Expression of Interest For Assessing The Scalability Of Warehouse Financing For Spices In India

Expression of Interest for Assessing the Scalability of Warehouse Financing for Spices in India CGAP is recruiting a vendor that will support our local partner in India. Our partner is an AgTech (from now on referred to as The Partner), procuring dried vegetables from smallholders, which it uses to produce and sell spices at local and international markets. The Partner is currently a market leader in the development of drying technology adapted to smalls cale agriculture, and partners with producer groups and agri-MSMEs to support groups of smallholders that pool their produce and manage the drying technology equipment to add value to their production and receive higher revenues from their crops. One of the most limiting constraints that the Partner faces to further scale its operations is the lack of working capital credit for its own procurement operations from smallholders. This type of financing would allow the Partner to significantly increase its purchases of processed vegetables from smallholders. The type of financial product deemed most appropriate for the Partners needs is warehouse financing. The very high seasonality of vegetable production forces the partner to procure most of its dried vegetable inventory needed for the whole year in a 3-month window. The Partner has acquired significant experience in storing the dried produce in warehouses and using it over time to meet its yearly demand. However, the partner reports it cannot meet the significantly higher demand for its spices, because it does not have the liquidity to purchase all the dry ingredients needed during the short time window. Although Warehouse Receipt Financing (WRF) is well developed in India, it is only for a few types of crops that have had higher economic and political relevance. Local financial institutions (FIs) have not developed such products for processed vegetables and spices, which have very strong linkages to smallholder livelihoods, especially those of women, and whose demand has significantly increased in the past decade. This is mainly because FIs lack the necessary knowledge and evidence of the technical and financial feasibility of developing a WRF product for spices. CGAPs own assessment shows this constraint is prevalent across all AgTechs engaged in spice and processed food production in India. The selected vendor will work in close coordination with CGAPs task team leader (TTL) and The Partners key focal point and data analytics unit, to conduct a data-driven market assessment to evaluate the business case for FIs to develop a WRF for spices. This assessment will analyze the main challenges seen by FIs to offer WRF for processed spices in India. And then compile the data and evidence to define practical steps that can be taken by the Partner and interested FIs to overcome these challenges and unlock WRF from FIs. This assessment will inform a possible second phase of the collaboration between CGAP and its Partner, in which they would implement a pilot where an interested FI delivers WRF to the Partner for an agreed purpose. Challenges to WRF that will be analyzed include: a) Defining benchmark prices for stored goods b) Setting clear quality standards c) Stored product liquidation pathways d) Managing risks during storage, e) Coping with raw material price drops The analysis should leverage the build up of a tailored agri-data stack where the Partner offers part of the highly local data, which is complemented by the vendors compilation of secondary data available at the regional and national level. Together, the agri-data stack built should gather time series data on the spice price fluctuation history; warehouse operations, monitoring and certification costs; historic fluctuation of interest rates for working capital loans, and current legal framework to assess the viability of WRF from the perspective of Parther, smallholder groups, warehouses, and financial FIs. The Partner has defined the geographical focus on the assessment described above to be Maharashtra and Gujarat. And the type of spices/products to be prioritized during the analysis will be Onion, Ginger, Garlic, and Chilli. The analysis will be made in consultation with a sample of financial institutions presented by CGAP and the Partner to ensure their questions and constraints are considered in the analysis from the start. This will favor carrying out a pilot with financial institutions. Implementing recommendations will allow FIs to expand WRF to the partner and all spice processing agri-MSMEs in India, enabling agriculture investments throughout the value chain to increase productivity and incomes, especially for smallholder farmers. Tender Link : https://wbgeprocure-rfxnow.worldbank.org/rfxnow/public/advertisement/6791/view.html

Refer document

FileName	File Description
Global Tender Document	8c87af77-a27a-474b-be9c-a27ada2cd396.html