“We believe that for supply chains to function efficiently and limp back to normalcy, quickly, there needs to be availability of working capital. Having a separate liquidity line or nudging the Public Sector Banks to prioritise lending to entities that are working in the agricultural supply chains to create this liquidity is important.”
This crisis can bring in opportunities if utilised well. This is the time to focus on important aspects of bringing about fundamental changes in supply chains and the agri sector as a whole, which otherwise might not get the attention given our focus on the urgent things that bother us here & now. Here are a few suggestions that can bring about corrections in the linkages:
As an agri-value chain enabler, Samunnati has been providing working capital solutions to stakeholders across the agrivalue chain. We believe that for supply chains to function efficiently and limp back to normalcy, quickly, there needs to be availability of working capital. Having a separate liquidity line or nudging the Public Sector Banks to prioritise lending to entities that are working in the agricultural supply chains to create this liquidity is important. National procurement agencies like etc., can also play an enabling role in making working capital available to players facilitating the movement of agricultural goods. When procurement is done from Farmers or FPOs and supplied to these national procurement agencies, there could be entities that can discount these receivables other than Banks. We need to look at whether can these agencies make direct payment to these funding entities since the sellers have already received their money.
The guidelines on eNAM for FPOs released are very enabling. All the three major steps taken go a long way in enabling supply from the producer to the respective buyers. There will still be the necessity for aggregation of produce given that majority of our farmers are smallholders producing small quantities that fall short of a threshold volume for a meaningful aggregation / transportation cost. We believe that FPOs are well poised to play this role of being aggregators. Entities working with FPOs need to be supported with logistics and liquidity so that they further make sure that the FPOs provide valuable services to their members.
[box type=”shadow” align=”” class=”” width=””]Contributor: Anil Kumar SG, Founder and CEO, Samunnati[/box]
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fabulous post, i love it