The Hindu Business Line : `Budget has made an effort to address farming risks'

Advertisement

Mangalore March 2 Welcoming the measures announced by the Finance Minister, Mr P. Chidambaram, in the Budget proposals for 2007-08 to the farm sector, the Chairman and Managing Director of Corporation Bank, Mr B. Sambamurthy, said that the proposals have made an effort to address the risks involved in farming.

The agriculture production, which stood at 213 million tonnes (mt) in 2002-03 when credit to this sector stood at Rs 60,700 crore, now stands at 209 mt when the outstanding credit is Rs 1.72 lakh crore.

`Holistic approach'

Though the credit has gone up by three times, production is stagnant or a little less than what it was five years ago. "The missing links in this have to be addressed immediately. That is an issue, which requires a holistic approach at the broader level," he said.

There is an urgent need to come out with some products that would mitigate risks in the post-harvest stage, he added. The agriculture sector is no longer looked upon as a social obligation, but as a business opportunity.

"How do we address the farmers' risks? That requires a total framework; some of the risks were addressed today."

Stating that agriculture involves pre-harvest and post-harvest stages, Mr Sambamurthy said that in pre-harvest a lot of things are attributed to nature, while most of the post-harvest processes are man-made or system-made.

There is a need for a mechanism where farmers take the benefits of man-made systems such as forward market information, which is currently being used mainly by traders and speculators.

Vital aspects

"One way in my opinion is for banks or farm institutions to act as aggregators. We give crop loans and we also want to see that farmers get a good price for the crop.

So, banks can aggregate the forward contracts."

The other aspect is that there is no value-addition as far as the farmer is concerned in the post-harvest stage. With slight value-addition, the other intermediaries are taking the value away.

Meanwhile, the Chairman and CEO of Karnataka Bank Ltd, Mr Anantakrishna, said that people were expecting relaxation on various fronts, including personal tax. "Perhaps the Finance Minister is trying to control inflation by increasing tax on various fronts," he added.