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Agri financing rises in fourth quarter of FY 2021, with large procurement

Agri financing rises in fourth quarter of FY 2021, with large procurement

Agriculture financing has rises in the current fourth quarter of fiscal year 2021, with large processors, exporters and traders in paddy and groundnuts entering into procurement and pledge financing.

Leading agri-financing companies have said that the pledge to finance sugar has also been taken as the sector is set to witness higher production.

Sandeep Sabharwal, the Chief Executive Officer (CEO) of Sohan Lal Commodity Management (SLCM), said: ‘Last year, at the time of the arrival of rabi crops in the mandis, a lockdown was imposed which led to uncertainty in commodity trading. At Kissandhan, our wholly-owned agri-financing subsidiary, we saw an overall decline of 40-45 per cent in Agri-Financing off-take. In Q3, the business impact was around 25-35%. However, things have begun to improve over the current quarter and the overall impact on the business will fall to 10-15% compared to FY20.”

Throughout the company’s warehousing and collateral management business, the volumes were severely affected by the lockdown restricting the movement of workers and goods transportation, he said. “However, from the second half of the fiscal year, business has shown a positive rate of growth and business volumes have more than doubled compared to the second half of the fiscal year 2019-20.’

Also Read: FY 2021-22 will recover from Covid-19 with ‘V’ shaped graph – FM

The ongoing farmers’ protest and unusual weather heavy rains last year, just before the soya harvest season, affected supply chains and logistics for a short period of time. Farmers’ protests began around October and November last year, at a time when the wheat crop was due to be sown in Punjab and Haryana, and had an impact on the agri-credit off-take, said Sabharwal.

Unseasonal heavy rains before the soya harvest caused almost 20% damage to the crop, creating an imbalance in the demand and supply scenario, resulting in a lack of use of the agri-funding facility by value-chain stakeholders.

‘However, things have started to improve as large processors, exporters and traders in paddy and groundnuts have begun procurement and pledge financing. Sugar production is anticipated to go up this time compared to last year, resulting in more funding under pledge,’ told SLCM Group CEO.

Prasanna Rao, CEO of Arya Collateral, which is into providing finance through an integrated platform alongside storage solutions, said that the company is expected to finance the loans at more than Rs 300 crore through its Fin-Tech platform in this fiscal year. Arya is offering loans against the electronic commodity balance pledged as collateral. It also helps farmers to sell their products by linking them to buyers on its platform.

Also Read: India’s Agri Credit Target elevated to ₹ 16.5 lakh crore in the budget 2021

It is expected to disburse more than Rs 700 crore in FY22, Rao said. In India, the seven states of Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Uttar Pradesh, Punjab and Haryana account for the highest demand for agricultural financing.