2. 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
3.
4. 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
5. 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
7. For-Profit Model
• Shop owner fees ($67- fee to join, $1.30- monthly fee)
• Commission from supplier partners (~5%)
• Break even in year 4
8. The Franchise Business Model
Franchisor (CARE)
Royalty fees/Franchise charge Business assessment to analyze
Company commission Negotiate contracts with suppliers
Design a respected brand
Conduct advertising for promotion
Training for expertise development
Continuous research and development
Franchisee (Shops)
9. 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
11. Branding Benefits
• Standardized shops
• Reputation and recognition
• Easier to expand the number of shops
• Krishi Utsho is a symbol of quality
12. Branding Challenges
• Advertising campaign- how to reach customers and
establish brand image
• Promotions
• Building relationships among shop owners
13. Progress
• 20 franchisees AI training
• 15 shops branded and incorporated in network
• Positive response- farmers and shops
14.
15.
16. 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
19. Partnership Progress
• Negotiations in progress
• A few agreements signed- e.g. Tamin Agro- feed
• Field assistant training
• Delays with eMIS system
20. 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
21. Problems Facing Financing
• Finding the capital
• Lack of collateral
• Preventing default
• Monitoring usage of capital
• Current cost of financing
• Regulations
22. Collateral Possibilities
• Use franchise membership
• CARE understands value of membership
• CARE guaranteeing a portion of the loan?
• Shop as potential collateral?
23. Potential Structural Options
• CARE managed loan system
• CARE financing operation
• Supplier credit system
• CARE partnership with lending organization
24. 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
25. CARE financing
• Legally acceptable
• No profit to support network
• Less than 1% interest (service fee)
• No experience
• Funding from grants
26. 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
27. 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
28. 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
29. Recommendations
• Branding push
• Aggressive with supplier partnerships
• Central leader for Krishi Utsho
• Develop financing system
• Data organization and centralization