To make the agriculture
sector productive it is necessary to ensure food security, controlled inflation
and social inclusiveness. To explore the real worth of the agro-based industry,
it is imperative to invest in new technology, modernization, and food
processing, to promote value-added products and widen exports and business.
Due to intricate
structure of food sector and prolonged gestation process, raising funds is
somewhat a challenge. Given this, the government had included food processing within
the parameters of ‘priority sector lending for banks’.
Role
of Nabard
For International Finance
Corporation, agri-business has become a priority due to its contribution to
food security. Nabard, created in 2006-07, worked as a window to offer refinance
for loans paid out to food processing industry particularly agro-processing segment,
development of market, and follow-up initiatives, leading to enhanced refinance
for the sector. The stats suggest that the refinance support offered by Nabard reached
1,310 crores in the year 2006-10.
Valuable Stats
The credit-linked
subsidiary schemes floated by the Government of India for the cold storage
sector, agri-sector infrastructure and rural godown got these subsidiary schemes
that consolidated post-harvest linkage and raw material repository for
processing units and invited fresh credit flow to the sector. In this effort
the total bank loan granted under Ciss reached 5,422 crore.
The overall growth
in ground-level credit for agribusiness raised from 1,80,486 crore, which was in
2005-06, to 3,66,919 crore in the year 2009-10 and it has strengthened the raw repository
for food processing, as per the government records.
Addressing
the Requirements
The financial needs of agribusiness companies differ from business to business. As per the MD of
Nabard, Gopalan usually the financing needs are working capital, equity capital
or long and term debt financing. Working capital, which is very crucial for the
growth of many agribusiness firms, can be met through several instruments like bank
loans or commodity-driven financing.
The major financial
requirements of any agribusiness include:
- Procurement of agrochemicals, seeds and farm machinery etc
- Allied Agriculture project finance for dairy, poultry, warehouse, greenhouse, godown, and farm building construction.
- Production of crop loan, irrigation, land development, plantation crops, etc.
- Processing of post-harvest mechanisms like sorting, grading, storing, packing and value-addition.
- Marketing, branding, promoting, sampling, selling and other promotional expenses.
- Consultancy for agri-clinics, agribusiness centers, etc.
Synopsis
Given the above
agribusiness requirements, one of the most popular instruments that can provide
a long term financial support is venture capital firms in India. Venture capital funds in India are growing and venture capital firms are finding
agriculture sector to be more profitable in the present scenario and are ready
to invest in this sector.
