Farmers always wonder how the price of produce shoots up the moment it leaves their hands. The crop in their hands is quoted below the MSP (minimum support price). A week or two later, prices in the secondary and tertiary markets skyrocket, leaving fruits of their labour somewhere else.
Farmers who sell their produce very cheap soon after harvest due to lack of working capital and for repaying crop loans can now aspire for low-cost loans. They need not sell their produce for low prices just to meet small time needs. NABARD has launched a new scheme that encourages banks to give post-harvest loans, taking warehouse receipts as receipts.
About 10.62 crore farmers in the country holding Kisan Credit Cards (KCC) will be eligible for these loans.
Though banks give loans for post-harvest needs of farmers, the interest rates charged range in 15-17 per cent which is expensive for farmers. The new initiative by National Bank for Agriculture and Rural Development (NABARD) will allow banks to give loans at 7 per cent. Besides, it will offer interest subvention, taking care of interest burden on additional funds the banks might require.
“In most cases, they go for distress sale, with prices falling well below the minimum support price (MSP). They do not get any advantage of the real demand in the market for their produce. The new scheme will help them discover better price. They can wait till market favours them,” Mr P Mohanaiah, Chief General Manager of NABARD (Andhra Pradesh), told Business Line .
The banks, however, will have to prepare a list of accredited warehouses where farmers can deposit their produce.