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KRISHI UTSHO UPDATEWorking to address inefficiencies within the dairy sector of Bangladesh
Strengthening the Dairy Value Chain (SDVC)
• Project to address inefficiencies within the dairy market• Women as a marginalized group• Works with actors throughout the value chain
• Farmers• Collectors• Shop owners• Processing plants• Input Suppliers
• Long term economic growth without dependency
SDVC Impact• 36,000 farmer members• Over 150 agro input shops with nearly 40,000 clients per
month• Higher quality of milk and increased consumption (178%)• Production up from 1.2 to 1.8 liters/day• Doubled the daily household milk sales
Krishi Utsho (Agro Source)• For-profit Agro Input shop franchise for farmers• Artificial insemination (AI), medicine, feed, and other agro
inputs• 53 input shops- serving 20,000 farmers per month• Rapid growth (35-113% per year)• Expand to more than 250 shops in next few years
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210
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10005
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Scale Up Plan
Number of Shops Beneficiaries '000 Company Linkage Agro Processor
Year of Operation
Be
ne
fic
iari
es
in t
ho
us
an
d
For-Profit Model• Shop owner fees ($67- fee to join, $1.30- monthly fee)• Commission from supplier partners (~5%)• Break even in year 4
The Franchise Business Model
Business assessment to analyze
Franchisor (CARE)
Franchisee (Shops)
Royalty fees/Franchise charge
Negotiate contracts with suppliers
Design a respected brand
Continuous research and development
Training for expertise development
Conduct advertising for promotion
Company commission
The Supply Chain• Partnerships with private sector suppliers to ensure
quality inputs and gain revenue• 2 potential CARE roles:
• Central ordering supplier distribution, or• Standard products, supplier ordering and distribution
• Cost effective• Central ordering and supplier distribution more attractive
to private sector
Challenges Moving Forward• Forming partnerships with private sector• Branding shops• Shop financing
Branding Benefits• Standardized shops• Reputation and recognition• Easier to expand the number of shops• Krishi Utsho is a symbol of quality
Branding Challenges• Advertising campaign- how to reach customers and
establish brand image• Promotions• Building relationships among shop owners
Progress• 20 franchisees AI training• 15 shops branded and incorporated in network• Positive response- farmers and shops
Private Sector Supplier Partnerships• Top input suppliers in quality and quantity• Commission• Supplier goal and CARE goals differ• Contracts for individual product• CARE should consider fewer, larger partnerships- easier
to attract larger suppliers
ACI
ACME
BRIDGE P
harm
a
CHEMIS
T
DOCTORSAGRO
ETHICAL
FNF
GLOBE P
HARMA
NAVANA
NOVERTIS
OPSONIN
ORBITEC
POPULAR
RENATA
RAFIQ M
EDICAL
SOLVER
SQUARE
TECHNO
ZENTRY
Other
s0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
4.77%
14.84%
2.43%
10.40%
1.98%
2.77%
1.60%
4.51%
1.22%
4.97%
6.03%
2.37%
4.01%
12.34%
1.40%1.67%
7.21%
4.53%
1.14%
9.82%
Market Share by Medicine company (53 shops)
ACI FEED
AFTAB FEED
ALOM
FEED
CP FEED
FATIMA F
EED
KOLLANY F
EED
LOCAL
FEED
MIN
A MIX
PRAN
RABIA F
EED
SONALYFEED
SAFIA F
EED
TAMIM
AGRO
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
2.25% 2.41%0.64%
8.61% 7.37%
2.41%
34.48%
0.48% 0.16% 0.68%3.61% 2.61%
34.28%
Market Share of Feed (By Company) 53 shops
Partnership Progress• Negotiations in progress• A few agreements signed- e.g. Tamin Agro- feed• Field assistant training• Delays with eMIS system
Financing• Number one concern of shop owners• Shop owners want loans up to $1000 with 8% interest• Why?
• No capital for inventory or physical improvements• Loans too expensive (15-20% interest)• Will spur high growth and expansion to other sectors• One-stop shop
Problems Facing Financing• Finding the capital• Lack of collateral• Preventing default• Monitoring usage of capital• Current cost of financing• Regulations
Collateral Possibilities• Use franchise membership• CARE understands value of membership• CARE guaranteeing a portion of the loan?• Shop as potential collateral?
Potential Structural Options• CARE managed loan system• CARE financing operation• Supplier credit system• CARE partnership with lending organization
CARE Managed Loan System• CARE runs loan organization using money from investors
or grants• Large knowledge of shop economics• Additional source of Krishi Utsho profit• Increased control• Higher interest rates• Legally difficult• No experience• Least feasible
CARE financing• Legally acceptable• No profit to support network• Less than 1% interest (service fee)• No experience• Funding from grants
Supplier Credit System• No foreign capital• Different credit duration based on item• Need for collateral• CARE guarantee?• Cheap?• Suppliers are less supportive• What do they require?• No capital for physical improvements
CARE Partnership with a Lending Org
• Partnership with Aunkul Foundation?• Aunkul infrastructure• CARE attracts capital- grants or investors• Obtain a low interest rate (4%)• CARE assist with info on shop performance- eMIS• Most viable option• Loans in tranches- must repay to get larger tranche
Financing Points to Consider• Overhead cost of lending• How to fully utilize CARE information• Currency risk if foreign investors participate• How to get the lowest interest rate?• Size and duration of loan• Group lending• Expanding the loan pool
Recommendations• Branding push• Aggressive with supplier partnerships• Central leader for Krishi Utsho• Develop financing system• Data organization and centralization
Thank You