Mr Shaji K V, Chairman, NABARD, in an exclusive chat with ET NOW

Summary

In an exclusive conversation with ET Now, Nabad Chairman Shaji Ki discusses the challenges and future of rural finance, focusing on governance gaps and the need for patient capital. He elaborates on the Agri Fund, which supports early-stage agricultural startups, and the scaling up of Farmer Producer Organizations (FPOs). Ki emphasizes the importance of professional leadership within FPOs, the success of accelerator programs, and digitization efforts for cooperatives. With a vision for a more progressive rural sector, he believes that cooperatives and FPOs can coexist and drive sustainable growth in agriculture.

Takeaways

• 😀 Nabad is addressing governance tech gaps in cooperative banks for small and medium farmers.
• 😀 Nabad launched a 750 crore Agri Fund, managed by Nav Ventures, focusing on early-stage agri-startups.
• 😀 The Agri Fund is expanding into a larger initiative, aiming to provide patient capital rather than venture capital for rural sectors.
• 😀 Many recently launched Farm Producer Organizations (FPOs) face challenges in profitability and viability.
• 😀 FPOs should be treated as startups with a professional leadership structure to succeed, including skilled CEOs to lead operations.
• 😀 Nabad is scaling up a pilot program that aims to support FPOs by enhancing their business plans and capabilities through accelerator programs.
• 😀 In Karnataka, the accelerator program has shown 3 to 5 times improvement in business for FPOs over the last one and a half years.
• 😀 The accelerator program offers ecosystem support, including assistance from tech companies, marketing, branding, and skill development.
• 😀 Nabad is expanding the accelerator program across India, learning from successful and failed regions to improve outcomes.
• 😀 There is renewed focus on cooperatives, which are the original form of FPOs, to improve governance and digitize their operations.
• 😀 Nabad is working with the Ministry of Cooperation to digitize cooperatives, aiming for a more robust rural sector by aligning FPOs and cooperatives.

Q & A

What is the Agri Fund managed by Nav Ventures, and what is its purpose?

The Agri Fund managed by Nav Ventures is a 750 crore fund aimed at supporting early-stage agritech startups. It focuses on innovation within the agriculture sector and is designed to provide funding for startups in the rural and agritech space.

What does Nabad's second fund aim to address, and how does it differ from venture capital?

Nabad's second fund aims to provide broader support for the rural sector, with a focus on patient capital rather than venture capital. Patient capital is meant to allow businesses in the rural economy to grow over time, without the pressure of high returns typically associated with venture capital investments.

What challenges do Farm Producer Organizations (FPOs) face, according to the interview?

FPOs face challenges related to profitability and viability. Many FPOs, despite being launched recently, struggle to be financially sustainable due to governance gaps, lack of professional leadership, and inadequate business planning.

How does Nabad plan to address the governance challenges within FPOs?

Nabad plans to address governance challenges within FPOs by treating them as startups. They are launching accelerator programs to provide CEOs with the necessary support, including business planning, tech support, marketing capabilities, branding, and skill development.

Can you explain the results of the FPO accelerator program in Karnataka?

The accelerator program in Karnataka involved around 30 FPOs and resulted in a 3 to 5 times improvement in business over the span of one and a half years. This positive outcome suggests that the accelerator model can be scaled and replicated in other areas.

What does Nabad's accelerator program for FPOs focus on?

Nabad's accelerator program for FPOs focuses on strengthening the leadership and governance of FPOs by providing support for business planning, access to ecosystem resources, marketing, branding, and professional skill-building for the CEOs.

How does Nabad view cooperatives in relation to FPOs?

Nabad views cooperatives as the original form of FPOs. Although they face legacy issues, Nabad is working to improve their governance and digitization. The goal is to have cooperatives and FPOs coexist and work together to enhance the rural economy.

What role is Nabad playing in the digitization of cooperatives?

Nabad is spearheading the digitization of cooperatives, working on behalf of the Government of India’s Ministry of Cooperation. The focus is on enhancing the governance and operational capabilities of cooperatives through digital tools and modern systems.

What is the overall vision for the future of FPOs and cooperatives in rural India?

The vision is to create a vibrant ecosystem where both FPOs and cooperatives coexist and contribute to rural development. The aim is to drive rural sector growth through improved governance, digital integration, and professional capabilities, which will ultimately help enhance profitability and sustainability.

How does Nabad plan to scale its successful FPO accelerator model across the country?

Nabad plans to expand the FPO accelerator model by learning from the success stories and failures in the current pilot projects. These lessons will be used to improve the program and replicate it in different parts of India to benefit more FPOs across the country.