AGrI and FOOD PROCESSING

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AGrI and FOOD PROCESSING
NABARD Kerala

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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 40
Dairy Products 5
Grain Mill Products 10
Beverages 20
Other Food Products 25

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Advantage India
FRUITS VEGETABLES
India is the worlds 2nd largest producer of
fruits and vegetables production to rise from
227MT currently to 377MT by 2021
MILK MILK PRODUCTS
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
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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Indian Food Processing Industry
Unorganised Sector 42
Small scale Industries 33
Organised Sector 25
Unorganised sector (includes SSI) contributes 75
by volume and 50 by value.
Value Chain in Food Processing
Retailing
Production
Procurement Storage
Processing
Inputs
Seeds, Fertilizers, Farm Equipment
Farmers, Cooperatives, Companies
Warehouses, Cold Storages
Primary (cleaning, grading, packing,
etc.) Secondary (product conversion)
Malls Retail shops Cash Carry

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Major Food Processed in Kerala

• Spices
• Marine Products
• Cashews
• Coconuts
• Cocoa,
• Coffee and Tea
• Fruits like banana and pineapple

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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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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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FOOD PROCESSING FUND 2014-15

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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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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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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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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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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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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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Lending Terms
Sl. No Borrowing entity Max. loan ( of TFO) Rate of interest ( p.a) Security
(i) State Governments 95 As applicable for RIDF (Bank Rate less 1.50) State Government Undertaking
(ii)   Entities promoted by State Govts. (with Govt. Guarantee) 95   As applicable for RIDF (Bank Rate less 1.50) Primary security, Govt. guarantee and collateral security as acceptable to NABARD

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Lending Terms
Sl. No Borrowing entity Max. loan Tenure of loan RoI ( p.a) Security
(iii) Entities promoted by State Govts. (without Govt. guarantee) 95 Up to 7 years PLR Risk Premium Primary security and collateral security as acceptable to NABARD
(iv) Private Sector 75 Up to 7 years PLR Risk Premium Primary security and collateral security as 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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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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Repayment
Borrowing entity Total repayment period Grace period Nature of installments Remarks
State Governments 7 years 2 (fixed) Annual Each installment of release is a separate loan and has separate repayment schedule
State Agencies (with Govt. Guarantee) 7 years 2 (fixed) Quarterly / Half-yearly / Annual (as per cash flows)
PLR-based Up to 7 years Up to 2 years (based on cash flows) Quarterly / Half-yearly / Annual (as per cash flows)
_at_ In all cases, interest shall be paid at quarterly intervals, including the moratorium period. _at_ In all cases, interest shall be paid at quarterly intervals, including the moratorium period. _at_ In all cases, interest shall be paid at quarterly intervals, including the moratorium period. _at_ In all cases, interest shall be paid at quarterly intervals, including the moratorium period. _at_ In all cases, interest shall be paid at quarterly intervals, including the moratorium period.

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Other Aspects

• Evaluation Fee
• No fees for RIDF-based lending
• Fees _at_ 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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• THANK YOU

Picture

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• UPNRM

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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 management (including livestock
  and aquaculture resources)?
• Climate change adaptation / CDM

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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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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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Rate of interest on UPNRM loans

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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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• financing cold chain infrastructureunderwarehous
  e infrastructure fund

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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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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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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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WIF 2014 -15- Financing terms and conditions
Type of Borrower Maximum Quantum of Loan ( of TFO) Tenor of loan (Years) Rate of Interest ( p.a.) Security/ Documentation
A Loans with RIDF rate of interest Loans with RIDF rate of interest Loans with RIDF rate of interest Loans with RIDF rate of interest Loans with RIDF rate of interest
1 State Governments (loans to Finance dept. under article 293(3) ) 95 07 Prevailing RIDF rate of interest Government undertaking.
2 State Owned Corporations (loans outside article 293(3) 95 07 Prevailing RIDF rate of interest Government Guarantee Primary Collateral Security, etc.

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WIF 2014 -15- Financing terms and conditions
Type of Borrower Max. Quan. of Loan ( of TFO) Tenor of loan (Years) Rate of Interest ( p.a.) Security/ Documentation
B Loans with interest rates based on Prime Lending Rate ( PLR) Loans with interest rates based on Prime Lending Rate ( PLR) Loans with interest rates based on Prime Lending Rate ( PLR) Loans with interest rates based on Prime Lending Rate ( PLR) Loans with interest rates based on Prime Lending Rate ( PLR)
1 State/Central Govt. Owned/Assisted Entities (without Government guarantee)/ Cooperatives, FPOs, SPVs set up under PPP mode, etc., 95 07 PLR RP Primary Collateral Security, Assignment of rentals receivable and any other unencumbered receivables, Debt Service Reserve etc.
1 State/Central Govt. Owned/Assisted Entities (without Government guarantee)/ Cooperatives, FPOs, SPVs set up under PPP mode, etc., 95 7 years PLR RPTP Primary Collateral Security, Assignment of rentals receivable and any other unencumbered receivables, Debt Service Reserve etc.
2 Private Companies/ Corporates/ Individual Entrepreneurs etc. 75 07 PLR RP Primary Collateral Security, Assignment of rentals receivable and any other unencumbered receivables, Debt Service Reserve etc.
2 Private Companies/ Corporates/ Individual Entrepreneurs etc. 75 gt 7 years PLR RPTP Primary Collateral Security, Assignment of rentals receivable and any other unencumbered receivables, Debt Service Reserve etc.
ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS ABOVE SEVEN YEARS APPLICABLE ONLY FOR WIF LOANS
- PLR Prime Lending Rate, RP Risk Premium,
TP Tenor Premium.

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• Producers Organisation

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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

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What POs can offer End to end solutions !!
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What POs can offer End to end solutions !!
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NABARD COMPREHENSIVE SUPPORT PROGRAMME

• Credit support
• In the form of loan to POs
• Term loan
• Working Capital Term Loan
• 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
• Capacity Building Includes Human resource
  development and organizational development.
• II. Market Linkages
• III.Others (DPR preparation, administrative
  expenses etc)

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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 11 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.

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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
• Present range 10.25-12 based on collaterals
  provided
• 10.25 in case of 100 collateral

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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

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