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– How to make it big in Agri Business

– How to make it big in Agri Business

Last updated on: October 29, 2005 at 2:53 pm by Desh Kapoor

– How to make it big in Agri Business 2005-10-29T14:53:37-05:00 Desh Kapoor

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Rediff.com

Highlights:

Are you an agriculture graduate and looking for a job? Here is an opportunity for you to become an agripreneur at a low investment, instead of working under somebody.

And you can get trained for your business by Terra Firma Biotechnologies Ltd, a Bangalore-based biotechnology firm.

Terra Firma, a government of India-recognised agricultural training centre, has mooted what it calls Farmer’s World, a supermarket chain to be run by agriculture graduates who have trained to become agripreneurs.

It is being jointly promoted by Small Farmers Agri Business Consortium, a society under the union ministry of agriculture.

Farmer’s World will be a one-stop shop selling all farm produce under one roof.

“We are promoting this concept as an answer to MNCs like Metro and large retail chains like FoodWorld and Big Bazaar. Our chain will not only provide backward and forward linkages to farmers, agripreneurs and consumers, but also avoid middlemen,” says Terra Firma managing director R Ganesh.

To begin with, Farmer’s World will be set up at 30 centres covering the major districts of Karnataka.

It hopes to take the model to other states once it is successful. Each district will have at least one centre and all the centres will be integrated to a central hub located in Bangalore.

The ultimate aim is to provide job opportunity to at least 5,000 agriculture graduates, who will be linked with each other.

The entrepreneurs can place their order with the central hub and get delivery within 24 hours through a transport network being organised by Terra Firma.

The central hub will help in creating a farmers’ input (seeds, fertilisers, bio-pesticides) supply chain, render marketing and other services required by farmers and the agripreneurs, act as an information kiosk and impart technical know-how and extension service.

Each local centre will be constituted as a private limited company, with agriculture graduates as its directors. The initial cost of each centre will be Rs 80 lakh {Rs 8 million (estimate made by SFAC)}.

The agripreneurs will contribute Rs 800,000 as promoter’s equity, National Bank for Agriculture and Rural Development will give a subsidy of Rs 20 lakh (Rs 2 million) under a programme of the National Horticultural Board, SFAC will provide a venture capital loan of Rs 12 lakh (Rs 1.2 million) at zero per cent interest, which is payable after the repayment of bank loan, and a term loan of Rs 40 lakh (Rs 4 million) will be raised from commercial banks.

Leading banks such as ICICI Bank, Vijaya Bank, HDFC Bank, Canara Bank and Syndicate Bank have come forward to finance these projects. Over and above all this, the state agriculture and horticulture department will provide up to 20 per cent subsidy.

Terra Firma is presently conducting a market study and logistics survey and hopes that the network will be in place within six months.

The company will act as a nodal agency, identifying and training entrepreneurs, conducting market surveys, preparing the detailed project report for each centre and help in setting up the centres and monitoring the scheme. “We act as a service provider.

“We will earn Rs 50,000 per entrepreneur towards preparing the detailed project report, which will be given by the SFAC and not the entrepreneur directly. This is optional. If any entrepreneur wants to do the report himself, we have no objection,” says Ganesha.

Terra Firma will also manage the logistics chain. Initially, 24 lorries including four freezer containers and six canters of 5 tonnes will be running from north to south with two drivers in each lorry.

The 30 centres will be divided into three routes with 10 districts covered by each. The transport network will ensure a truck visits each centre every six hours.

Terra Firma expects that each entrepreneur will make a business turnover of about Rs 2 crore (Rs 20 million) annually, on which it plans to charge service fee of about 2-3 per cent. “This will not be a permanent arrangement. It is not compulsory for them to rely on our support,” adds Ganesha.

The company has not made any significant investment in the project except an initial Rs 500,000 on setting up a consultancy firm employing eight persons. Its main job will be to prepare project reports on behalf of the agripreneurs and helping them get them bank loans.

It, however, expects to make a gain of Rs 30 lakh (Rs 3 million) annually after expenditure towards overheads, maintenance of the processing hub, broadband and real estate charges.

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