ANANYA FINANCE: MAKING FARMER PRODUCER ORGANIZATIONS BANKABLE
Financial Inclusion, Women Led/Owned
In India, there are an estimated 400 Farmer Producer Companies (FPCs), with an average of 1,000 farmer members per company. There are also cooperatives in excess of 100,000 that are ready to absorb finance, if given at a desired time and at reasonable rates. However, banks and financial institutions have been wary of providing loans to FPCs due to the high risk involved and absence of proper collateral. As a result, these FPCs almost always fail to attract timely finance during peak agricultural time.
Contrary to this trend, Ananya Finance for Inclusive Growth Pvt. Ltd has shown faith in companies that have the potential and resolve. Ananya was set up by the Friends of Women’s World Banking, India (FWWB). Over the last three decades, FWWB has played a critical role in nurturing and developing several MFIs. Ananya is in the business of lending and strengthening the Microfinance industry. It has diversified into agriculture-financing and facilitates access to formal credit to small and marginal farmers as well, who have grouped together to form registered Farmer Producer Organizations/Companies or Farmer Cooperatives. This is in symmetry with ICCO Investment’s mandate of capacitating the FPC’s that have notable potential but limited resources. The investment will help Ananya to build their direct agri lending portfolio and leverage to create the indirect agri lending portfolio as well. The proposed investment is targeted to impact 175,000 farmers across 175 FPCs.
With the aim of catalysing debt financing across India, Ananya currently partners with 50 organizations across 15 states to support financing of micro credit and agricultural activities. Now, timely supplies of agricultural inputs at lower than market price is a reality for the FPC’s. The working capital helps them procure the commodity well in advance, stock it and sell it to the needy farmer members just prior to the sowing season at reasonable prices.
Similarly, FPCs have used the working capital limits to procure and supply other agri-inputs like seeds, pesticides and other chemicals to their farmer members at prices lower than the market prices. As a part of its expansion strategy, it will continue to provide financial and technical support to scalable, sustainable and proven business models in micro credit and agricultural activities. However, the focus would be to build the FPC financing business and diversify. The ICCO Investments support will also help the agency to take further exposures on FPCs, nurture them to start borrowing from regular channels and further strengthen their borrowing power. In line with the success of the micro-finance model, Ananya will also combine financing to FPCs with training and capacity building. In this way ICCO supported Ananya will continue to empower smallholder farmers, giving them the opportunity to deal with contemporary market actors on one hand, and on the other, the hope to enter high-value markets within the Indian economy and consequently abroad too.