Kota Integrated Grain Mandi

A modern marketplace integrating technology and mechanised processes to benefit small-scale farmers

Context

In India, ‘mandis’ are marketplaces where farmers sell their produce through an auction process. As mandis facilitate first transactions between farmers and the bulk buyers of their produce, their efficiency has direct bearing on the overall competitiveness of grain sales for the farmer in particular.

Existing mandis are fraught with challenges such as high produce wastage, poor price realisation, poor sorting and grading infrastructure, high cost of financing for farmers and requiring intensive manual effort to operate.

The grain warehousing and sales sector also suffers from chronic underinvestment due to its high capital requirement, longer payback time, and lack of design know-how. The lack of investment in this sector has impeded its growth, innovation and adoption of best practices.

The Project

The Kota Integrated Grain Mandi project involves the development, financing, and construction of an Agriculture Produce Marketing Committee (APMC)-regulated integrated mandi in the state of Rajasthan. Once developed, it is expected to benefit around 6,500 local farmers through the provision of cheaper financing and the reduction of mandi-related fees.

The Kota Integrated Grain Mandi project will comprise an approximately 20,000 metrictonne (MT) grain storage warehouse fitted with mechanised sorting and bagging services; and an electronic trading facility, integrated with a national commodity exchange to facilitate auctioning, settlements and inventory management.

The project aims to provide warehouse receipt financing to cash-starved farmers, thereby reducing the farmers reliance on incumbent commission agents in the mandi. The implementation of mandatory scientific cleaning and assaying processes will enable the farmer to assess the quality of their produce and its tradeable quantity, while also providing buyers with sufficient assurance of the quality of their purchase. Whereas farmers currently depend on the buyer to assess the quality and tradeable quantity of their produce, the standardisation of quality-checking procedures will enable a fairer negotiation of prices.

The success of the Kota Integrated Grain Mandi project would serve as a proof-of-concept for a modern and efficient grain mandi model that could be replicated across India.

Project Overview
Company
Kota Agri Market Private Limited
Country
India
Region
State of Rajasthan
Sector
Bulk Storage and Logistics
Size
~20,000 MT
Status
Under development
Timeline

Financial Close expected in Q2 2020
Commercial operations expected Q2 2021

Total Project Cost
~US$ 10M
Funding Committed
~US$ 1.2M in equity ~US$ 1.8M as optional, fully-convertible debt
IAI Investment
To be determined
Other Shareholder(s)
AgSrv.Com Private Limited
Suppliers

India:
InDev Solutions LLP
SNPM Solutions
Buhler (India) Private Limited

Development Impact

~6,500 people with improved access to mandi services
~100 short-term jobs in construction
~100 long-term jobs in operation

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