Benefit of wider access to credit eludes farmers: study

Tenant farmers cannot reap the benefit of a wider access to bank loans due to a lack of advisory and training services from the government.
A Bangladesh Bank credit programme styled Tenant Farmer Development Project also lacks arrangements to support these vulnerable borrowers, analysts said at a workshop in Dhaka yesterday.
Brac, a leading NGO, organised the workshop to share the findings of a study it conducted on the impact of the credit programme.
The BB in 2009 formed a Tk 500 crore revolving fund for the project to help tenant farmers, mostly small and marginal ones, get working capital without collateral.
The central bank assigned Brac to disburse the fund. So far, Brac disbursed Tk 1,370 crore among 274,000 farmers.
"The number of tenant farmers is on the rise, and so is the land under their cultivation. So the need for financial services has become important," Abdul Bayes, a professor of economics at Jahangirnagar University, said at the workshop at Brac Centre Inn.
Bayes said land has become precious resources and the percentage of landless households is rising. People do not sell their lands even if they migrate to urban areas, he added.
"But land is transacted through tenancy market, which is booming," he said, adding that the number of farmers who rent land rose to 58 percent in 2013 from 44 percent in 1988.
The amount of land ploughed under tenancy contracts has also increased during the period, he said. Farmers' access to credit also rose, he added. Of the credit, 70 percent comes from banks and microfinance institutions, while the rest from informal sources such as borrowing from friends, relatives and moneylenders with or without interest, he said.
“The tenancy pattern, lower yield and return for tenant farm households, and the lower extent of cost for rented land reflect the need for credit," said Mohammad Abdul Malek, a senior research fellow at Brac's research and evaluation division.

He presented the findings of a baseline study on the impact of credit on tenant farmers.
"Evidences also show that small, marginal and landless tenant farmers are neglected by the Department of Agricultural Extension," said Malek.
Only 34 percent of the tenant households were familiar with agricultural personnel, whereas only 4 percent households received some kind of training from the DAE, he said.
Presenting a qualitative study on tenancy, agricultural livelihoods and microcredit, Abu Ahasan Mishu of Brac research and evaluation division said families with non-farm income did well by getting loans under the programme.
Prof MA Sattar Mandal of Bangladesh Agricultural University said there is a tendency among farmers to shift from cereal crops to high value crops such as vegetables and fruits.
BB Governor Atiur Rahman said farmers' dependence on informal loans has fallen. Rahman said one third of the bank finance for agricultural purpose is now channelled through microlenders. Mahabub Hossain, adviser to the executive director of Brac, chaired the event.