Can Supply Chain Finance Improve Indian Agriculture?
It’s not at all an exaggeration that we are largely dependent on our Indian agriculture to keep things running in our country. But, is there anything that can be done to improve this sector in terms of finance?
Supply chain finance is a new form of financing that can help farmers and food manufacturers overcome their challenges with raising capital. It is a type of debt that allows companies to raise money in an efficient manner and use it to finance the purchase of inputs they need for the production process. This helps them improve their cash flow cycle, enables the crops to grow faster and sell more products at better prices if they did not have access to supply chain financing.
Seems quite intriguing right? To give you a better idea, in this Adesh chaurasia latest news, we’re going to elaborate on how supply chain finance can improve Indian agriculture!
What is Supply Chain Finance?
“Supply chain finance” is a term that describes a variety of financing tools used by businesses in the supply chain to manage their cash flow. Some examples include:
- Working capital
- Inventory financing
- Receivables financing (in which you borrow money against receivables) and more.
But, what does it mean in agricultural supply chains? Supply chain finance is a financial service that helps farmers and food manufacturers to get credit for their operations. It is also known as a type of financing that helps with working capital which can reduce post-harvest losses in the supply chain.
How does it Work in the Agricultural Sector?
Supply chain finance is a type of working capital financing. It’s used by businesses to finance the movement of goods from the point of origin to the point of consumption. The term “supply chain” refers to the fact that there are multiple stages in this process, each stage contributing something different:
- Origin (The farmer)
- Processing (A manufacturer or distributor)
- Exporting (A buyer who will buy your product at wholesale prices and then sell it at retail prices).
These are the main three pillars of any agricultural supply chain. However, there can be more than one hand in the exporting stage, but things can vary depending from farmer to farmer!
What would be the Benefits?
It’s no secret that India has a lot to be proud of. But there are also some things we can improve on. One area where we have fallen behind is supply chain finance which is essential for farmers and small businesses alike.
Supply chain finance offers many benefits to farmers: it helps them reduce post-harvest losses, improve farmer returns, access credit more easily, increase their income and thus, improve food security—all while making it easier for them to sell their produce in markets around the country or abroad.
This will help farmers increase their productivity, grow more food, and improve food security. Raising capital has always been a challenge faced by farmers, food manufacturers, and exporters, who often lack access to working capital to facilitate their operations. This can be an ideal solution for them!
How Supply Chain Finance can directly help Farmers?
The process of raising capital is a challenge faced by farmers, food manufacturers, and exporters who often lack access to working capital to facilitate their operations.
For example, it has been reported that the average farmer spends 15–20% of his/her annual income on debt repayment and interest payments. This translates into losses in productivity because of delayed planting or cultivation due to the inability (or unwillingness) to pay off loans on time. On top of this, most farmers have high levels of debt with banks and other creditors (e.g., state governments). As a result, they can’t take risks when investing in new technologies or equipment which would improve their yields or profitability significantly over time. If implemented correctly at scale across multiple farms within a region, country, etc.
In this Adesh chaurasia latest news, we have seen the upsides of supply chain finance for Indian agriculture. Supply chain finance is a great tool to aid in the growth of the Indian agriculture sector. It can help farmers access capital, reduce post-harvest losses and increase their productivity. There are many challenges that need to be addressed but once these are solved we will see a rise in crop yields as well as increased investment in research and development across all industries. But, if we take one step at a time, nothing will be impossible!
Also, read- How Technology is the Driving Force for the Transformation of the Agricultural Sector?
Author- Adesh Chaurasia
A superior and highly experienced entrepreneur in the field of business for quite a long time now. Also, a philanthropist, author, and public speaker who believes in working towards the overall well-being and betterment of society as a whole.