The Hindu Business Line : Lending a helping hand to the farmer

For the first time a government at New Delhi is talking of caring for the farmer, though it could be some time before bankers are coaxed into funding farmers.

"GRAMEEN Bank started because I approached a commercial bank merely to solve a local problem. I realised very soon that the problem was not at all a local one. In order to solve the problem, the entire banking system would have to be turned upside down and fully reorganisd," writes Muhammad Yunus.

These lines are pertinent in today's India, where for the first time a government at New Delhi is talking of caring for the farmer though it could take some time before bankers (who went on a one-day strike on Tuesday) can be coaxed into funding farmers.

If the rich farmers are kept aside, most have no collateral and the Indian banking system will have to think of farm lending sans collateral. Any primer on banking will tell you that a banker lends money against the comfort of an asset held in the name of a borrower. But the primer goes blank when a banker has to deal with a borrower who has no assets to his name, except his ownname.

Chengal Reddy, President, Federation of Farmers Association, recently said: "To be a farmer itself is a stigma. Especially the small and marginal farmers. They are born with debt, live in debt and die with debt."

He was speaking at the National Consultative Meet on the Critical Issues Confronting Farmers, organised by the National Bank for Agriculture and Rural Development (Nabard). The proceedings of the meet held on August 8 and 9, 2004, at the Dr Marri Channa Reddy Human Resource Development Institute, Hyderabad, are worth a read as some of the top officials in agri-lending have owned up to some hurting flaws in the rural credit delivery system.

Y.S.P. Thorat, Managing Director, Nabard, admits to a sharp decline in the long-term investment in agriculture from 20.2 per cent in 1970 to 11.9 per cent in 1990; at present, the growth rate in farm credit is around 16 per cent, i.e. farm credit doubles every six years.

P. Chidambaram, the Union Finance Minister, wants to push up this percentage to 30 per cent per annum, which could mean lifting the present level of credit at Rs 80,000 crore as of March 31, 2004, to Rs 105,000 crore by March 31, 2005.

Will this happen? Possibly the targets will be met, funds will leak and the sordid tale of farmer suicides will continue. Thorat is aware as he says: "The integrity with which we manage this fund would to a large extent determine the welfare of the farmer at the ground level. We must create conditions to stop and minimise leakage, whereby farmers are able to leverage the maximum from this flow."

Prof Mohan Rao, Agriculture University, Visakhapatnam, presenting the findings of a study on "Causes for suicide among cotton farmers in Andhra Pradesh," believes agriculture is no more a way of life as it is "full of risk and uncertainty" and adds: "There is a temptation among small and marginal farmers, particularly the youth, towards high-risk commercial crops to improve their lot. The consequence of the changing scenario is a mismatch between expectations and aspirations which have made farmers restless and dissatisfied."

Around 75 per cent of the farmers who took their lives in 1995 died at the prime age of 35, with Karnataka accounting for one-fifth and Kerala for one-eighth of the total suicides. Regional distribution of suicides in Andhra Pradesh shows that most of the victims were from Telangana (84.5per cent) followed by coastal Andhra (14 per cent) and Rayalaseema (1.48 per cent). Nearly half of the victims were below 40 years and around 63 per cent was small and marginal farmers.

The percentage distribution of causes for suicide deaths of cotton farmers was as follows: credit and indebtedness 36 per cent; natural factors 23 per cent; government lapses 22 per cent; government policies 13 per cent and lapses by farmers 6 per cent.

Ranjana Kumar, Chairperson, Nabard, did not hesitate to say that "farmers have limited access to credit and the scale of finance is not realistically fixed nor is it flexible and need-based, forcing the farmers to resort to money lenders; more, there are considerable delays in getting credit from the banks."

Surya Kumar of Nabard related some of the "straight answers" given to him by farmers on marketing and pricing.

Some of them were: a) About 50 to 60 per cent of the produce is sold by the farmers to the lenders who advance credit with the balance sold in the nearby markets; b) in most states, the arthiyas or the private traders fix the price; c) market yards are not managed properly with 3 to 10 per cent of the value of the produce going towards cess, bribe, distortion of weight, etc.; d) farmers have no control over the prices of inputs or the produce.

Will the farmer make it?

More Stories on : Farm credit | Reflections | Agricultural Institutions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Castorseed futures prices may recover on speculative buying

Lending a helping hand to the farmer

Going bananas?

Third party to evaluate quality of work on AP irrigation projects

Tough nut to crack

Truckers' strike keeps rubber prices steady

Tea stocks in demand on firm price trends

Gold prices may consolidate

'India has potential to influence gold prices'

Milk, ghee prices crash on monsoon revival

Raw silk imports by EOUs/SEZs from China — CBEC to discontinue testing of grades

Need for serious rethink on clearance of edible oil imports

Spices exports top 50 pc of fiscal target during April-July

Milma arm to resume marketing

Here is a tractor for Rs 99,000!