Agro Money

SCHEME FOR AGRIBUSINESS DEVELOPMENT THROUGH VENTURE CAPITAL ASSISTANCE AND PROJECT DEVELOPMENT FACILITY
SFAC (Small Farmers Agri. Business Consortium)

Background:
Private agribusinesses provide first point market for the farm sector and growth depends principally on private initiatives. A significant portion of agribusiness activity is the result of small and medium enterprises. Such enterprises are necessarily widespread in location to capture opportunities that arise all along the farm to table supply chain. Key constraints that impede development of new agribusiness projects are access to information and access to credit. Agribusiness entrepreneurs are generally first generation who have business skills but their financial resources are limited.

In order to facilitate agribusiness development in the country SFAC venture capital scheme:

• Assist agripreneurs to make investments in setting up agribusiness projects through equity participation, and
• Provide financial support for preparation of bankable Detailed Project Reports (DPRs) through Project Development Facility (PDF).

Objectives:
The main objectives of the Scheme are:

• To facilitate setting up of agribusiness ventures in close association with banks.
• To catalyze private investment in setting up of agribusiness projects and thereby providing assured market to producers for increasing rural income & employment.
• To strengthen backward linkages of agri-business projects with producers.
• To assist farmers, producer groups, and agriculture graduates to enhance their participation in value chain through Project Development Facility.
• To arrange training and visits, etc. of agripreneurs setting up identified agribusiness projects.

Salient features of the Scheme:
A Venture Capital Assistance SFAC provides equity to qualifying projects on the recommendations of the bank financing the project. This equity capital is repayable back to SFAC after the project has repaid the term loan of the financing bank.
SFAC provides financial assistance to agri-business projects by way of equity participation on the fulfillment of the following conditions.

Qualifying projects under Venture Capital

• Project should be in agriculture or allied sector namely horticulture, floriculture, medicinal and aromatic plants, minor forest produce, sericulture, organic farming, vermi compost, apiculture, plantation crops, and fisheries. However, poultry and dairy projects will not be covered under the scheme.
• Project should provide assured market to farmers/ producer groups
• Project should encourage farmers to diversify into high value crops, to increase farm incomes
• Project should be accepted by banks for grant of term loan

The quantum of SFAC venture capital assistance will depend on the project cost and will be the lowest of the following -

• 10% of the total project cost assessed by the bank
• 26% of the project equity
• Rs. 75.00 lakhs

Eligible Persons
Assistance under the scheme will be available to Individuals, Farmers, Producer Groups,
Partnership / Proprietary firms, Self help groups, Companies, agripreneurs, units in agriexport zones, and Agriculture graduates Individually or in groups.
For professional management and accountability the groups have to preferably form into companies or producer companies under the relevant act.