yes bank approaches to agribusiness

Presentation on

Approaches to Financing Agribusiness in India

Conference of in-Charges of Priority Sector Advances of

Commercial Banks

Gopi Krishna Swarangi Vice President

Food & Agribusiness Strategic Advisory & Research

26-07-2008

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 EconomyContributes ~ 25% to the GDPEmploys ~ 60% of the work forceContributes ~ 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

Agri & Food Inputs

SeedsFertilizersAgro-chemicalsAgri-biotechIrrigationFarm MachineryPoultry Feed & EquipmentDairy Feed & EquipAqua & Fishery Feed & EquipmentFood PackagingFood Ingredients

Prodn. and Warehousing

Food Corporation of IndiaState Warehousing CorporationCentral Warehousing CorporationPvt. WarehousesCold StoragesFloricultureGreenhouses

Logistics & Distrbn.

PortsReefer TransportCaterers

Trading

Edible OilGrainSpicesFruits & VegMeat/ aquaCommodity Exchanges

Processing

Primary ProcessGrain MillingEdible OilDairyFruits & VegSugarHigh Value ProcessingConfectioneryBakeryBeveragesDairyMeat & PoultryMarine & Fishery

Food Retail & Food Service

Super MarketsHyper MarketsFast Food & Beverage Chains

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”…

A dedicated Food and Agribusiness Strategic Advisory and Research team consisting of sector experts has been domiciled within the Development and Knowledge Banking

Division of the bank

Knowledge Banking helps us offer customized products to stakeholders across the value chain

Contract Seed Growers

Dealer

Seed Company

Distributor

Farmer

Contractual agreement

Credit sales

Preferred distributors

Lending against offtake contract

SEEDS

Lending against stop sales agreement

Term lending/ WC

Short term lending against liquid collateral

Crop loans

Credit

Credit/ forward contract

Farmer

Wholesaler

Village level CA

Mandi/ Warehouse

Miller

Warehouse Receipt

Warehouse Receipt

Spot market price

EDIBLE OIL

Vendor bill discounting

WR finance

Crop loan

Need for a Holistic Development Approach – along the Agri Value Chain

Consumer Orientation

Farmer linkages

Action steps

Financial Services

Market Linkage

Research & Extension

Regulatory

Refo

rms

Infra

structu

re D

evelopm

ent

Credit

Delivera

nce

Innovativ

e Busin

ess Modelin

g

Commodity Trading

Agri Infrastructure & Logistics

Mar

ket

Dev

elop

men

tP

rice

com

peti

tive

ness

Str

eam

line

d su

pply

cha

in

Production Handling

& Mrktg. Processing Wholesaler Retailer

Traceability

Geographic appellation

AEZ

Select Initiatives in the Food and Agribusiness space

Knowledge Reports

FASAR – Key Government Assignments

National Institute of Agricultural Marketing

Optimal Operational & Ownership Model of

Modern Terminal Markets

National Institute of Agricultural Marketing

Optimal Operational & Ownership Model of

Modern Terminal Markets

Ministry of Agriculture

National Consultants for Developing Framework for Selection of Private Enterprises for Setting up of Modern Terminal

Markets

Ministry of Agriculture

National Consultants for Developing Framework for Selection of Private Enterprises for Setting up of Modern Terminal

Markets

Govt. of Rajasthan and NIAM

Feasibility Study for Setting up of Modern

Terminal Market in Jaipur


Feasibility Study for Setting up of Modern

Terminal Market in Jaipur

Govt. of Orissa and NIAM

Preparation of Detailed Project Reports for

Modern Terminal Markets in Cuttack and

Berhampur


Preparation of Detailed Project Reports for

Modern Terminal Markets in Cuttack and

Berhampur

Govt. of UT of ChandigarhConsultants for

Selection of Private Enterprises for Setting

up Modern Terminal Market in Chandigarh

Govt. of UT of ChandigarhConsultants for


up Modern Terminal Market in Chandigarh

Govt. of Punjab

Consultants for Selection of Private

Enterprises for Setting up Modern Terminal

Market in Punjab

Govt. of Punjab


Enterprises for Setting up Modern Terminal

Market in Punjab

Govt. of MaharashtraConsultants for


up Modern Terminal Market in Mumbai

Govt. of MaharashtraConsultants for


up Modern Terminal Market in Mumbai



Enterprises for Setting up Modern Terminal Market in Sambalpur



Enterprises for Setting up Modern Terminal Market in Sambalpur


Govt. of Andhra Pradesh

Assessment of Infrastructure of Existing

APMCs and Development of Strategy for their

Modernization

Govt. of Andhra Pradesh



Modernization




Modernization




Modernization

Govt. of West Bengal

Preparation of “Agricultural Marketing – Vision 2011” Document

Govt. of West Bengal

Preparation of “Agricultural Marketing – Vision 2011” Document

Govt. of Gujarat

Advisory for Development of Modern

Fruits & Vegetables Market in Surat, Gujarat

Govt. of Gujarat

Advisory for Development of Modern

Fruits & Vegetables Market in Surat, Gujarat

IFFCO-Greenport JVC

Implementation of Integrated Agro Food

Park in Nellore, Andhra Pradesh

IFFCO-Greenport JVC


Park in Nellore, Andhra Pradesh

Govt. of GujaratMoU for Development of

Integrated Agro Food Park on PPP basis

Govt. of GujaratMoU for Development of

Integrated Agro Food Park on PPP basis

National Horticulture Board

Evaluation of Role, Structure and

Continuation of National Horticulture Board

during XI Five Year Plan

National Horticulture Board

Evaluation of Role, Structure and

Continuation of National Horticulture Board

during XI Five Year Plan

HAFEDPreparation of Vision and Comprehensive

Business Plan

HAFEDPreparation of Vision and Comprehensive

Business Plan


APEDAStreamlining of Existing

Procedures and Documentation for

Agricultural Produce Exports

APEDAStreamlining of Existing

Procedures and Documentation for

Agricultural Produce Exports

APEDARestructuring of APEDA

in order to Confirm to the Proposed APEDA Amendment Bill 2007

APEDARestructuring of APEDA

in order to Confirm to the Proposed APEDA Amendment Bill 2007

APEDAStudy on Dwell Time of

Agricultural Produce and Meat Products at Delhi’s

IGI Airport and ICD, Dadri

APEDAStudy on Dwell Time of

Agricultural Produce and Meat Products at Delhi’s

IGI Airport and ICD, Dadri

APEDAAdvisors on Fast Track Development of AEZs through PPP in India

APEDAAdvisors on Fast Track Development of AEZs through PPP in India

Government of Uttaranchal

Floriculture Project on PPP Basis

Government of Uttaranchal

Floriculture Project on PPP Basis

Ministry of Agriculture (World

Bank Project)Role of Centre and State Systems in Agriculture

under NAIP

Ministry of Agriculture (World

Bank Project)Role of Centre and State Systems in Agriculture

under NAIP

UNIDOMarket Study for

Shortening of Supply Chain and Enhancement of Value for the Farmers

in Vidharbha, Maharasthra

UNIDOMarket Study for

Shortening of Supply Chain and Enhancement of Value for the Farmers

in Vidharbha, Maharasthra

Cane & Bamboo Technology Centre

Market Assessment, Channel Study and

Mapping of Consumer Preference for Select

Bamboo Products in NE

Cane & Bamboo Technology Centre

Market Assessment, Channel Study and

Mapping of Consumer Preference for Select

Bamboo Products in NE

FASAR – Key Corporate Assignments

North India based Large Corporate

GroupEntry Strategy for Fresh Produce Business and Securing Backward and

Forward Linkages

North India based Large Corporate

GroupEntry Strategy for Fresh Produce Business and Securing Backward and

Forward Linkages

Leading Indian Corporate

Diversification into Organic Farming of

Fruits & Vegetables and Entry into Bio fuels


Diversification into Organic Farming of

Fruits & Vegetables and Entry into Bio fuels

Leading Indian Conglomerate

Roping in a Strategic Partner for Distribution

of Fruits & Vegetables in European Markets

Leading Indian Conglomerate

Roping in a Strategic Partner for Distribution

of Fruits & Vegetables in European Markets


Entry into Rural Retailing with Special

Attention to Agri Inputs


Entry into Rural Retailing with Special

Attention to Agri Inputs

Leading Food Ingredients Player

Formulating India Strategy

Leading Food Ingredients Player

Formulating India Strategy

Leading Shipping Conglomerate

Business Potential for Gamma Irradiation Application in Food Industry in India

Leading Shipping Conglomerate

Business Potential for Gamma Irradiation Application in Food Industry in India

Leading Indian Seed Company

Raising Growth Capital for Fresh Produce and

Retail Business

Leading Indian Seed Company

Raising Growth Capital for Fresh Produce and

Retail Business

South India based Project Developer


Parks in Andhra Pradesh, Tamilnadu, Karnataka, Kerala, Pondicherry and

Maharashtra

South India based Project Developer


Parks in Andhra Pradesh, Tamilnadu, Karnataka, Kerala, Pondicherry and

Maharashtra

Setting up the first “state of the art” Integrated Agro- Food Park in the Country in Andhra Pradesh

Unique first of its kind integration of various agribusiness value chain componentsSpatial clustering of different agro-production chainsSpatial combination of agro-processing and non-agro functions (building, industrial estate or region) Scale increase in production further enables industrial processingApplication of principles of industrial ecology, i.e. mutual use of waste and by-productsClustering approach to attract leading foreign retail chains to anchor and plan their supply chain at and through the Agro Food ParksTownship model approach to attract Indian MNCs and foreign food processing companiesTremendous scope for Rural transformation and rural employment generation

AGRO FOOD

PARK

RTC

RTC

RTC

RTC

RTC

RTC

Consolidation Centre

Consumers

Integrated Agro Food Park - Concept

Clustering and Networking provides context for sustainable innovations

Intelligent Agrologistic Networks combining Consolidation Centres, Agroparks and RTCs

METROPOLE

METR

OP

OLE

Consolidation Centre

Agroproduction- and

processing Park

RuralTransformati

on Centre

AFP

Modern Farm ClustersGreen Houses

Livestock farmsMushroom Nursery

FP ZonesUtilities & Services

CommercialComplex

R&DIncubation

QCL

Commissaries &Packaging

CommonInfrastructure

AgribusinessMgt. Trg. Inst

Convention CenterIT/ Library

Training Center

Agro tourismWellness &

Nutrition

Terminal MarketsLogistics

Cold StoresRipening Chambers

Warehousing

RuralTransformation

Centers

RuralTransformation

Centers

RuralTransformation

Centers

RuralTransformation

Centers

ProductionProcessing

R&D

Trade

Soc

ial

Concept (contd.)

Rural Rural TransformationTransformation

CentersCentersAt Mandal Level

Popln: 5000 - 10000

Agri Clinic

Collection Center

MentoringTraining

Farm CreditMicro Finance

Primary HealthCenter

CommercialRural Mart

Office Space

Smart CardGreen Port

Realty

Food &Entertainment

Village

VillageVillage

Village

Village

Village

Concept (contd.)

Market-Oriented Food Production Chains

Farmers

Collection Points

Collection Centres

Primary processing

Centres

DistributionCentre

Domestic markets

Export markets

Retail

Collection - Value Adding -

Distribution Centres:

Increase employability

Add quality and value

Link farmers to retail

Open new markets

Farmers

Collection Points

Collection Centres

Primary Processing

Centres

DistributionCentre

Domestic markets

Export markets

Retail

Primary processing centre:Cooling, sorting, grading, packaging and storingCollection from max. 50 - 100 km

Backward chain optimisation from farm to fork (incl. seeds and tissues); farmers become preferred suppliersReduce shrinkage by expanding cool chainIncrease quality (+price)Extend potential market

Market-Oriented Food Production Chains (contd.)

Farmers

Collection Points

Collection Centres

Value Adding Centres

DistributionCentre

Domestic markets

Export markets

Retail

Add Agro-production to Processing and Trade

Land-independent agriculture in Agro Food Parks adds opportunities, mainly in new markets

Case Study - Integrated Dairy Farms – Linked to AFP

AFP

{

Margin Money

Payment of Milk (Market Price)

Payment Of Cattle Feed (Market Price)

Veterinary Services, Training, Technical Knowledge, Market

Information

Information Flow

Bank

Payment from the market

Cattle Loan Repayment

Cattle Loan

Payment (Milk+Fodder-

Loan-Feed)

Financial Flow

Distribution Centre

Domestic Markets

Export Markets

}

Retail

Consumers

Modern Livestock Farm

Farmers

Cattle +

FodderMilk

Feed

Dairy Product

Product Flow

Strategic Partnerships

Strategic alliance with Alterra, a leading

international knowledge institution

and part of Wageningen

University Research Center, Netherlands

For implementation of Integrated Agro Food Parks

Strategic alliance with Alterra, a leading

international knowledge institution

and part of Wageningen

University Research Center, Netherlands

For implementation of Integrated Agro Food Parks

MoU with National Institute of Agricultural

Marketing (Ministry of Agriculture, GoI)

For undertaking Strategic

Advisory and Consultancy

MoU with National Institute of Agricultural

Marketing (Ministry of Agriculture, GoI)

For undertaking Strategic

Advisory and Consultancy

MoU with NABARD Consultancy Services

(NABCONS) For jointly carrying out

Strategic Advisory assignments in the areas of Food & Agribusiness,

Agri Infrastructure, etc.

MoU with NABARD Consultancy Services

(NABCONS) For jointly carrying out

Strategic Advisory assignments in the areas of Food & Agribusiness,

Agri Infrastructure, etc.

Strategic Alliance with Agriculture

Insurance Corporation of India

(AIC) For co-developing

insurance products suitable for the farming

community across India

Strategic Alliance with Agriculture

Insurance Corporation of India

(AIC) For co-developing

insurance products suitable for the farming

community across India

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 coverAgri-Infrastructure Projects

Other important rural and urban infrastructure projects

Water Supply and Micro Irrigation

Conceptualization to Implementation

Thanks for your attention !

yes bank approaches to agribusiness

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