Agro-business challenges

Developing people-based agro-business in remote, tribal areas poses many challenges:

  • Lack of infrastructure facilities such as tarred roads and assured electricity supply limits the potential for earning best returns from perishable commodities. Typically, daily aggregation of vegetables for transportation and sale in wholesale markets, or establishment of processing units requiring continuous supply of electricity, is not feasible in many remote areas.
  • Developing a people-based agro-business organisation on a large scale requires considerable business acumen and market intelligence. These capacities may not be  readily available in the project area, or in the project staff.
  • There is necessarily an element of risk involved. Deciding optimum risk-return level for poor primary producers requires much consultation and exercise of judgement. A typical business dilemma is a lucrative bulk purchase offer made by a new or unknown buyer.
  • There can be considerable annual fluctuation in production and prices of horticultural produce, due to weather and market changes, and other reasons. Business plans have to take into account unpredictable highs and lows.
  • While new and emerging people-based agro-business organisations may be able to tap institutional finance to meet working capital needs, they would initially find it difficult to get funding at low rates of interest for making large capital investments in processing facilities, etc.
  • Processing facilities have to strictly adhere to food standard norms; setting up such facilities in remote areas, giving staff appropriate training and maintaining quality standards can be challenging.
  • As new organisations with small equity capital base, run by people with limited exposure to modern markets, people-based agro-businesses in remote areas cannot quickly gain benefits of branding; nor may they be in a position to tap emerging global market opportunities, or raise finance through the equity route.
  • The emergence of large supermarket chains, which buy directly from producers, poses an opportunity as well as a threat to local agro-business in remote areas.

These challenges have to be considered at the planning stage of a Wadi project itself, and the project team has to include professionals with suitable experience and expertise.

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