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A Presentation on EMERGING OPPORTUNITIES IN
AGRICULTURAL FINANCE By Sri S S BHAT General
Manager Priority Credit Financial Inclusion
Wing, H.O. Bangalore
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Overview of Indian Agriculture

• Our Food Production has been stagnating since
  2001-02
• It is time we started the next round of green
  revolution
• Agri Business and Agri Processing should drive
  the second round of Green revolution with
  diversification of crop production
• Developed countries have converted their
  agriculture into Agri-Business

• .

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Contd..

• India is in the threshold of transforming its
  Agriculture into Agro-Processing due to
• Huge emerging domestic market with change of
  lifestyle of people
• High potential for exports to developing/
  developed countries
• Agri-Business to create job opportunities in
  Rural Areas

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Agri credit-as enabler of increased farm
productivity
Outline of Issues Agriculture growth, an urgent
priority -Flow of credit to agriculture is
critical closely monitored Reducing size of
land holdings- affecting viability of
farming Poor capital formation at farm
level-little credit beyond production
credit Emerging opportunities give the edge
for building viable models Much criticism-Banks
predominant short term Production credit a
little term loan
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Canara Banks initiatives in agricultural finance

• Delivery initiatives-
• Hi-Tech Agri Finance branches, Agri focus
  branches with AEOs Agri Finance Cells
• Agri-Business Marketing Units
• Marketing reaching Corporate managements
• Agriculture Consultancy Services
• To provide Consultancy services for
  formulation/appraisal of projects
• To take up viability study-of existing projects
  /stimulus/rehabilitation packages

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STRATEGIES FOR INCREASING AGRICULTURE LENDING

• Identify borrowers through Extensive Credit
  Camps.
• Cluster Approach to be adopted.
• More thrust to Term Loans and investment loans
  under Agri Projects
• Garner Agri-Corporate accounts by involving
  ABMOs.
• Popularise Value Chain Finance, Contract Farming
  and Hire Purchase of Farm Machineries
• Encourage post harvest finance.

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Indian Agri- Business as an investment

• Corporates Both Indian and Multinational
  identifying agro processing as an opportunity.
• Scope for Joint ventures with global players.
• Huge potential for infrastructure creation like
  cold storages, chilling plants, market yards and
  handling facilities.
• Encouraging Contract Farming including organic
  farming.

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• Investment by venture capitals.
• Channel financing and financing modern retail
  outlets
• Private Agri -extension initiatives
• Organic farming
• Going for Hi-Tech Agriculture like Floriculture,
  Tissue Culture, Aquaculture.

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STRATEGIES FOR CHOOSING PROJECTS
Individual would chose a project which. -
Gives more benefit than cost - Maximum rate
of return among alternatives - Adequate return
in quickest possible time

• Banks would choose projects which would....
• Give enough incremental income to repay principal
  interest
• Leave some surplus to improve standard of living
  of farmers
• Give quicker return to borrowers
• Sufficient Cash Generation for repayment
  obligation.

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Agro Based Industries

• Project Financing
• Appraisal of Projects Syndication of
  Loans
• Long term Loans in local currency and foreign
  currency for buildings, machinery, technology
  upgradation.
• Working capital facilities
• Export financing
• Term Loans for Upgradation of existing units to
  adopt modern technology/ Standards

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Financing opportunities for Commercial Banks

• Post harvest management
• 1/3rd of fruits and vegetables produced in the
  country are wasted due to poor cold storage and
  handling facilities.
• Cold Chains controlled atmosphere cold storages
  for fruits and vegetables, Milk chilling plants,
  Refrigerated vehicles
• Creation of market yards and other infrastructure
  
• Financing quality testing and certifying agencies
  
• Labeling and Packaging industry

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• Food parks with common facilities for storage,
  effluent treatment etc.
• Finance against goods stored in warehouses in
  association with Collateral Management Companies.
  
• Bill discounting facilities to agriculturists
  against acceptance of Bill of Exchange by the
  purchasing company.
• Opportunities in price risk mitigation using
  commodity derivatives.

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FINANCING OPPORTUNITIES
Contract Farming / Tie-up arrangements

• Sugar cane
• Cotton
• Broiler Poultry
• Seed Production
• Grapes
• Vegetables
• Gherkins
• Dairy
• Aqua Ventures
• Spices Processing
• Rubber Farming
• Winery Units

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Agro Based Industries

• Some examples
• Seed production
• Fruits and vegetables processing Vineries
• Food grain processing
• Meat and meat products, Egg powder
• Marine exports
• Extraction of oleoresins, Natural dyes
• Extraction of aromatic compounds
• Bio fertilizers, Bio pesticides
• Bio Technology

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AGRO BASED INDUSTRIES

• FOOD GRAIN PROCESSING
• - Flour Mills, Wheat atta/suji, Rice Mill, Corn
  flakes
• PROCESSING OF FRUITS VEGETABLES
• - Mango, Pineapple, Litchi, Guava etc. for pulp
  production with aseptic packaging for exports
• FREEZE DRYING OF PRODUCTS (IQF)
• - Potato chips, French fries, Peas, Culinary
  Herbs

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• WINERY UNITS
• - French varieties of grapes
• SEA FOOD PROCESSING
• Tiger prawns, Shrimps other fish products
• PROCESSING OF MILK
• - Processed Milk, Cheese, Butter, Ice Cream etc.
• PROCESSING OF MEAT MEAT PRODUCTS
• - Poultry, Lamb, Pork etc

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• Aromatic Medicinal Plants
• - Extraction of essential oils / compounds viz.
  Ashwagandha, Rosemary, Coleus, Patchouli
• Spices Condiments
• - Extraction of Oleoresins
• Bio Diesel Production
• - Jatropha, Pongamia
• Natural Dyes
• - Annato

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• POST HARVEST MANAGEMENT
• - Rural Godowns, Warehouses promoted by Govt.
• Cold Chains
• Controlled Atmosphere Cold Storages
• Milk Chilling Plants
• Refrigerated Vehicles
• Irradiation Plants Use of gama rays to improve
  shelf life - Cereals, Pulses, Meat, Onion, Potato
  etc.

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• Capital Investment Assistance (Subsidy)
• - National Horticulture Board (NHB)
• - Agricultural and Processed Foods Export
  Development Authority (APEDA)
• - Department of Agriculture Co-operation
• - National Horticulture Mission

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To sum up-

• Agriculture growth, a priority for an inclusive
  growth.
• The road ahead offers a promising opportunity as
  well as challenge for Indian Agriculture.
• The role of banks more specifically the Field
  level Officers ( AEOs/ROs) is crucial in
  providing the much needed credit for capital
  investment and meeting the need of Rural Poor.
• Visualise the emerging business opportunities and
  be a proud partner in ushering in another era of
  excellence in agriculture production.

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