Financing marketing of agricultural inputs

Abstract

This paper conceptualizes the need for stocking agricultural inputs to match supply with their demand. The stocks in turn have to be financed. Because of seasonality in demand the general credit limit extended by the banks to the input enterprises are found to be inadequate. Thus the input enterprises, depending upon the nature of demand for their products, formulate schemes to tap funds available with the channel to partly finance their marketing operations. Here is a case of a seed enterprise which came up with a scheme to collects advance against future supply of certain seed. The case identifies factors that affect the economics of the proposed scheme. It shows that the scheme not only generates the much needed liquidity for the enterprise but also reserves shelf place with the channel and ensures sales at an agreed price.