Difference between revisions of "SPIS Market"

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=== '''<span style="color: rgb(135, 150, 55);">Module Aim and Orientation</span>''' ===
 
=== '''<span style="color: rgb(135, 150, 55);">Module Aim and Orientation</span>''' ===
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The FINANCE module describes general financial services possibly available to farmers who want to adopt a Solar Powered Irrigation System (SPIS). The goal of the module is to inform decision-making agencies (governments, financial institutions, technology providers, development practitioners, etc.) about the financial option more suitable for farmer needs considering their specific characteristics. As a result, more farmers will have access to finance for procuring Solar Powered Irrigation Systems (SPISs), increasing the efficiency and sustainability of the agriculture sector.
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The '''MARKET Module''' aims to provide high level theory on how to conduct market potential assessments for solar powered irrigation systems within a country or region. It provides parameters for consideration that may be applied by varying stakeholders (including private SPIS companies, policy-makers, financial institutions and development practitioners) in assessing the market potential of SPIS.  
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The Module recognizes that, in order to carry out the market potential assessment, the user must have identified a target area for evaluation. '''Chapter 1: Identifying a potential market''' provides factors for consideration in identifying the market and provides tools that can be used.  
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If farmers possess enough money to purchase a SPIS without the need of a loan, they should consider the '''[[SPIS_Invest|INVEST module]]'''.
 
 
<span class="mw-customtoggle-SPIS3" style="font-size:small; font-weight: bold; display:inline-block; float:right; color: blue"><span class="mw-customtoggletext">read more</span></span>
 
<span class="mw-customtoggle-SPIS3" style="font-size:small; font-weight: bold; display:inline-block; float:right; color: blue"><span class="mw-customtoggletext">read more</span></span>
 
<div id="mw-customcollapsible-SPIS3" class="mw-collapsible mw-collapsed">
 
<div id="mw-customcollapsible-SPIS3" class="mw-collapsible mw-collapsed">
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Agricultural productivity and profitability are highly correlated with the state of development of the financial sector in a country. Therefore, agricultural financing is an important driver for growth. Unfortunately, limited access to adequate financing is a common problem among farmers, especially in developing countries. This shortage of agricultural funds derives mostly from the unwillingness of financial institutions (FIs) especially banks to finance new technologies in the agriculture sector. The main reason for this is the perceived risk of non-repayment due to the uncertainty of the sector w.r.t. price, production, highly unpredictable markets and risks associated with a new technology. Furthermore, the remote location of some farms, the shortage of knowledge about the agricultural sector and inadequate policies like strict collateral requirements constrain the access to agricultural financing.
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Additionally, the Module identifies two over-arching categories of parameters that are key to conducting a high-level assessment of the market potential for SPIS in a target country or region: 1) geophysical attributes and 2) business environment. '''Chapters 2 – evaluate geophysical parameters''' and '''Chapter 3 – evaluate the business environment''' expound on the specific parameters under each category. These chapters provide the definitions of the parameters and highlight why these parameters are considered key to the market assessment.  
  
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These difficulties could be overcome with innovative finance products, the adoption of adequate insurance, increasing awareness about agricultural specific risks and the expansion of agriculture financial service providers. As a result, the financing of Solar Powered Irrigation Systems could be seen as an opportunity for financing institutions, technology providers and governments to diversify their loan portfolio, expand their range of financial products, and enhance the economic development of a country.
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The parameters identified under geophysical attributes include: land cover land use, solar radiation, water availability, topography, crop and livestock and ambient temperature.
  
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This module differentiates between two main financing model categories: development models and business models. Development models are mostly used by governments, NGOs and non-profit institutions that aim to enhance the livelihood and overall development of farmers. Development models would typically include grants, subsidies and infrastructure programmes. Business models on the other side are adopted by banks and financial institutions, which, besides enhancing the economic growth of a country, aim to obtain profits from the provided credit. Business models are suitable for more mature markets, where appropriate credit mechanisms are readily available. 
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Parameters affecting the business environment include: government and non-governmental interventions, financing, cost and availability of alternative sources of power, level of SPIS related technical capacity, awareness levels of solar PV and irrigation technologies, significance of agriculture to the economy, land use rights and tenure and transport and communication infrastructure.  
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Even if, in rural areas, the loans from family members, neighbors and friends are widespread, they are not going to be described in this module, since they do not add overall value to the market.
 
  
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In this module, eight financing models are described and subcategorized between development and business financial models.  
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The Module is also supplemented by the  '''[[:file:MARKET - Market Assessment Tool.xlsx|MARKET - Market Assessment Tool]], which considers basic geophysical parameters, and provides guidelines and weights to evaluate parameters that inform an enabling business environment for SPIS.  
 
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Revision as of 13:01, 29 August 2018

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Module Aim and Orientation

The MARKET Module aims to provide high level theory on how to conduct market potential assessments for solar powered irrigation systems within a country or region. It provides parameters for consideration that may be applied by varying stakeholders (including private SPIS companies, policy-makers, financial institutions and development practitioners) in assessing the market potential of SPIS. The Module recognizes that, in order to carry out the market potential assessment, the user must have identified a target area for evaluation. Chapter 1: Identifying a potential market provides factors for consideration in identifying the market and provides tools that can be used. read more

Additionally, the Module identifies two over-arching categories of parameters that are key to conducting a high-level assessment of the market potential for SPIS in a target country or region: 1) geophysical attributes and 2) business environment. Chapters 2 – evaluate geophysical parameters and Chapter 3 – evaluate the business environment expound on the specific parameters under each category. These chapters provide the definitions of the parameters and highlight why these parameters are considered key to the market assessment.

The parameters identified under geophysical attributes include: land cover land use, solar radiation, water availability, topography, crop and livestock and ambient temperature.

Parameters affecting the business environment include: government and non-governmental interventions, financing, cost and availability of alternative sources of power, level of SPIS related technical capacity, awareness levels of solar PV and irrigation technologies, significance of agriculture to the economy, land use rights and tenure and transport and communication infrastructure.

The Module is also supplemented by the MARKET - Market Assessment Tool, which considers basic geophysical parameters, and provides guidelines and weights to evaluate parameters that inform an enabling business environment for SPIS.

Chapters

1. Identify a potential market
 2. Evaluate geophysical parameters
 3. 3. Evaluate the business environment
 4. Decide on market potential

Supplementary Tools

Further Readings

  • A.W Worqlul, J. Jeong, Y. Dile, J. Osorio Assessing potential land suitable for surface irrigation using groundwater in Ethiopia, Applied Geography 85 (2017) 1-13

read more

  • N.G. Dastane, FAO Irrigation and Drainage Paper No 25-Effective Rainfall -FAO,1978



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