Aryadhan - An assisted Fintech solution for Post-Harvest finance needs of smallholder farmers and FPOs
Stage of adaption :
Crop Planning Stage
Availability of finance is one of the key challenges faced by farmers, FPOs and small aggregators. The impact of this gap has been tremendously aggravated in the aftermath of the COVID-19 pandemic. Aryadhan specialises in offering post-harvest loans against warehouse receipts to farmers, FPOs and smaller entities through its wide network of accredited warehouses. It offers an assisted Fintech platform that enables sanctioning of a warehouse receipt loan to borrowers at their doorstep within a few hours with assistance from our field executives. The technology just requires borrowers to have their Aadhar Card or any other valid KYC document. It carries out defined credit analysis without any external invention and confirms sanction electronically. It has pre-defied parameters for more than 40 commodities and estimates eligibility automatically. Loans are disbursed against commodities stored in a nearby approved warehouse within a maximum of 24 hours from storage. The platform is now integrating artificial intelligence (AI) to assess the quality of the commodities. Loans of upto 70% of the commodity value are extended at attractive interest rates. For FPOs Aryadhan also helps set up flexible warehousing structures (Flexible Hermetic Storage technology solutions https://www.aryacma.co.in/admin/files/Arya-FHS.pdf ) at their doorstep where ready warehouses are not available. This ensures seamless availability of storage and credit for FPOs and farmers at the farm gate.
Farmers are normally forced to sell their produce at distress values immediately after harvest due to lack of post-harvest finance availability. Warehouse receipt finance is a viable structure to address this challenge. However, we have not seen a large penetration of this product for the benefit of farmers. Traditional Banks have been servicing only larger traders, processors and corporates under their lending schemes. The fintech platform of Aryadhan ensures seamless availability of post-harvest credit to farmers and FPOs at their doorstep with minimal physical documentation. It also ensures minimal physical contact between the lenders and borrowers. Other ancillary benefits include bundling with flexible warehousing structures to overcome the challenge of shortage of warehousing space close to the borrowers. A price risk mitigation guarantee for FPOs is also expected to be launched soon in a partnership between Aryadhan and Rabobank Foundation. This guarantee would cover FPOs from any losses arising from downward price movements upon storage of commodities.
Deployed in large scale
The platform has serviced more than 700 borrowers including 60 FPOs with membership of more than 40000 farmers. It has disbursed about INR 200.0 crores to these borrowers. Aryadhan focusses on servicing the post-harvest financing needs of farmers, FPOs and small aggregators in distant primary and secondary agriculture centers closer to the farmgate.
Technology Not Protected
Aryadhan focusses on servicing the post-harvest financing needs of farmers, FPOs and small aggregators in distant primary and secondary agriculture centers closer to the farmgate.
Aryadhan recognises the large finance gap in post-harvest agriculture. This is estimated at about INR1.25 Lac crores with Banks being able to service only about INR0.40 Lac crores. A viable technology solution that cuts down on paperwork and builds on readily available information of farmers, FPOs and other small stakeholders can effectively bridge this gap.
Availability of liquidity at reasonable rates is one of the key limiting factors for large scale growth. Further, some support in terms of credit guarantees and enhancements could go a long way in scaling up such initiatives.
Aryadhan offers loans to its borrowers at 13-14% per annum.
The fintech solution democratises finance for smallholders and their organisations. It ensures that they are able to overcome the challenge of being forced to sell their produce at distress values immediately after harvest. Availability of storage and post-harvest finance are among the most important reasons for farmer distress in our country. It is estimated that by undertaking post-harvest storage followed up by finance, smallholders can improve their income to the tune of 25% in a single agriculture season.