bu Commodity Trading
In Cr e
tiv
ova Agri Infrastructure AEZ
n n & Logistics
I
Financial
Services

supply chain
Streamlined
Research &
Extension
Traceability
Farmer
linkages
Action steps
Select Initiatives in the Food and Agribusiness space

 
Knowledge Reports
FASAR – Key Government Assignments
National Ministry of Govt. of Govt. of
Institute of Agriculture Rajasthan Orissa and
Agricultural National and NIAM NIAM
Marketing Consultants for Feasibility Study Preparation of
Developing for Setting up of Detailed Project
Optimal
Framework for Modern Terminal Reports for
Operational &
Selection of Market in Jaipur Modern Terminal
Ownership Model
Private Markets in
of Modern
Enterprises for Cuttack and
Terminal
Setting up of Berhampur
Markets
Modern Terminal
Markets

Govt. of UT of Govt. of Govt. of Govt. of

Chandigarh Punjab Maharashtra Orissa and
Consultants for Consultants for Consultants for NIAM
Selection of Selection of Selection of Consultants for
Private Private Private Selection of
Enterprises for Enterprises for Enterprises for Private
Setting up Setting up Setting up Enterprises for
Modern Terminal Modern Terminal Modern Terminal Setting up
Market in Market in Punjab Market in Modern Terminal
Chandigarh Mumbai Market in
Sambalpur
FASAR – Key Government Assignments
Govt. of Govt. of Govt. of West Govt. of
Andhra Rajasthan Bengal Gujarat
Pradesh and NIAM Preparation of Advisory for
Assessment of Assessment of “Agricultural Development of
Infrastructure of Infrastructure of Marketing – Modern Fruits &
Existing APMCs Existing APMCs Vision 2011” Vegetables
and and Document Market in Surat,
Development of Development of Gujarat
Strategy for Strategy for
their their
Modernization Modernization

IFFCO- Govt. of HAFED National

Greenport Gujarat Preparation of Horticulture
JVC MoU for Vision and Board
Implementation Development of Comprehensive Evaluation of
of Integrated Integrated Agro Business Plan Role, Structure
Agro Food Park Food Park on and Continuation
in Nellore, PPP basis of National
Andhra Pradesh Horticulture
Board during XI
Five Year Plan
FASAR – Key Government Assignments
APEDA APEDA APEDA APEDA
Streamlining of Restructuring of Study on Dwell Advisors on Fast
Existing APEDA in order Time of Track
Procedures and to Confirm to the Agricultural Development of
Documentation Proposed APEDA Produce and AEZs through
for Agricultural Amendment Bill Meat Products at PPP in India
Produce Exports 2007 Delhi’s IGI
Airport and ICD,
Dadri

Government Ministry of UNIDO Cane &

of Agriculture Market Study for Bamboo
Uttaranchal (World Bank Shortening of Technology
Supply Chain
Floriculture Project) Centre
Project on PPP and
Role of Centre Market
Basis Enhancement of
and State Assessment,
Value for the
Systems in Channel Study
Farmers in
Agriculture and Mapping of
Vidharbha,
under NAIP Consumer
Maharasthra
Preference for
Select Bamboo
FASAR – Key Corporate Assignments
North India Leading Leading Leading
based Large Indian Indian Indian
Corporate Corporate Conglomerate Corporate
Group Diversification Roping in a Entry into Rural
Entry Strategy into Organic Strategic Retailing with
for Fresh Farming of Partner for Special Attention
Produce Fruits & Distribution of to Agri Inputs
Business and Vegetables and Fruits &
Securing Entry into Bio Vegetables in
Backward and fuels European
Setting up the first “state of the art” Integrated Agro-
Forward Markets

Food Park in the Country in Andhra Pradesh

Linkages

Leading Leading Food Leading South India

Indian Seed Ingredients Shipping based Project
Company Player Conglomerate Developer
Raising Growth Formulating Business Implementation
Capital for Fresh India Strategy Potential for of Integrated
Produce and Gamma Agro Food Parks
Retail Business Irradiation in Andhra
Application in Pradesh,
Food Industry in Tamilnadu,
India Karnataka,
Kerala,
Integrated Agro Food Park - Concept
Unique first of its kind integration of various
agribusiness value chain components
Spatial clustering of different agro-production RT RT
chains C C
Spatial combination of agro-processing and RT RT
non-agro functions (building, industrial estate C AGRO FOOD C
or region)
PARK
Scale increase in production further enables RT
industrial processing RTC C
Application of principles of industrial ecology,
i.e. mutual use of waste and by-products
Consolidation
Clustering approach to attract leading foreign Centre
retail chains to anchor and plan their supply
chain at and through the Agro Food Parks
Township model approach to attract Indian
MNCs and foreign food processing
companies Consumers
Tremendous scope for Rural transformation
and rural employment generation

Clustering and Networking

provides context for sustainable innovations
Intelligent Agrologistic Networks combining
Consolidation Centres, Agroparks and RTCs
Rural
Transformati
on Centre

METROPOLE
Agroproductio
n- and
processing
Park

METROPOLE
Consolidatio
n Centre
Concept (contd.)

Rural Production Rural

Transformation Pro Transformation
Centers c e ss Centers
Modern Farm Clusters i ng
Green Houses
Utilities & Livestock farms FP Zones
Services Mushroom Nursery

Agro tourism R&D

ia l

Wellness & Incubation

c
So

Nutrition QCL
R
Common Agribusiness
AFP &
Infrastructure Mgt. Trg. Inst
D
Cold Stores Convention Center
Ripening Chambers IT/ Library
Warehousing Training Center

Terminal Markets Commissaries &

Logistics Packaging
Rural Commercial Rural
Transformation Complex Transformation
Centers Centers

Trade
Concept (contd.)

Village

Village Village

Agri Clinic
Food &
Collection Center
Entertainment

Rural Mentoring
Realty
Transformation Training
Centers
Primary Health At Mandal Level Farm Credit
Center Popln: 5000 - 10000 Micro Finance
Commercial
Smart Card
Rural Mart
Green Port
Office Space

Village Village
Village
Market-Oriented Food Production
Chains
Distribution
Centre
Retail

Primary Domestic
processing markets
Centres
Collection
Centres
Collection
Points Export markets
Farmers

Collection - Value Adding -

Distribution Centres:
Increase employability
Add quality and value
Link farmers to retail
Open new markets
Market-Oriented Food Production
Chains (contd.)

Distribution
Centre
Retail

Primary Domestic
Processing markets
Centres
Collection
Centres
Collection
Points Export markets
Farmers

Primary processing centre:

Cooling, sorting, grading, packaging and storing
Collection from max. 50 - 100 km
Backward chain optimisation from farm to fork (incl. seeds and tissues); farmers become
preferred suppliers
Reduce shrinkage by expanding cool chain
Increase quality (+price)
Extend potential market
Add Agro-production to Processing and
Trade
Distribution
Centre
Retail

Value Adding Domestic

Centres markets
Collection
Collection Centres
Points Export markets
Farmers

Land-independent agriculture in Agro Food Parks adds opportunities,

mainly in new markets
Case Study - Integrated Dairy Farms –
Linked to AFP
Information Flow
Veterinary Services, Training,
Technical Knowledge, Market
Information
Retail

Product Flow
Cattle + Dairy
Product Distribution
Milk
Fodder Centre
} { Consumers
Payment
Payment
(Milk+Fodder- Modern Feed Domestic
from the
Loan-Feed) Livestock Farm market Markets
Payment of Milk AFP
Cattle Loan (Market Price)

Farmers Payment Of Cattle Cattle Loan

Margin Money Feed (Market Price) Repayment Export
Markets

Financial Flow

Bank
Strategic Partnerships

Strategic MoU with MoU with Strategic

alliance with National NABARD Alliance with
Alterra, a Institute of Consultancy Agriculture
leading Agricultural Services Insurance
international Marketing (NABCONS) Corporation of
knowledge (Ministry of For jointly India (AIC)
institution and Agriculture, carrying out For co-developing
Strategic Advisory insurance
part of GoI)
assignments in products suitable
Wageningen For undertaking
the areas of Food for the farming
University Strategic Advisory & Agribusiness, community
Research and Consultancy Agri
across India
Center, Infrastructure,

Netherlands For etc.

implementation of
Integrated Agro
Food Parks
Conceptualization to Implementation
Dedicated state level initiative to enable “project development”
Public Private Finance Initiative (PPFI)
Work with state governments to accelerate implementation of pre-
approved projects
YES BANK will incur initial developmental expenses
We propose to work with external consultants for developing DPR,
finding private sector partners, developing the capital structure and
achieving financial closure
Assists Governments to analyse and develop a number of projects
without incurring costs on initial project development
YES BANK will recover costs from project success
Bid Process Assistance is built within the frame-work
Sectors PPFI will cover
Agri-Infrastructure Projects
Other important rural and urban infrastructure projects
Water Supply and Micro Irrigation
Thanks for your attention !