Agri Finance Consultancy to Farmers: Crucial to Bridge the Knowledge Gap

By Anil Patil

Over the years, India has moved away from subsistence farming to commercial farming. Along with this, the farmer has transformed into a commercial entrepreneur from just a grower of food grains. This change has forced him to make higher investments for quality seeds, fertilisers, equipment and automated irrigation, and plant protection systems. With higher investments, there also came higher risks. Hence, he has to look for risk mitigation systems and ideas so that he is financially safe.

Land, labour and capital are traditionally considered as factors of production. Under the category of labour, management also comes in. Often, in all three segments of economy viz, primary (agriculture and mining), secondary and tertiary, the knowledge gap affects success and profitability very much and more so in the agriculture sector. Hence, there is a need for external consultancy to bridge the knowledge gap. The consultants specialises not only in state-of-the-art technology but also in commerce, marketing, legal aspects and in event management.

Role of a Consultant

Essentially, consultant should be a friend, philosopher and a guide to a farmer. He should not have any interest in selling his products like fertilisers, irrigation systems etc. He should sincerely support the cause of farmer’s productivity and profitability.

Unlike in the medical sector, farmers cannot afford services of plant pathologists, entomologists, agronomist, horticulturists, etc separately purely for financial reasons. Hence, a consultant has to play multiple roles himself and he can consult, in turn, other subject matter specialists. For the same reason, consultants should offer end-to-end services/turnkey services to farmers. Essentially, entire consultancy services can be further classified into several sub heads:

Counselling: This is the first and essential part of consulting. Here, data collection and SWOT analysis of the entrepreneur happens. Consultants gauge what solution fits into farmer’s or agriprenuer’s problems. This is more important for the first generation agriprenuers, who are not aware about the nuances of agribusiness.

Feasibility: A feasibility report has to be prepared for understanding technical and financial feasibility of a given project. The role of a consultant here doubles as does the role of agriculture subject matter specialists and a financial consultants. All the cost parameters and components of agribusiness have to be listed in the report with the active participation of farmers. A consultant here has to contribute the missing links, visualise what fits him, sizes, farmers’ investing capacity, economies of scale, agro climatic suitability, farmer’s convenience, capability to manage, market issues like demand and supply for the produce, seasonality of market, etc. Consultants also have to revisit all the issues of feasibility reports to ensure correctness.

Funding: The third stage of consulting is funding. Here, based on the feasibility report, a farmer/agri-entrepreneur approaches commercial banks, seeking funds. For this, consultants should have prepared the feasibility report in such a way that farmer/agri-entrepreneur will not face any hassles and the funding agency will not find any shortfall in the information provided, for processing and sanction of funds. However, if any query is raised by the funding agency, consultant should pitch in and offer necessary clarifications.

Execution: At this stage, a consultant has to visit the location of project, and re-adjust the plan based on practical necessities. Many new and unexpected issues like non-availability of certain inputs, new ideas and seasonal issues may crop up, demanding continuous re-adjustment from a consultant. Often to save cost, some entrepreneurs resort to depending only on the given feasibility report. This will pose several problems leading to higher risks. There can be turnkey executions which may be outsourced to agencies. In such cases, consultants have to ensure that all components of the project are as per plan.

Thus, consultancy proves to be an ongoing continuous process. The services and costs towards consultancy will be justified by assured and higher income.

Anil Patil is a post graduate in horticulture and has nearly 35 years of experience in technical aspects of agri projects, agri project financing, banking, commerce and legal aspects.