AGRI AND FOOD PROCESSING
NABARD Kerala
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Taking Rural India >> Forward
Indian Food Processing Industry & Potential
• Food Processing Sector is the 5th largest Manufacturing Industry
• Contributes 9% to the manufacturing sector
• Contributes 1.5% to GDP
• Indian Food Processing Industry (2012) - Rs. 8 lakh crore
• Estimate by 2015 : Rs. 12 lakh crore
• Important Segments
Meat, Fish, Fruits, Vegetables & Oils
Dairy Products
40%
5%
Grain Mill Products
Beverages
Other Food Products
10%
20%
25%
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Taking Rural India >> Forward 2
Advantage India
FRUITS & VEGETABLES
MILK & MILK PRODUCTS
India is the world’s 2nd largest producer of fruits and vegetables;
production to rise from 227MT currently to 377MT by 2021
With 133 MT (P) in FY13, India is the largest producer of milk in the world
MEAT & POULTRY
India is the largest producer of buffalo meat (1.5 MT*) and the second
largest producer of goat meat (0.6 MT*)
MARINE PRODUCTS
With 9.1 MT production in FY13, India is the second largest producer of
fish in the world
GRAIN PROCESSING
India produced about 259 MT of food grains in FY13
CONSUMER FOOD
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Among the fastest growing segments in India and includes (i) Packaged
Foods (ii) Aerated Soft Drinks (iii) Packaged Drinking Water and (iv)
Alcoholic Beverages
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Taking Rural India >> Forward 3
Indian Food Processing Industry
Unorganised Sector
Small scale Industries
42%
33%
Organised Sector
25%
Unorganised sector (includes SSI) contributes 75% by volume and 50% by value.
Value Chain in Food Processing
Inputs
Production
Seeds, Fertilizers,
Farm Equipment
Farmers,
Cooperatives,
Companies
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Procurement
& Storage
Retailing
Processing
Warehouses, Cold
Storages
Primary (cleaning,
grading, packing, etc.)
Secondary (product
conversion)
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Malls
Retail shops
Cash & Carry
Taking Rural India >> Forward 4
Major Food Processed in Kerala
• Spices
• Marine Products
• Cashews
• Coconuts
• Cocoa,
• Coffee and Tea
• Fruits like banana and pineapple
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Taking Rural India >> Forward 5
Food processing potential identified -Kerala
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Coconut Park
Rice park
Activated carbon plant
Modern Cold Storage
Coconut based food processing plant
Modern rice mill
Individual Quick Freezing (IQF) facility
Meat processing unit
Medicinal plants preservation and processing centre
Coconut oil mill and refinery
Mango processing
Marine food park
Ready to Eat (RTE) products
Bioethanol from Cashew Apple
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Taking Rural India >> Forward 6
NABARD Support to Processing Sector
• Refinance
• Rural Infrastructure Development Fund
• Umbrella Programme on Natural Resource Management
• NABARD Infrastructure Development Assistance
• Warehouse Infrastructure Fund
• Producer Organisation Development Fund
• Off Farm Sector Development
• Food Processing Fund
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Taking Rural India >> Forward 7
FOOD PROCESSING FUND 2014-15
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Taking Rural India >> Forward
Operationalization of Fund
• Corpus contributed by Scheduled Commercial Banks
• NABARD to finance directly or through consortium
financing.
• Lending rate and margin on loans to State Governments
and Government entities on par with RIDF lending
• Loans to private sector at rates not below PLR of
NABARD
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Taking Rural India >> Forward 9
Eligible Institutions / Entities
• State Governments
• Entities promoted by State Governments (with or without
Government Guarantee)
• Entities promoted by Government of India, Joint
Ventures,
SPVs,
Cooperatives,
Federations
of
Cooperatives, Farmers’ Producer Organizations (FPOs),
corporates, companies, entrepreneurs, etc.
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Taking Rural India >> Forward 10
Designated Food Parks (DFPs)
• Food Parks promoted by MoFPI
• Mega Food Parks promoted by MoFPI
• Food Parks/food processing industrial estates
promoted by States
• Food processing/ agro processing/ multi products
SEZs and de-notified areas of these SEZs
• Any area having infrastructure and designated as
Food Park by MoFPI
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Taking Rural India >> Forward 11
Eligible Projects
• Creation of infrastructure required in the DFPs
• Augmentation of existing infrastructure in the DFPs
• New processing units in DFPs
• Modernization of existing processing units in the
DFPs
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Taking Rural India >> Forward 12
Eligible Processing Activities / Units
• Activities resulting in value addition and/or
enhanced storage life
• Units
requiring
product
processing
(primary/secondary)
• All types of products as per MoFPI guidelines
(horticulture, milk, meat, fish, cereals, oilseeds,
confectionery, convenience foods, ready-to-eat
foods, nutraceuticals, health foods, etc.)
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Taking Rural India >> Forward 13
Eligible Project Components
• Land (up to a max. of 10% of land cost reckoned towards project
outlay)
• Site development
• All civil works, covering core and non-core buildings,
internal roads, fencing / boundary wall, etc.
• Plant and machinery, equipment and other fixed assets
• Miscellaneous fixed assets
• Technology transfer fee and other consultancy charges
• Preliminary and pre-operative expenses
• Capitalized working capital for one operating cycle, etc.
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Taking Rural India >> Forward 14
Lending Terms
Sl.
No
Borrowing entity
Max. loan
Rate of interest
(% of TFO)
(% p.a)
As applicable
for
RIDF
(Bank Rate less
1.50%)
As applicable
for
RIDF
(Bank Rate less
1.50%)
(i)
State
Governments
95%
(ii)
Entities
promoted by State
Govts.
(with
Govt. Guarantee)
95%
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Security
State
Government
Undertaking
Primary security, Govt.
guarantee and collateral
security as acceptable to
NABARD
Taking Rural India >> Forward 15
Lending Terms
Sl.
No
Borrowing entity
Max. loan Tenure of
loan
(iii) Entities
promoted by State
Govts.
(without
Govt. guarantee)
95%
(iv) Private Sector *
75%
Up to 7
years
Up to 7
years
RoI
(% p.a)
Security
PLR** + Primary security and
Risk
collateral security as
Premium acceptable to NABARD
PLR** + Primary security and
Risk
collateral security as
Premium acceptable to NABARD
• Entities promoted by Government of India, Joint ventures, SPVs, Cooperatives, Federations of Cooperatives,
FPOs, corporates, companies, entrepreneurs, etc. ** Prime Lending Rate
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Taking Rural India >> Forward 16
Lending Rate to Private Sector
• Linked to PLR of NABARD and Risk Rating of
Borrower
• PLR of NABARD to be worked out by ALCO
quarterly
• Risk Rating of the Borrower
• Risk premium to be based on Risk Rating
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Taking Rural India >> Forward 17
Repayment
Borrowing entity
Total
Grace period
repayment
period
State
Governments
7 years
2 (fixed)
State Agencies
(with Govt.
Guarantee)
PLR-based
7 years
2 (fixed)
Up to 7
years
Nature of
installments
Annual
Remarks
Each installment of
release is a separate
loan and has separate
repayment schedule
Quarterly / Halfyearly / Annual (as
per cash flows)
Up to 2 years Quarterly / Half(based on
yearly / Annual (as
cash flows) per cash flows)
@ In all cases, interest shall be paid at quarterly intervals, including the moratorium period.
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Taking Rural India >> Forward 18
Other Aspects
• Evaluation Fee
• No fees for RIDF-based lending
• Fees @ 0.25% of Project Cost, subject to a min. of Rs. 2 lakh and a
max. of Rs. 30 lakh for PLR-based lending
• Annual Monitoring Fee
• No fees for RIDF-based lending
• Expenses on undertaking technical, financial and legal
inspections undertaken during the currency of the loan, either
by NABARD or through a LIE / LLC appointed for the specific
purpose, shall be reimbursed by the borrowing entity to
NABARD.
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Taking Rural India >> Forward 19
THANK YOU
Picture
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Taking Rural India >> Forward 3
UPNRM
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Taking Rural India >> Forward 3
Other Aspects
• A) Core Activities
• Soil and water conservation
• Plantation and horticulture (tree based farming, Bamboo based farming, wadi
development,organic farming, energy plantations)
• Forestry activities (rehabilitation and management /Community Forest
management, biodiversity conservation)
• Farming systems
resources)
management
(including
livestock
and
aquaculture
• Climate change adaptation / CDM
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Taking Rural India >> Forward 22
Sectors Covered
b) Supplementary / support areas
 forward and backward linkages and livelihood generating activities;
processing, storage, marketing, supply chain
 critical rural infrastructure (including rural roads, minor irrigation,
drinking water)
 renewable energy (micro/mini-hydel, biomass based power generation,
biofuels, wind-power, solar power)
 livelihood generating activities (dairy, poultry, fisheries, etc)
c) Information & Knowledge Management (IKM) and Capacity
Building
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Taking Rural India >> Forward 23
UPNRM Guiding Principles
• Pro-poor
(improves employment, reduces poverty, improves access to
credit, information, entitlements)
• Ensuring sustainability
(conserves / augments NRM base of the
region, prevents degradation)
• Good Governance
(Equity in ownership and access and use of
resources, decentralized decision making, accountability and transparency)
• Community
participation
(ownership
/
management/
empowerment)
• Integrated approach
(need-based and flexible, convergence with
other schemes / programmes)
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Taking Rural India >> Forward 24
Rate of interest on UPNRM loans
Type of
funding
Project
finance/
bulk
finance
Channel
Partner
Type of Projects
Projects implemented thru’
NGOs,
Cooperatives CBOs (where loan is passed
on to rural people directly or
, MFIs
through POs);
Projects implemented
directly (without onlending to people)
State Govt
www.nabard.org
9%
10 -12 %
Corporates
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Rate of
interest
9-10%
8.5%
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Taking Rural India >> Forward 25
UPNRM – Special Features
contd…
• Investment loan
– various NRM measures, associated livelihood activities, related infrastructure
and marketing chain management, etc
• Working Capital / Revolving Assistance
– Value addition and supply chain management
– Production of raw material, Procurement and stocking of produce, Processing and packing,
Marketing inventories, distribution, etc
• Grant support
–
–
–
–
Proposal development
Capacity building
Community mobilisation
Cost of expertise
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Taking Rural India >> Forward 26
FINANCING COLD CHAIN INFRASTRUCTURE
UNDER
WAREHOUSE INFRASTRUCTURE FUND
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Taking Rural India >> Forward 3
Eligible Projects
 Cold chain for Horticulture Products
 Pack houses / Integrated Pack houses (washing, grading, waxing,
packing, etc.)
 Pre-cooling Units (with / without staging cold rooms)
 Standalone cold storages / CA Storages / MA Storages
 Refrigerated vehicles (reefer vans/ reefer trucks)
 Freezing / Individual Quick Freezing Units
Integrated Cold Chain Projects
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Taking Rural India >> Forward 28
Eligible Items of Project Cost (indicative)









Land (up to a max. of 10%)
Civil works (core and ancillary)
Plant and Machinery
Equipment and Miscellaneous Fixed Assets
Technical consultancy charges
Preliminary and pre-operative charges
Interest during construction
Cost contingencies
Capitalized working capital for one operating cycle
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Taking Rural India >> Forward 29
Sectors eligible
•Sectors prioritized by GoI.
•Loans to Public and Private Sector.
•Private Sector* includes all agencies
without Govt.
guarantee.
•Loans to State Govts. & Govt undertakings with State
Government guarantee on RIDF terms.
•Loans to Private Sector – PLR based interest rate.
* - Central Government /State Government undertakings (without guarantee), Joint ventures,
SPVs, Federations of Cooperatives, FPOs, Corporates, Companies, Entrepreneurs etc.,
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Taking Rural India >> Forward 30
WIF – 2014 -15- Financing terms and
conditions
Type of Borrower
Maximum
Tenor of
Quantum of loan (Years)
Loan
(% of TFO)
Rate of
Interest
(% p.a.)
Security/ Documentation
A
Loans with RIDF rate of interest
1
State Governments
(loans to Finance dept.
under article 293(3) )
95
07
Prevailing Government undertaking.
RIDF rate
of interest
2
State Owned
Corporations (loans
outside article 293(3)
95
07
Prevailing Government Guarantee +
RIDF rate Primary & Collateral
of interest Security, etc.
dsm@nabard.org
13 Oct 2014
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Taking Rural India >> Forward 31
WIF– 2014 -15- Financing terms and
conditions ………
Type of Borrower
Max. Quan. of Loan
(% of TFO)
Tenor of loan
(Years)
B Loans with interest rates based on Prime Lending Rate ( PLR)
1 State/Central
Govt.
95
07
Owned/Assisted Entities (without
 7 years
Government
guarantee)/
Cooperatives, FPOs, SPVs set up
under PPP mode, etc.,
2 Private Companies/ Corporates/
75
07
Individual Entrepreneurs etc.
> 7 years
Rate of Interest
(% p.a.)
Security/ Documentation
PLR*+ RP*
Primary & Collateral Security,
of
rentals
PLR+ RP+TP* Assignment
receivable and any other
unencumbered receivables,
Debt Service Reserve etc.
PLR*+ RP*
Primary & Collateral Security,
of
rentals
PLR+ RP+TP* Assignment
receivable and any other
unencumbered receivables,
Debt Service Reserve etc.
ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS
dsm@nabard.org
*- PLR – Prime Lending Rate, RP – Risk Premium, TP – Tenor Premium.
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Taking Rural India >> Forward 32
Producers Organisation
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Taking Rural India >> Forward 3
DEFINITION OF PRODUCER ORGANIZATIONS
 Formed and owned by a group of producers for either
farm or non-farm activities
 It is a registered body and a legal entity
 Producers are shareholders in the organization
 It deals with business activities related to the primary
produce/product.
 It works for the benefit of the member producers
 Portions of profit are shared amongst the producers and
the balance goes to the share capital or reserves
Presentation6.pptx
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
34
What POs can offer – End to end solutions !!
Input
Supply
Services
• Supply of seeds, fertilizers, pesticides, agri
implements, etc
Financial
Services
• Provides/facilitates for loan for crops,
purchase of agri implements, etc
Technical • Promote best farming practices, marketing
Services
information System, skill upgradation, etc.
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
What POs can offer – End to end solutions !!
Insurance
Services
• Various insurance like Crop Insurance, Life
insurance, etc
Procurement
& Packaging
Services
• Procurement, storage, marketing, value addition
and packaging
Marketing
Services
• Direct marketing to reduce income leakages
Networking
Services
• Making channels for information (product
specification, market prices, etc
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
NABARD COMPREHENSIVE SUPPORT PROGRAMME
A. Credit support
I. In the form of loan to POs
i. Term loan
ii. Working Capital Term Loan
iii. Composite Loan (term loan + working capital)
II. Assistance to Implementing Agency for on lending to PO
Credit Support to implementing agencies like NGOs, Vas, Trusts (instrumental in forming
SHGs, Farmer federations, clusters, other cooperatives/POs) and financial institutions
including , subsidiaries like ABFL, ADFT and NABFINS participating in value chain process,
for on-lending to POs, farmers/artisans groups or clusters such as SHGs, JLG, federations
and farmers clubs.
B. Credit plus support – in the form of grant, subject to a cap of maximum 20%
of loan amount
I. Capacity Building: Includes Human resource development and
organizational development.
II. Market Linkages
III.Others (DPR preparation, administrative expenses etc)
Presentation6.pptx
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
37
NABARD COMPREHENSIVE SUPPORT PROGRAMME
III. Lending to Producer Organisations for Contribution to
Share Capital
Model –I: Lending to Producer Organisations for Contribution
to Share Capital
Model – II: Lending to the promoting agency which in turn can
lend to the members of the PO
Features:
Capital: loan would be at 1:1 basis.
Cap on loan amount would be Rs. 25 lakh.
Further cap of Rs. 25000/- per member
Repayment 5-7 years with 1-2 years moratorium period.
`
Presentation6.pptx
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
38
DETAILS OF FINANCIAL ASSISTANCE
 Quantum
Limited to 90% of total financial outlay
 Mode
Loan for taking up of economic activity along with grant or
loan or a blend of both for capacity building
 RoI -As decided by ALCO


Presentation6.pptx
Present range: 10.25-12% based on collaterals provided
10.25 % in case of 100% collateral
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
39
ELIGIBLE INSTITUTIONS
PARTNERSHIP WITH CORPORATES, LINE DEPARTMENTS,
NGOS, CBO
 Support to Supply Chain from Primary producer to
retailer/ultimate consumer
 Support to value addition
 Encourage feeder/suppliers to retailer chains like Big
Bazar to form/promote POs avail assistance under PODF.
 Subsidiaries/Ancilliaries of larger entities/corporate
business houses can promote POs and avail assistance
under PODF
Presentation6.pptx
ഗ്രാമീണ ഭാരതത്താട ാപ്പം പുത്രാരതിയിത്േക്ക്
Taking Rural India >> Forward
40