Agri Value Chain - BASIX

Fin4ag ConferenceNairobi, 16th. July 2014

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The BASIX Mission…..

To promote a large number of sustainable livelihoods, including for the rural poor and women, through the provision of financial services and technical assistance in an integrated manner

BASIX will strive to yield a competitive rate of return to its investors so as to be able to access mainstream capital and human resources on a continuous basis.

Evolution of Financial Structure

Soft Loans from Donors & Development Banks(GTB, CIDA-DID, CordAid, SIDBI, ICICI, HDFC)

1996-98 Grants and Soft Loans from Donors (Sir Ratan Tata Trust, Ford Foundation, Swiss Agency for Development Cooperation)

1998-2000

2001

2001 onwards

2007-08

Equity Investment(IFC, Shore Bank, Hivos Triodos, ICICI and HDFC)

Loans from Commercial Banks(ICICI Bank, HDFC Bank, ABN Amro, ING Vysya)

Mainstream Equity

Context..

Indian Market Research Bureau

(IMRB) impact assessment study

(2001) on credit customers revealed that

– 52% showed increase in the income

– 25 % reported no change in the income levels

– 23% reported decline in their income levels

Review of BASIX Work

The reasons

• Low Productivity

• Un-managed Risk

• Low Price Realization / Access to Market.

Credit is necessary but not a sufficient condition for

livelihood promotion

BASIX framework

BASIX utilizes financial, human and intellectual capital to work towards brining equality of opportunity and social justice

Collaborative PolygonWe propose collaborating with players having domain expertise to provide

………Financial Services

Linkages with Banks & MFI’s Training & Extension

Agril Universities, Ag. Research Stations, Agril Departments,

Digital Green, Agriwatch,

Institutions

NGO’s, village govt. & other village level community Institutions

Service Providers

Artificial Insemination, Vaccination, Soil testing,

Insurance

Output Market

Linkages to organised buyers, processors etc..

Input Supply

Agri Input companies, wholesalers', dealers,

Enhance competencies, Reduce transaction costs and Reduce risk for farmers by integrating all services

FARMERS

The task is too complex for any single actor. Hence there is a need for multilateral partnerships or “Collaborative Polygon”. However, it is useful for one actor to be the anchor, who understands both development & finance markets for the Collaborative Polygon to work.BASIX tries to play that role.

BASIX Approaches in Agri Value Chain

Identify the Sub Sector / Value Chain

Undertake ActionResearch / Study • Livelihood Profiling• No of HH’s engaged• Economic contribution from that subsector• Strengths and Weaknesses

Identify & Address the Bottlenecks • Establish collaboration• Develop successful intervention on revenue model

Scaling up Phase• Scale up the intervention • Undertake impact assessment• Improve the design

Enterprises/ Commercial Farmers

Direct LoansJoint Liability Groups / Farmers Producer Organizations

Farmers Producer Organizations

Micro-Enterprises/ Small Farmers

Marginal Producers

Market Segment

Method

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Credit Delivery Channel

Farmers’ Producers’ organization (FPO)

Cereals /Vegetable / Pulse growers

Farmers Interest Group (FIG)

Farmers Interest Group (FIG)

Farmers Interest Group

(FIG)

Cluster Committee Cluster Committee

BLOCK

FPO

DISTRICT

• One FIG = 10-20 Farmers.• One village = 1- 4 FIG (15 to 60 Farmers)• One FPO = 15-20 Villages (45-60 FIG with 600 to 1200 farmers).

Package of Services to Crop customers• Productivity

Enhancement through Package of Practices – Soil testing, Vermicompost

and Integrated Nutrient Management

• Risk Mitigation– Seed treatment, Stem

application, Integrated Pest Management

• Local Value Addition– Semi-processing (e.g.

ginning of cotton, shelling of groundnut pods)

• Alternate Market Linkages for better prices (Super Spinning Mills, NCDEX)

• Establishing/strengthening farmers’ cooperatives for input/output marketing

Enhanced Production in Cotton

Linked with Market

Livelihood

Financial Services

Cotton crop technical Services

Institutional Development

Services

Farmers

Ginning

BASIX – Cotton Value Chain

Lint

Pressing unit-

Conversion to Bales

Farmers

Farmers

National Commodity Derivatives Exchange(NCDEX )

Trading Platform

Formed into cotton Producer

Group

BASIXWarehouse Receipt

BANK

Loan

Assured PriceSeeds,

Fertilizers,

Pesticides

NCMSL Godowns

Supper Spinning Mill

Dairy Value Chain: BASIX - Reliance Dairy Company Collaboration

DAIRYFARMERS

INP

UT S

UP

PLY

BASIX OU

TP

UT M

AR

KET

RELIANCE

Milk supplied toBulk Milk Coolers

Financial & Dairy Extn

Services

Potato Value Chain

Frito Lays India Limited

Potato Growers

BASIX

Credit Ext. services Gr. formation

Potato

Seed

Buy back arrangeme

nt

Some other Value Chain Interventions

1. Dairy Value Chain Intervention – Reliance Dairy Foods

– 1000 farmers; 30 villages– 50 Producer Groups formed– Credit, Vet. Services, Market linkages

2. Vegetables Intervention – ITC– Push carts were provided by ITC– Credit, Crop extension services – Market Linkages

3. Sweet Orange Market Linkages – Reliance Fresh

– Credit– Extension services– Market Linkages

4. Mango Market Linkages – Jain and Other players

– Mango cluster developed – Credit– Extension services– Market linkages

BASIX Outreach – Agri Value Chain Finance•No. of customers: 1.05 million•Amt. disbursed (million USD): 230•Repayment: 97%

• Input Side– Lack of quality seeds– Timely access to inputs

• Production– Lack of improved Farm Equipment use– Production volumes Vs. price– Lack of improved PoP– Weather, Diseases

• Post Harvest– Transport and handling related losses– Lack of Storage facilities– Lack of primary sorting, grading

Major Constraints

• Markets– Distress sales– Distant markets leading to middlemen– Internal finance based sales– Lack of market information

• Processing– Quality adherence– Technology and Equipment aspects– Assured supply and Inventory management– Branding and Marketing

Major Constraints – contd..

BASIX Collaborators

Thank You

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Head Office3rd Floor, Surabhi Arcade, Bank Street, Koti, Hyderabad 500 001TelenganaPhone: + 91-40-3917-2500 Fax: + 91-40-3917-2502Website : www.basixindia.com

Registered OfficeD 9, First Floor, Greater Kailash Enclave - I, New Delhi 110 0 48.Ph: 011 4173 0252 , 011 4173 0454    Website : www.basixindia.com