Agri-commodity financing companies don’t see commercial sense ‘in dealing with most farmers’ since the latter fail to measure up to the required size and scale.
“We fund farmers, aggregators, processors, and traders...anybody with a commodity to offer,” says Sudip Bandyopadhyay, Group Chairman, Inditrade Group of Companies.
“Unfortunately, with most commodities, farm/crop sizes are very small,” Bandyopadhyay told BusinessLine in a telephone interview.
“But with commodities such as cardamom, there are large players from Kerala where we originally belong to. So we fund them. Wherever there are large farmers, we work with them.”
Bandyopadhyay said that among clients, processors require the maximum loan facility and they are the biggest borrowers.
“We don’t require any other security other than the agri-commodity itself. We do business in a structured manner. We ask the borrower to also fund the futures through our broking platform.”
So, if somebody today wants to borrow against turmeric for three months, the company will ask him to sell the June futures through its broking platform. So, theoretically speaking, even if the borrower runs away or absconds or otherwise makes himself unavailable for business, the company need not bother.
“We only work with exchange-accredited warehouses — though we do not differentiate between private or public warehouses — just in case, some quality-quantity issues crop up in future. So if you want to borrow, you’ve to put your commodity in exchange-accredited warehouses, and this is available online. Based on the stock, we ask you to make an online pledge and give you the money.”