Download Key Issues - Rural Finance

Key Issues
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Agriculture and Agribusiness go far beyond production and marketing; value chains and
their linkages are complex
Variables like the quality of land, availability of water, weather (factors like rainfall,
temperature etc.), availability of input resources etc. significantly affect the production
Growth in the agriculture sector is stagnant (2%); while GDP is 9 %. To maintain the overall
growth it is critical for India to invest in the agriculture sector. Such investments in
agriculture are also critical for making the growth inclusive
Millions of small and marginal farmers do not adequately participate in the value chain;
many more could become competitive through value chain linkages, some will need
transition to outside of agriculture
Primary producers realize just about 30-35% value of their produce
Infrastructure in the rural areas is a major concern and has a huge potential for
investments.
Present agro produce marketing system is inefficient and fragmented. Few supply chains
are established, making it difficult for the banks to finance
There is a knowledge gap:
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Improved cultivation techniques
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Markets
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Prices
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standards, quality, timings etc.
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Access to credit
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Information
Knowledge exists but its dissemination and application to strengthen public
understanding and provide conducive policies is lacking
Ideas, Possible Solutions and Strategies...
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knowledge is the key element for each stakeholder involved in the
agriculture value chain, including government (built on better practices,
developed in collaboration with global and local experience – FAO,
UNCTAD, etc.)
Investments should be for creating and sustaining growth in agriculture and
rural development
Supply chain model holds significant potential for the growth
Application of innovative ideas
 ICT (DrumNet, e-Choupal, Kisan credit card, KCC,Kisan Bandhu)
 Risk management tools (Crop and weather risk insurance, futures and
options)
 Service providers (integration of facilitator companies into value chain)
 Group Aggregates (farmers associations, SHG links)
 Financing models (contractual farming, warehouse receipts, collateral
management, leasing, equity finance, supply and structured commodity
finance
 National spot and futures exchanges
 Focus on practical options and modalities of mitigating risk
Bridge the gap between the public, private sector, involving all actors from
farmers, to agribusinesses, traders, financiers and government