Cold Store - Potato 1
Potato storage in Bangladesh is being done through the eco-friendly Cold Storage method. This is done by a great number of local firms as well as local distributors. This has brought a good advantage for the farmers because of the elimination of the time lag that remains i.e for transportation, finding buyers etc.
In Bangladesh, several intermediaries play different kinds of roles in the potato supply chain. The common marketing channel of potato is a little bit asymmetric in rural and urban areas. During the harvesting period in March, farmers sell their product to all of the intermediaries and some part directly to the consumers of the rural areas. Some portions are also stored in the cold storage. The channel which is mediated by all of the intermediaries, consumers need to pay more money for buying potatoes. On the other hand, in urban consuming areas, paiker collect potatoes from the rural bepari and then sell to aratder or retailer. Finally the urban consumer can get the product for consumption. Transaction costs including transportation, rent, packaging, loading-unloading, marketing tools of different intermediaries are responsible for the high pricing of potatoes in consumer’s level.
February and March are the harvesting time for potatoes in Bangladesh. Major portion of potatoes is harvested during March. So, in March the price becomes very low and sometimes farmers cannot get fair prices
Storage: Potatoes can be stored at 0 degree for max 12 months
Project Duration = 08 months. Financiers get investment capital and 50% of the profit or loss if made. iFarmer gets 50% of the profit or loss including profit or loss sharing with farmers.
Cold storage financing model is a different approach to portfolio model abiding by the Shariah Law guidance, where the funder gets a profit portion based on the return of the overall portfolio of the storage capacity of the Cold Storage unit, not on any specific quantity sold.
Our purchasing price of potato on average would be BDT 9.5tk per kg and the associated cost till reaching market would be an additional BDT 10 per kg, so the total cost stands at around BDT 19.5 per kg.
For people who are interested to be part of this farm, they can purchase a value per unit of BDT 10,000 or equivalent to 512 kg of Stored Potatoes. The duration of the project is 8 months with a projected profit sharing of 6.5% (BDT 640) to16.5% (BDT 1,650) which will be distributed at maturity.
The funder will be receiving a yielded return after 8 months (244 days), and at the end of the investment tenure, the funder will receive profit and actual funding amount.
iFarmer consists of sector experts who continuously monitor operations to minimize the risk of loss within their best capacity.
Previous year the price of potato per kg was recorded at the hightest of Tk 28-Tk35 during the month of June 2020. (Reference: https://thefinancialexpress.com.bd/trade/potato-prices-go-up-by-28pc-in-a-week-1590982283) Hence the estimated price per kg might vary.
Shariah-Compliant Agriculture Financing through iFarmer:
- iFarmer follows the concept of Mudrabah for receiving and managing the fund for agriculture investment.
- The iFarmer Mudarabah Investment Guideline:
- This is an agreement made between two parties- Party A, 'Financier' is known as ‘Rabal-Maal’ the one who provides‘ 100 percent of the capital’ for the project and Party B, "iFarmer" is known as a ‘Mudarib’ who using his entrepreneurial skills, manages the project.
- Profits arising from the project are distributed according to a predetermined ratio. Any losses accruing is borne by the provider of capital. The provider of capital has no control over the management of the project.
- The Mudarib (iFarmer) will invest the funds provided by the ‘Rabal-Maal’ (Financier) for agricultural ventures and returns to the investor the principal and a pre-agreed share of the profit.
Mudarabah Implementation Guideline for iFarmer:
- Two parties (Financier and iFarmer) execute Mudaraba Agreement by way of which they decide that one party will provide Mudaraba capital and another party manages the capital for a particular period.
- The profit rate is to be pre-agreed between them.
- Mudarib (iFarmer) has management rights and, therefore, he will utilize the partnership capital in an agreed manner.
- At the end of the tenor, Mudarib (iFarmer) will return the principal and pre-agreed share of the profit to the Rabal-Maal (Financier).
- If the business incurs a loss, it will be borne by Rabal-Maal (Financier) if there happens no negligence on the part of Mudarib (iFarmer).
- Rabal-Maal (Financier) is not liable for the losses beyond the capital he has contributed.
Portfolio brief of iFarmer's Currently Active Shariah Farm:
Cold Storage contains a capacity of 4550+ tonnes of storage capacity. All Potatoes would be purchased at a specific timeline and stored together. All the cold storage are managed by our iFarmer Team for preset timeline will sell to the market for a better price and share profit with Financier (Within the contract timeline) All transactions for Shariah Farms are maintained separately through Shariah Compliant Banks.
Partnership with Farmer:
A partnership agreement is signed between iFarmer and Cold Storage operators. Whereas Cold Storage operator is responsible for buying and storing different types of Potato. iFarmer provides required management and selling support to the Cold Storage operators. Cold Storage operators get pre-decided profit sharing for his service.
How It Works
What is iFarmer?
iFarmer is an impact tech startup that has developed an innovative online platform which enables anyone to be a funder in farming and livestock in Bangladesh.
How do I join iFarmer?
You as an individual or organization can join through an online registration using your Gmail/Facebook account or can register directly at iFarmer office.
What does iFarmer do?
iFarmer is an impact tech startup based in Bangladesh which aims to connect individuals willing to be a funder in agricultural and livestock farming with farmers seeking easy access to capital. Our idea is based on the asset-sharing model, which has been a very common practice in our rural landscape for ages. We want to portray ourselves as portfolio managers for our funder's agriculture and livestock shares.
What costs should be paid by the funder?
This depends on what you would like to fund. We have different portfolios with varying degrees of funding opportunity, return and maturity. To fund, you need to register through our website and make payment using your card or other available options of your choice. You can also issue cheque in favor of iFarmer Limited.
Are funders given evidence on the units funded?
Each funder has evidence in the form of a Certificate of Ownership in their email, which also explains the ownership of the assets and iFarmer’s responsibility as an asset manager. In addition, an invoice will be issued right away in an individual’s/organization’s email after payment has been made. For every transaction through a cheque, a money receipt is provided to the issuer along with all other documents mentioned above.
How much will I get as my return on funds?
Return on fund is based on a profit-sharing criterion, where the Cold Storage Operator receives 50% of the profit, the funder receives 50% of the profit. For example, if the purchase price of potatoes per kg is 19.5 BDT with a total of 3200 kgs being stored equalling to a total price of 62,400 BDT and sold for 67,200 BDT, the farmer will get (4,800x50%) = 2,400 BDT, the farm funder will get (4,800x50%) = 2,400 BDT
When will I get a return on my fund?
iFarmer sells the potatoes within the 8 months or 244 days period of storage. Taking everything into consideration, the return is transferred into the funder's bank account in exactly 8 months or 244 days from the date of payment.
Who will take care of my funded Cold Storage?
An operator for the cold storage is appointed who will be looking after the storage under iFarmer’s supervision.
Can I contact the designated person taking care of the cold storage?
A manager will be assigned to you and you can reach out to the designated person through your manager.
How will I receive updates related to my cold storage?
We will be posting live updates about the goods in the storage from time to time.
What will happen if the potatoes are spoilt or are stolen?
iFarmer consists of sector experts who are dedicated to counter any unavoidable circumstances within their capacity. However, in any given situation where the risk cannot be mitigated, we will try our level best to compensate for your loss using the available benevolent fund.
How many units can I fund at once?
The quantity varies. Please check specific farms or contact with us.
Can I keep the funded units for myself?
No, you cannot. iFarmer works on ground level with bulk buyers only.
Where will my funded units be sold?
iFarmer has a dedicated supply chain division through which goods are sold in bulk in the local market or to institutional buyers
What transaction mode does iFarmer use?
You can pay through our secure online system or issue cheque in favor of i-Farmer Limited.
Can I see my funded storage in person?
Yes, you may. You must inform us in advance to ensure that you get the best welcome possible.
Who will be storing the potatoes?
iFarmer and the Cold Storage Operator both would be working together to store the potatoes.
Where is the storage located?
The Cold Storage would be operating in two (2) places Lalmonirhat and Rangpur.
Not convinced yet?
Team iFarmer understands the value of your time, faith and money. Our team continuously appraises your funding for something much greater than monetary return.
Refund your Funding
iFarmer allows you to take back your funding within 1 week with 100% refund.
iFarmer team consists of sector experts with professional experience working in various high valued national and international projects.
Certificate of Ownership
Each funder will be provided with a Certificate of Ownership Farm (COF), which also explains the ownership of the unit with complete details.