Institutional Synergies for People-Private Partnership: Agri-business
Approach for Small Farmers
Raghavendra Mandavilli
Senior Manager
Public and Social Policies Management (PSPM) Group
International Conference on Agricultural Governance,18th Dec
Agriculture to Agribusiness
Agricultural Value Chain implies the chain from farm Gate to Farm Plate…
…However Agribusiness Value Chain corresponding to above activities are following
Inputs
Production
Procurement
AGRI - INFRASTRUCTURE
Processing
Retailing
2
Transition from Agriculture to
Agribusiness
FOCUS
• Focus on few crops rather than efforts
dispersed across crops and regions.
• Efforts should be market driven (including
state research) & not supply driven
REMOVAL OF
STRUCTURAL
BARRIERS
•Multiple
intermediaries
•Absence of
serious
entrepreneurs
•Information
transparency
•Facilitate
consolidation
of land holdings
ATTRACT
PRIVATE
PLAYERS
1
2
TRANSITION TO
AGRIBUSINESS
4
CREATE ADEQUATE PHYSICAL
INFRASTRUCTURE
3
• Investor
support for
creating an
enabling
environment
•PPP approach
for project
development
•Physical agri-infrastructure should be geared up
to service processing industry & exports
3
Solutions lie in integrated steps
Technological
intervention
right from
quality seed
production to
efficient
warehousing
and
professional
packaging is the
only way to
address these
issues
Implementing
the available
technology and
also research
and
development of
further
technology
needs
investment
Investment
required for
effective
changes in
agriculture
knowledge and
infrastructure
capital
development
can only be
done through
private
investment
Mobilizing
private
Investment
needs effective
Government
policy
directives that
can be attained
through
institutional
change
PPP in case of
agriculture is
not only
government
and private
corporate tie-up
but needs to
also include the
farmer SHG’s
and
cooperatives
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Governance Systems – The Need for Innovative
Institutional Mechanisms
The secret to tapping the potential that
India holds for upscaling both production
and consumption lies in effective
institutional partnerships wherein:
• Collaborative community structures like
co-operatives or FPOs are established onground to ensure social equity with
agricultural growth
•The Public Sector utilizes its delivery and
infrastructure capabilities
Public Sector:
Delivery,
Infra,
Institutions to
promote
consumption
Private
Sector:
Production,
Consumer
Interface
R&D
Collaborative
Community
Structures
• The Private Sector utilizes its technical
and management expertise to optimize
production, as well as lead in R&D
processes
• An institutional structure to promote and
create awareness on consumption of
pulses
An effective People Public Private
Partnership (PPPP) to streamline
Production & Consumption
5
Governance Systems – The Need for Innovative
Institutional Mechanisms
• The needs are so high for both for resources and management, that PPP mode is a necessity to
arrive at a sustainable solution.
• PPP models have the ability to efficiently cover the last mile in a long-haul problem.
Delivery of
inputs and
services to
farmers
Technological
interventions
Skill
upgradation of
farmers
Procurement of
produce
Extension of
improved
package
Seed
production
Crop-insurance
& credit
delivery
Resource
relevant farm
mechanization
Key Areas
for Private
Sector
Participation
Development
of natural
resources
6
Farmer Producer Organizations (FPOs) – As a means for
Institutional Innovation in Agriculture
Agri –cooperatives
 Collaborative community model of
They have been
successful small
in spreading
producers,
especially
and
education and awareness
marginal farmers, into producer
organizations
Results are not remarkable in case of
Credit access & Business viability for
medium and long term. They are often
Effective
pathways
to subsidies
address &the
relying on receiving
grants,
loan waiver.
many
challenges of agriculture but
most importantly, improved access to
investments, technology inputs and
market.
No of Small Farmers in India
120
115
 Aggregators of Farmers Producer
Organizations (FPOs) can have
improved
access
of
through
collaborative community model
Millions
110
105
No of Small Farmers
100
95
90
85
2000-01
2005-06
2010-11
Source: Agri census-2011 ; Image courtesy- The Hindu
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PPPP: The Way Forward
PPPP: People – Private- Public- Partnership is the only sustainable
way to achieve capital formation in Agriculture.
 Being a marginal economy where supply increase is not matched with
immediate consecutive demand and as we do not have established
trade lines, it is necessary to have enough infrastructure to stop
wastage of agriculture produce
 Infrastructure can only be achieved through Capital formation
 Given domestic and international economic condition, it
expected to raise the capital required by the government
is not
 To achieve sustainable economic growth, one thing that India does not
have is time
 All
these macro issues can be addressed through PPPP. With more
awareness and pressure on land including local people in ground level
policy is of utmost importance.
8
New Win-Win Business Model
The models should create a win-win situation for rural industry,
rural communities, private investors and the economy as a whole
Proposed New Business Model:
Social Equity Model
Based on the principle of
Public Private Partnership
(PPP)
Implemented/ operated
through Cooperatives
Financing is easier with either Government, Co-operatives or bigger corporates taking
a part in the Agricultural Chain
9
Social Equity Model
Local Community
Agro – Corporate
Capital & Overall
Management
•Branding
•Additional revenue
that can be ploughed
back
•Land & Capital up to
say 10% stake in the
project (Social Equity)
• Part Management
•Employment
•Empowerment
•Additional Income
PROJECT
•Govt funding programmes
• Fiscal Concessions
Government
•Funding
Meeting certain social
•Management
goals
•Providing feasible
solutions
NGO(s)
Financial Institutions
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Business Merits of Social Equity Projects
Financial Services
• Due to the scale of operations, makes access to finance
easier in relation to standalone agricultural practice
Input Services
• Low cost quality inputs by ensuring the participating
agriculture input companies
Procurement & Packaging
Services
• Procurement of agriculture directly by retailers, processing
companies, exports
Marketing Services
•Direct marketing after procurement of agriculture produce
Insurance Service
• Better risk management strategies through weather
insurance and price hedging
Technical Services
• Access to latest technology, marketing information system,
and post harvest infrastructure
Networking Services
•Making channels of information (about product
specifications, market prices) programmes
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Project Development through FPOs
Knowledge
delivery
Technology
Delivery
Research
Institution
Investment
SPV
Knowledge
Bank
Financial
Institutions
Marketing
Strategy
Partner
Credit
Insurance
Innovative
Structure
FPOs
Cooperative Equity
PPP Agriculture Project
Tie-up with Food Processing
Companies
Retailer, Exports
Consumer
12
Impact Investing - Financial Scaling through FPOs
•Regulatory
Reforms
Consumer Orientation
FPOs
•Infra
Development
Market Linkage
•Credit
Deliverance
Market
Development
Commodity Trading
Agri Infra & Logistics,
cold chain
Price
Competitiveness
Financial Services
Research & Extension
Farmer Linkages
Streamlined
Supply Chain
Institution & Community
led Innovation
Agricultural
Practices/method
Action Steps
Source: YES BANK Analysis
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Conclusion
Institutional changes are required to enable to such People – Public –
Private Partnerships to be implemented
Stakeholders involvement is critical for the success of such
partnerships and hence the structure should be flexible
Land consolidation is a major issue which needs to be addressed
taking in to account the interests of all stakeholders
Pilot projects need to be taken up to further streamline operational
issues that may arise
Agriculture is the backbone of Indian economy and we need to address the issues fast
to empower the Primary Sector
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Contacts
YES BANK Limited
Northern Regional Corporate Office: 48 Nyaya Marg, Chanakyapuri, New Delhi 110 021
Tel: + 91 11 6656 9000; Fax: +91 11 4168 0144
Public and Social Policies Management (PSPM) Group
Tushar Pandey, Senior President
Northern Regional Corporate Office: 48 Nyaya Marg, Chanakyapuri, New Delhi 110 021
Tel: + 91 11 6656 9056; Email- tushar.pandey@yesbank.in
About YES BANK
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Disclaimer
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Registered & Corporate Office: Nehru Centre, 9th Floor, Discovery of India, Worli, Mumbai 400018
Tel: + 91 22 6669 9000; Fax: + 91 22 6669 9018
Northern Regional Corporate Office: 48 Nyaya Marg, Chanakyapuri, New Delhi 110 021
Tel: + 91 11 6656 9000; Fax: +91 11 4168 0144
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