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 Knowledgebanking 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 & Food
Inputs

Seeds

Prodn. and
Warehousing

Food Corporation

Logistics &
Distrbn.

Ports

Trading

Edible Oil

Processing

Food Retail &

Food Service

Super Markets
Primary Process
of India
Fertilizers
Reefer Transport
Grain
Grain Milling
Hyper Markets
State
Agro-chemicals
Caterers
Spices
Edible Oil
Fast Food &
Warehousing
Beverage Chains
Agri-biotech
Fruits & Veg
Dairy
Corporation
Irrigation
Meat/ aqua
Fruits & Veg
Central
Farm Machinery
Commodity
Sugar
Warehousing
Exchanges
Poultry Feed &
High Value
Corporation
Equipment
Processing
Pvt. Warehouses
Dairy Feed &
Confectionery
Cold Storages
Equip
Bakery
Floriculture
Aqua & Fishery
Beverages
Greenhouses
and Agribusiness Strategic Advisory and Research
team consisting of
FeedA&dedicated
Equipment Food
Dairy
Food Packaging
sector experts has been domiciled within the Development and
Knowledge
Banking
Meat
& Poultry
Food Ingredients
Division of the bank
Marine & Fishery

Knowledge Banking helps us offer customized

products to stakeholders across the value chain
SEEDS

Lending against
offtake contract

Contract Seed Growers

Term lending/ WC

Seed Company

Contractual
agreement

Lending against stop

sales agreement

Distributor

Preferred
distributors

Short term lending

against liquid collateral

Credit sales

EDIBLE OIL

Dealer
Credit/
forward
contract

Crop loan

Crop loans

Farmer

Farmer
Spot market
price

Village level CA
WR finance
Warehouse
Receipt

Mandi/ Warehouse

Warehouse
Receipt

Wholesaler
Credit

Vendor bill
discounting

Miller

Need for a Holistic Development Approach

along the Agri Value Chain

s
nt
m
r
e
Consumer
fo
m
e
p
R
o
Orientation
g
y
el
r
e
v
c
e
lin
to
n
e
D
a
a
Geographic appellation
ul
od
Market
Linkage
re
er
g
u
v
M
li
s
Re uct
e
s
tr
t D ine
i
s
s
ed
fra
Commodity Trading
u
r
n
B
I
C
e
iv
t
Agri Infrastructure
va
AEZ
o
n
n
&
Logistics
I

Financial
Services
Research &
Extension
Farmer
linkages

Traceability

Action steps

Retailer

Market
Development

Wholesaler

Price competitiveness

Processing

Streamlined
supply chain

Handling
& Mrktg.

Production

Select Initiatives in the Food and Agribusiness space

Knowledge Reports

FASAR Key Government Assignments

National
NationalInstitute
Instituteofof
Agricultural
Agricultural
Marketing
Marketing
Optimal
OptimalOperational
Operational&&
Ownership
OwnershipModel
Modelofof
Modern
ModernTerminal
Terminal
Markets
Markets

Govt.
Govt.ofofUT
UTofof
Chandigarh
Chandigarh

Consultants
Consultantsfor
for
Selection
of
Private
Selection of Private
Enterprises
Enterprisesfor
forSetting
Setting
up
Modern
Terminal
up Modern Terminal
Market
MarketininChandigarh
Chandigarh

Ministry
Ministryofof
Agriculture
Agriculture

National
NationalConsultants
Consultantsfor
for
Developing
Framework
Developing Framework
for
forSelection
SelectionofofPrivate
Private
Enterprises
for
Setting
Enterprises for Setting
up
upofofModern
ModernTerminal
Terminal
Markets
Markets

Govt.
Govt.ofof
Punjab
Punjab

Consultants
Consultantsfor
for
Selection
of
Private
Selection of Private
Enterprises
Enterprisesfor
forSetting
Setting
up
Modern
Terminal
up Modern Terminal
Market
MarketininPunjab
Punjab

Govt.
Govt.ofofRajasthan
Rajasthan
and
NIAM
and NIAM

Govt.
Govt.ofofOrissa
Orissaand
and
NIAM
NIAM

Govt.
Govt.ofof
Maharashtra
Maharashtra

Govt.
Govt.ofofOrissa
Orissaand
and
NIAM
NIAM

Feasibility
FeasibilityStudy
Studyfor
for
Setting
up
of
Modern
Setting up of Modern
Terminal
TerminalMarket
Marketinin
Jaipur
Jaipur

Consultants
Consultantsfor
for
Selection
of
Private
Selection of Private
Enterprises
Enterprisesfor
forSetting
Setting
up
Modern
Terminal
up Modern Terminal
Market
MarketininMumbai
Mumbai

Preparation
PreparationofofDetailed
Detailed
Project
Reports
Project Reportsfor
for
Modern
Terminal
Modern Terminal
Markets
MarketsininCuttack
Cuttackand
and
Berhampur
Berhampur

Consultants
Consultantsfor
for
Selection
of
Private
Selection of Private
Enterprises
Enterprisesfor
forSetting
Setting
up
Modern
Terminal
up Modern Terminal
Market
MarketininSambalpur
Sambalpur

FASAR Key Government Assignments

Govt.
Govt.ofofAndhra
Andhra
Pradesh
Pradesh

Govt.
Govt.ofofRajasthan
Rajasthan
and
andNIAM
NIAM

Govt.
Govt.ofofWest
West
Bengal
Bengal

Govt.
Govt.ofof
Gujarat
Gujarat

Assessment
Assessmentofof
Infrastructure
InfrastructureofofExisting
Existing
APMCs
and
APMCs and
Development
Developmentofof
Strategy
Strategyfor
fortheir
their
Modernization
Modernization

Assessment
Assessmentofof
Infrastructure
InfrastructureofofExisting
Existing
APMCs
and
APMCs and
Development
Developmentofof
Strategy
Strategyfor
fortheir
their
Modernization
Modernization

Preparation
Preparationofof
Agricultural
AgriculturalMarketing
Marketing
Vision
Vision2011
2011Document
Document

Advisory
Advisoryfor
for
Development
of
Modern
Development of Modern
Fruits
Fruits&&Vegetables
Vegetables
Market
in
Surat,
Market in Surat,Gujarat
Gujarat

IFFCO-Greenport
IFFCO-Greenport
JVC
JVC

Govt.
Govt.ofofGujarat
Gujarat

HAFED
HAFED

National
National
Horticulture
HorticultureBoard
Board

Implementation
Implementationofof
Integrated
IntegratedAgro
AgroFood
Food
Park
in
Nellore,
Andhra
Park in Nellore, Andhra
Pradesh
Pradesh

MoU
MoUfor
forDevelopment
Developmentofof
Integrated
IntegratedAgro
AgroFood
Food
Park
on
PPP
basis
Park on PPP basis

Preparation
PreparationofofVision
Vision
and
Comprehensive
and Comprehensive
Business
BusinessPlan
Plan

Evaluation
EvaluationofofRole,
Role,
Structure
and
Structure and
Continuation
ContinuationofofNational
National
Horticulture
Board
Horticulture Board
during
duringXIXIFive
FiveYear
YearPlan
Plan

FASAR Key Government Assignments

APEDA
APEDA

APEDA
APEDA

APEDA
APEDA

APEDA
APEDA

Streamlining
StreamliningofofExisting
Existing
Procedures
and
Procedures and
Documentation
Documentationfor
for
Agricultural
Produce
Agricultural Produce
Exports
Exports

Restructuring
RestructuringofofAPEDA
APEDA
ininorder
to
Confirm
order to Confirmtoto
the
theProposed
ProposedAPEDA
APEDA
Amendment
Bill
Amendment Bill2007
2007

Study
Studyon
onDwell
DwellTime
Timeofof
Agricultural
AgriculturalProduce
Produceand
and
Meat
Products
at
Delhis
Meat Products at Delhis
IGI
IGIAirport
Airportand
andICD,
ICD,
Dadri
Dadri

Advisors
Advisorson
onFast
FastTrack
Track
Development
of
AEZs
Development of AEZs
through
throughPPP
PPPininIndia
India

Government
Governmentofof
Uttaranchal
Uttaranchal

Ministry
Ministryofof
Agriculture
Agriculture(World
(World
Bank
Project)
Bank Project)

UNIDO
UNIDO

Cane
Cane&&Bamboo
Bamboo
Technology
TechnologyCentre
Centre

Floriculture
FloricultureProject
Projecton
on
PPP
Basis
PPP Basis

Role
RoleofofCentre
Centreand
andState
State
Systems
in
Agriculture
Systems in Agriculture
under
underNAIP
NAIP

Market
MarketStudy
Studyfor
for
Shortening
of
Supply
Shortening of Supply
Chain
Chainand
andEnhancement
Enhancement
ofofValue
for
Value forthe
theFarmers
Farmers
ininVidharbha,
Vidharbha,
Maharasthra
Maharasthra

Market
MarketAssessment,
Assessment,
Channel
ChannelStudy
Studyand
and
Mapping
of
Consumer
Mapping of Consumer
Preference
Preferencefor
forSelect
Select
Bamboo
Products
Bamboo ProductsininNE
NE

FASAR Key Corporate Assignments

North
NorthIndia
Indiabased
based
Large
LargeCorporate
Corporate
Group
Group

Entry
EntryStrategy
Strategyfor
forFresh
Fresh
Produce
Business
Produce Businessand
and
Securing
Backward
and
Securing Backward and
Forward
ForwardLinkages
Linkages

Leading
LeadingIndian
Indian
Corporate
Corporate

Diversification
Diversificationinto
into
Organic
Farming
Organic Farmingofof
Fruits
Fruits&&Vegetables
Vegetablesand
and
Entry
into
Bio
fuels
Entry into Bio fuels

Leading
LeadingIndian
Indian
Conglomerate
Conglomerate

Roping
RopingininaaStrategic
Strategic
Partner
for
Distribution
Partner for Distribution
ofofFruits
Fruits&&Vegetables
Vegetablesinin
European
EuropeanMarkets
Markets

Leading
LeadingIndian
Indian
Corporate
Corporate

Entry
Entryinto
intoRural
Rural
Retailing
with
Special
Retailing with Special
Attention
AttentiontotoAgri
AgriInputs
Inputs

Setting up the first state of the art Integrated AgroFood Park in the Country in Andhra Pradesh

Leading
LeadingIndian
Indian
Seed
SeedCompany
Company

Raising
RaisingGrowth
GrowthCapital
Capital
for
Fresh
Produce
for Fresh Produceand
and
Retail
Business
Retail Business

Leading
LeadingFood
Food
Ingredients
IngredientsPlayer
Player
Formulating
FormulatingIndia
India
Strategy
Strategy

Leading
LeadingShipping
Shipping
Conglomerate
Conglomerate

Business
BusinessPotential
Potentialfor
for
Gamma
Irradiation
Gamma Irradiation
Application
ApplicationininFood
Food
Industry
in
India
Industry in India

South
SouthIndia
Indiabased
based
Project
ProjectDeveloper
Developer
Implementation
Implementationofof
Integrated
IntegratedAgro
AgroFood
Food
Parks
in
Andhra
Parks in Andhra
Pradesh,
Pradesh,Tamilnadu,
Tamilnadu,
Karnataka,
Karnataka,Kerala,
Kerala,
Pondicherry
Pondicherryand
and
Maharashtra
Maharashtra

Integrated Agro Food Park - Concept

Unique first of its kind integration of various
agribusiness value chain components
Spatial clustering of different agro-production
chains
Spatial combination of agro-processing and
non-agro functions (building, industrial estate
or region)
Scale increase in production further enables
industrial processing
Application of principles of industrial ecology,
i.e. mutual use of waste and by-products
Clustering approach to attract leading foreign
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
Tremendous scope for Rural transformation
and rural employment generation

RT
C
RT
C

RT
C

AGRO FOOD
PARK

RTC

Consolidation Centre

Consumers

Clustering and Networking

provides context for sustainable innovations

RT
C
RT
C

Rural
Transformati
on Centre

Agroproductio
n- and
processing
Park

Consolidatio
n Centre

METROPOLE

METROPOLE

Intelligent Agrologistic Networks combining

Consolidation Centres, Agroparks and RTCs

Concept (contd.)
Rural
Transformation
Centers

Production

So

c ia
l

Utilities &
Services

Modern Farm Clusters

Green Houses
Livestock farms
Mushroom Nursery

i ng

FP Zones

Agribusiness
Mgt. Trg. Inst

AFP

R
&
D

Convention Center
IT/ Library
Training Center

Cold Stores
Ripening Chambers
Warehousing

Commissaries &
Packaging

Terminal Markets
Logistics
Rural
Transformation
Centers

e ss

R&D
Incubation
QCL

Agro tourism
Wellness &
Nutrition

Common
Infrastructure

Pro
c

Rural
Transformation
Centers

Commercial
Complex

Trade

Rural
Transformation
Centers

Concept (contd.)
Village
Village

Village
Agri Clinic
Food &
Entertainment

Realty
Primary Health
Center

Collection Center

Rural
Transformation
Centers
At Mandal Level
Popln: 5000 - 10000

Commercial
Rural Mart
Office Space

Mentoring
Training
Farm Credit
Micro Finance

Smart Card
Green Port

Village

Village
Village

Market-Oriented Food Production

Chains
Distribution
Centre
Primary
processing
Centres
Collection
Points

Domestic
markets

Collection
Centres

Farmers

Collection - Value Adding Distribution Centres:

Increase employability
Add quality and value
Link farmers to retail
Open new markets

Export markets

Retail

Market-Oriented Food Production

Chains (contd.)
Distribution
Centre
Retail
Primary
Processing
Centres
Collection
Points

Domestic
markets

Collection
Centres
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

Value Adding
Centres
Collection
Points

Collection
Centres

Retail

Domestic
markets

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
Dairy
Product

Cattle +
Milk

Fodder

Payment
(Milk+FodderModern
Loan-Feed)
Livestock Farm

Cattle Loan

Farmers

Margin Money

Distribution
Centre

Payment
from the
market

Feed

Payment of Milk
(Market Price)
Payment Of Cattle
Feed (Market Price)

Consumers
Domestic
Markets

AFP
Cattle Loan
Repayment

Export
Markets

Financial Flow
Bank

Strategic Partnerships

Strategic
Strategicalliance
alliancewith
with
Alterra,
Alterra,aaleading
leading
international
international
knowledge
knowledgeinstitution
institution
and
andpart
partofof
Wageningen
Wageningen
University
UniversityResearch
Research
Center,
Center,Netherlands
Netherlands

For
Forimplementation
implementationofof
Integrated
IntegratedAgro
AgroFood
FoodParks
Parks

MoU
MoUwith
withNational
National
Institute
Instituteofof
Agricultural
Agricultural
Marketing
Marketing(Ministry
(Ministryofof
Agriculture,
Agriculture,GoI)
GoI)

For
Forundertaking
undertakingStrategic
Strategic
Advisory
Advisoryand
andConsultancy
Consultancy

MoU
MoUwith
withNABARD
NABARD
Consultancy
ConsultancyServices
Services
(NABCONS)
(NABCONS)
For
Forjointly
jointlycarrying
carryingout
out
Strategic
Advisory
Strategic Advisory
assignments
assignmentsininthe
theareas
areas
ofofFood
&
Agribusiness,
Food & Agribusiness,

Agri
AgriInfrastructure,
Infrastructure,etc.
etc.

Strategic
StrategicAlliance
Alliance
with
withAgriculture
Agriculture
Insurance
Insurance
Corporation
CorporationofofIndia
India
(AIC)
(AIC)
For
Forco-developing
co-developing
insurance
insuranceproducts
products
suitable
for
the
suitable for thefarming
farming

community
communityacross
acrossIndia
India

Conceptualization to Implementation
Dedicated state level initiative to enable project development
Public Private Finance Initiative (PPFI)
Work with state governments to accelerate implementation of preapproved 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 !