2025, Vol. 10, Special Issue 10

Agriculture and its allied sectors in India face multifaceted challenges arising from unpredictable climatic conditions and frequent market fluctuations. Small and marginal farmers, who form the backbone of agricultural value chains, are the most exposed to these uncertainties and often lack access to suitable and timely financial services. Conventional financial products are typically uniform in structure and fail to align with the diverse production cycles and income patterns across different agricultural activities. For example, credit models designed for long-duration crops such as sugarcane are unsuitable for short-duration crops like paddy or for agribusinesses involved in milk collection and cashew processing.

In addition to financial constraints, farmers and agri-enterprises encounter non-financial challenges such as inadequate infrastructure, poor market linkages, and limited technical knowledge. The gap between the credit needs of farmers and the services offered by both microfinance institutions and commercial banks forces many to depend on informal financing sources. Insurance products also remain largely inaccessible or unaffordable. Formal credit options, often offered through standardised subsidised loans, do not adequately capture the interconnected nature and cash flow dynamics of agricultural businesses. This study examines agricultural value chains and financing opportunities for Samunnati in selected talukas of North Gujarat, namely Palanpur, Deesa, Patan, Kadi, Unjha, and Dhanera. Data were collected from 50 traders and 10 processors, mainly engaged in castor and mustard oilseed activities. The findings reveal that traders require short-term working capital (10-15 days) due to delays in buyer payments, even though they must pay farmers immediately. Currently, traders rely on bank loans at interest rates of 11-13%, while Samunnati provides collateral-free loans at around 21%. The study suggests that by lowering its interest rates, Samunnati can expand its market presence, increase competitiveness, and better serve the short-term financial requirements of traders and processors, thereby fostering a more inclusive and efficient agri-finance ecosystem in North Gujarat.