Aggois : last-mile financing for small-holder farmers /
Procurement based on the MSP route provides an avenue of assured and stable returns to farmers. In an RBI survey conducted in 2018, more than 50% farmers identified "MSPs for crops" as the most helpful scheme. However, the delayed payments on the sold produce pose a challenge to the farmer...
| Main Authors: | , , |
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| Format: | eBook |
| Language: | English |
| Published: |
London :
Indian Institute of Management, Ahmedabad,
2024.
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| Series: | SAGE Business cases.
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| Subjects: | |
| Online Access: | Connect to the full text of this electronic book |
| Summary: | Procurement based on the MSP route provides an avenue of assured and stable returns to farmers. In an RBI survey conducted in 2018, more than 50% farmers identified "MSPs for crops" as the most helpful scheme. However, the delayed payments on the sold produce pose a challenge to the farmers who, faced with tight and limited budgets, seek immediate capital for their expenses and impending production cycle. To ease this burden, Aggois provides receivable financing to farmers for the produce sold at MSP. Aggois began with an experimental model in which they could help farmers get better prices for their produce by reducing the rejection rates from large buyers. While the pilot was successful, they decided to discontinue their operations and explore other ways of fulfilling their purpose, as (a) they wanted to work with farmers at the ground level, as compared with the current engagements with traders; and (b) poor experience with buyers with inconsistent policies. Field interactions with farmers brought to light their needs, challenges and aspirations, connected to their primary source of livelihood-agriculture. Some key constraints identified were-tight operating budgets, trade-off between price and timely payments, high interest rates on loans, lack of financial literacy and management skills and lack of access to storage and financial products. The team at Aggois decided to look at the problem of farmer financing-particularly, the lack of receivables financing, which left them no option but to choose between two bad alternatives i.e. high rates with delayed payments under MSP or prompt payments at lower rates in private transactions. The product was named RapidPay and the value proposition was two-fold: (1) Provide liquidity to farmers for their next crop immediately post-harvest; and (2) Make it economically beneficial by providing them the option to sell at MSP and get financing at much lower rates of interest than local moneylenders. |
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| Physical Description: | 1 online resource : illustrations. |
| ISBN: | 9781071941423 1071941429 |