Page 47 - Banking Finance July 2023

ARTICLE

Agriculture Value Chain in India of important stakeholders in strengthening agriculture and
promoting sustainability across the value chain. Hence, it is
In India, agriculture system along with value chain
imperative to develop policies and initiatives that can act
framework has not been conceived as a main strategy to
as empowering tools for them.
bring more efficiency, productivity and earnings. There has
not been enough emphasis on the growth and development
Future of Agriculture Value Chain Finance
of efficient agricultural value chains in India. Through the
A value chain is about linkages generating value for the
development of modern agriculture value chains at national
consumer. The productivity, efficiency and depth of
and regional-levels, farmers in India can gain from increased
agricultural value chains are important elements driving
knowledge, data, and information and communication
commercial agriculture and agribusiness. A value chain
technologies.
approach in agricultural development helps identify weak
points in the chain and actions to add more value. Agri start-
The agriculture sector is at the cusp of a transformation with
ups and Fin-techs can revolutionise the AVCF. They can help
the launch of the One District One Product (ODOP) scheme,
to provide agile, efficient, low cost and differentiated
the Central Sector Scheme of Formation and Promotion of
experiences to the VC players. They can democratise the
10,000 Farmer Produce Organisations (FPOs) and the PM
existing services like invoice-based trading, Trade
Formalisation of Micro Food Processing Enterprises Scheme.
Receivables Discounting System (TReDs), digital connectivity
within the agrivalue chains, blockchains, etc. (RBI 2019).
However, while such efforts shall drive linkages and fair
remuneration, their impact can be further strengthened by
Conclusion
addressing the overall sustainability of value chains.
Sustainability in agriculture is going to be a key focus area A national level policy on agri value-chain coupled with
for future generations as it will ensure the availability of suitable financial architecture and infrastructure is needed
sufficient resources. Hence, stakeholders in the agriculture to make Indian agriculture, especially the small holder
sector should prioritise balancing the present needs with farmers more vibrant and prosperous. Agricultural markets
appropriate and sustainable measures for future need to be more competitive, and farmers should be free
generations. to market their produce to any entity on mutually agreed
terms. Competition is a key to building value chains, and
In the Indian context, there are lacunae in extending equal anything which restricts competitive practices, protects
benefits to all the agricultural stakeholders as women, monopolies and reduces transparency should be identified
children and adolescents are largely at a disadvantage due and removed. To make the value chains global, it will be
to limited resources and knowledge. Despite access to important to shortlist products where India has a
limited opportunities, the vulnerable groups can play the role competitive advantage and identify specific need for
investments and policy action.

Such a policy will need to consider the complementary
competence of farmers, co-operatives and FPOs as well as
public and private sector players. Value chain finance has
an important place in agricultural finance that augments,
but does not replace, conventional finance; most important
is its comprehensive, structured and market-
competitiveness approach, which complements
conventional finance, increasing access to capital and
reducing risk for both clients and financiers. Innovation and
disruption are the buzz words for Agriculture Value Chain
Finance revolution.

Reference
Various Sources.

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