This sub component will finance demand-based sub-projects proposed by farmer groups, and producer organizations to build strategic linkages amongst the value chain participants with a view to increase competitiveness, productivity, quality and market access. Market Infrastructure support will be provided to support farmer groups with matching grant investments in rural market infrastructure and for productive infrastructure such as storage facilities, grading and sorting equipment, collection centers etc. The grants provided under these activities will be supported at 50% of costs with 50% contribution in cash/ kind from beneficiaries.
Successful farmer groups would be graduated to a higher level enterprise viz., producer organizations that can undertake storage and trading of commodities, direct linkages with commodity exchanges, etc. Such producer organizations will essentially be community owned business entities who will undertake various activities such as bulk purchases of inputs and delivery to individual members, marketing of produce, grading and quality control and first level processing through value chain investments and linkage to markets. The producer organization will also provide a comprehensive package of economic and technical services to all its members in a particular value chain. The benefits to individual members of such producer organization will be both through sharing of profits and lower cost inputs and services due to aggregation. This process would be facilitated by the specialized business support organizations.
Agribusiness support is being provide producer organizations with matching grant directed towards agribusiness support and will co-finance investment proposals from producer organizations and producer groups established under the project and that are actively seeking to expand their operations. Proposals that qualify for matching grants will have one or more of the following general characteristics:
(i) Provide clear linkage through formal contracts between producer organizations and agribusiness/ value chain participants.
(ii) Have some public good character that benefits many participants in a value chain. The grants provided under these activities will be supported at 50% of costs with 50% contribution in cash from beneficiaries.