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Agricultural Value Chain Financing By Chavarin Saila Bank for Agricultural and Agricultural Cooperatives (BAAC)

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Presentation on theme: "Agricultural Value Chain Financing By Chavarin Saila Bank for Agricultural and Agricultural Cooperatives (BAAC)"— Presentation transcript:

1 Agricultural Value Chain Financing By Chavarin Saila Bank for Agricultural and Agricultural Cooperatives (BAAC)

2 - Established in 1966 - As a Specialized Financial Institution - State Enterprise under the Jurisdiction of the Ministry of Finance BAAC Historical Background To promote the improved social and economic well-being of Thailand’s farming population through the provision of financial assistance for agricultural production, investment and marketing purposes. Objectives

3 BAAC Vision “To be a secured rural development bank with modern managerial technology focusing on the uplift of small-scale farmer’s quality of life.” “Standing side by side and Recognizing the Value of People” Value

4 Mission To render integrated credit services to enhance farmers’ opportunity for effectively improved productivity To streamline social development regarding agriculture- based learning for the improved quality of life of farmers so that they will be valuable human resource assets and worthy members of society To administer funds in such a manner that the cost is kept at the appropriate level reflecting the banks key mission with emphasis on liquidity and stability To develop new areas of services to effectively and productively meet farmers needs on the strength of high- caliber staff with sound judgment

5 AMC BAAC Financing on Value chain Financial Service Learning Support Activities Risk Mitigation Support Activities Domestic Consumption/ Export Agricultural Produce Processing Agricultural Activities

6 BAAC’s Model in Agricultural Value Chain Financing Agricultural value chain financing would be successful if following aspects are well addressed: - supervised credit management - productivity enhancement supporting : productivity increasing and production costs reduction - marketing channel creation: group formation, stop selling to middlemen - knowledge supporting to be self-reliant : capacity building - providing of safe guard against risks

7 From farm to Mouth Rice value chain

8 Year 2009 Year 2010

9 Farm Households Serviced by BAAC, FY 2005-2009

10 Rice Cultivation Area in Thailand (Rai) > 2,000,000 1,000,001 - 2,000,000 500,001 - 1,000,000 100,001 - 500,000 < 100,000 = 0 Converted Area : 1 rai = 1,600 sqm 2 2.5 rais = 1 acre 6 rais 400 sqm 2 =1 hectare

11 Thai Rice Exporting in 2009 Bangladesh 44 Tons Pakistan 40 Tons Ceylon 288 Tons India 41 Tons Indonesia 219,643 Tons Philippines 156,033 Tons Iran 24,144 Tons Germany 25,604 Tons Cambodia 42,667 Tons Malaysia 162,437 Tons Total : 8,592,830 Tons Total : 5,027 Million US$

12 Rice Value Chain Financing

13 AMC network establishment

14 AMC network discussion

15 AMC : harvesting service

16 Transportation to AMC marketing center

17 Sampling for inspection

18 Inspection tool

19 Quality & price

20 Unloading bulk

21 AMC network : village collecting unit


23 AMC : organic jasmine rice

24 Thank You for Your Attention Q&A


26 ICredit Services Credit services for individual farmers - short term loans for agricultural production (working capital) –loan for seasonal expenses –repayment term within 1 year (in special cases repayment term < 1 ½ year) - Medium and long term loans for investment –loan for investment in assets which last more than 1 years, in special cases loan term can last up to 20 years, e.g. loan to buy agricultural land and machinery –payment in installment, loan terms more than 1 year Financial Services

27 ICredit Services Credit services for individual farmers - Loans for sale postponement of farm produce : Crop Pledging Schemes: to provide funds to farmers to meet their immediate expenses while waiting for crop prices to rise after the harvest season, avoiding thinned to sell their crops when prices are low. Repayment of this type of loan is normally due within six months. - Cash credit lines : To provide a convenient way for clients to obtain BAAC loans. Clients can withdraw cash from his account as he needs up to an agreed ceiling and within the period of loan agreement. - Long term loans for refinancing old debts - Loans for farm-related and non-farm activities Financial Services

28 ICredit Services Credit services for individual farmers - Loans for overseas working - Loans for quality of life - Housing - Education - Medical care - Advanced Credit (A-Cash) -instant cash credit facility for meeting their urgent needs. The clients can obtain and repay credit amount at their convenience Financial Services

29 ICredit Services Credit services for farmer’s Institutions - Re-lending to members - Procurement of farm inputs and equipment - Long term agricultural investments Financial Services

30 Learning Support Activities First Phase Self-Reliance - change way of living - Practice of keeping detailed accounts of household expenses - abandoning gambling habit - have occupations that generate extra income, - cutting down unnecessary expenses - Form savings habit Second Phase Inter-dependence - Stronger community take part In planning, preparing community data and analyzing strengths and weaknesses - Conducting joint business ventures - buying and selling collectively - Acting as a group e.g. occupation, savings, resources conservation and fringe benefits - Development of strong community to create community business network - Advocate joint trading and setting up of an economic network at community level Model of Sufficiency-economy- oriented Community Project Third Phase Community Economic Network

31 - Farmer becomes confident that they will be compensated in times of drought that caused damage to their crops - Indemnity payment is utilized to fund a repeated cultivation - BAAC in collaboration with the General Insurance Association has rendered the weather index insurance service to maize farmers. - Service areas currently covering 5 provinces - Drought index is based on data supplied by eight rainfall stations under the auspices of the Meteorological Department. Risk Mitigation Support Activities Weather Index Insurance

32 - Insurance premium is fixed at 100 Baht per rai with maximum indemnity payment of 1,228 Baht per rai. - Indemnity appraisal relies on rainfall measurement criteria as stated in the insurance policy and differs from : - degree of risk prevailing in each locality - rainfall at each station - starting of cultivation and crop stage, i.e. planting, growing or budding Risk Mitigation Support Activities Weather Index Insurance

33 - Were set-up in BAAC branch premises to support provision of quality agricultural inputs and developing marketing channels for agricultural products produced by client farmers. - Crop collection: Support from AMC to collect and sell farm produce. Crop collection is convenient way for farmers to sell their crops directly to buyers without any intervention from middlemen at fair prices in accordance with quality and quantity. Agricultural Marketing Cooperatives (AMCs) Marketing Support Activities

34 to help client to sell paddy at fair prices and on fair terms and conditions Marketing Support Activities Central Paddy Markets Agricultural Marketing Cooperatives (AMCs) - Advantages for client farmers include: - To purchase farm inputs at fair prices with good after- sale services - To sell farm products through the AMCs collectively with fair prices

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