Agri-loan, key to farming success

Starting today's article with statistics provided by the Bangladesh Bank. According to the statistics, in six months, from July to December 2020, banks have given loans a total of Tk 12,077 crore (USD 1420 million) to the farmers, collected Tk 14,091 crore (USD 1657 million) from the farmers at the same time. It means, banks have collected 22.53 percent more agricultural loans, compared to the total disbursement. Although, there was a special instruction from the Bangladesh Bank regarding the payment of instalments, farmer kept on paying off their loan instalments. It can be said that our farmers were at the forefront who worked hard towards a sustainable economy during the coronavirus pandemic. In 2020, Bangladesh Krishi Bank has distributed agricultural loans worth Tk 4,636 crore (USD 545 million) and despite the spread of COVID-19, the bank was able to recover Tk 4,000 crore (USD 474 million) that year. Real farmers are not defaulters and they have proved it even during the pandemic. Whenever they failed to repay a small loan, the law enforcers are always there to arrest them, but the big fish manage to escapes through the loopholes of the law.

It is difficult for a farmer to get a loan as we have prolonged negligence regarding the farmers and farming sector. According to a 2019 study by the International Food Policy Research Institute (IFPRI), farmers in Bangladesh typically borrow more than 81 percent of loans from various private sources, including NGOs, relatives, private banks and moneylenders. The interest rate of these loans is 19 to 63 percent while the interest rate is nine percent at Krishi Bank. But for some unknown reason, only 6 percent of the total loan comes from Krishi Bank. IFPRI's survey found that 36.4 percent of the total loans were borrowed from NGOs, where the farmer has to pay an interest of more than 20 percent. According to IFPRI, 19 percent of farmers take loans from relatives. 15 percent from the landowner, 11.4 percent come from moneylenders and 3.6 percent from various associations and cooperatives. Farmers get the largest share of the loan from the Krishi Bank, which is about 15 percent. Large, medium and small farmers together get 36 percent of the total loan while marginal farmers get about 5 percent. The total percentage of loan all the farmers get is 36 percent. Sharecroppers, the farmers who cultivate other people's land on lease, do not get this loan. As a result, they have to rely on loans from other sources, including NGOs.

Small NGOs and associations began to form in the districts and upazilas from the 80s to the early 90s of the last century. Along with other developmental activities, these institutions started a micro-credit programme. Institutions thrive mainly on interest earned from loans. But there is no such change in the farmer I have witnessed. The farmer falls into a debt trap and sometimes carry the burden of prolonged loans that they take from NGOs and local moneylenders. Farmer Rafiqul Islam from Natore, at one of the open-air discussion among farmers and policymakers, popularly known as 'Krishi Budget Krishoker Budget' (Farmers' Voices in Budget, aired on Channel i), said he has never seen any political person become poor while doing politics, but the farmers are not well off doing their profession, which is farming. "We don't have capital, no one thinks about our market, no one talks about us," Rafiqul angrily said. Such anger doesn't only come from Rafiqul, but almost every farmer bears the same agony. Most importantly, the moneylenders expanded their business by capitalizing on the poor state of the farmers and they never want them to get out of this vicious circle of borrowing money from the locally-rich and powerful people.

Usually, the prices of fruits and crops are not that well during the season. So if the crop is preserved, the farmer would probably get a higher price during the off-season. After harvest, a farmer has to sell the crop for two reasons. Small and medium farmers do not have any arrangement for crop storage. After taking loan at a high interest from a moneylender, it becomes obligatory to repay the loan in time. Usually, the farmer has to sell the crop from the land to repay the loan. Otherwise, he will not get a loan from the moneylender for the next crop. According to a recent research report by Bangladesh Rice Research Institute (BRRI), farmers have to sell 52 percent of their surplus paddy within a month at the beginning of the season. In one to two months 25 percent paddy has to be sold, in two to three months 18 percent and in four months or more 5 percent. However, if the farmer had three to four months to repay the loan and there was a system to save the crop, they could have benefited a lot. Once upon a time in this country, farmers used to get loans by storing grains in food storages. That excellent project called 'Foodgrain storage loan project' was stopped by the muscle power of the moneylenders.

Another problem regarding loans is arranging loans for landless farmers and sharecroppers. According to Bangladesh Bureau of Statistics (BBS), 19 percent of the 35.5 million agricultural households in the country are sharecroppers. According to this calculation, the number of sharecropping families in the country is more than 65 lakh (6.5 million). There are about 23,23,270 (2.3 million) landless farming families in Bangladesh and these families are directly engaged in farming, by leasing other people's land. According to the existing agricultural loan policy of the government, the owner of land up to five acres will get a maximum loan of Tk 2.5 lakh (USD 2964) and they have to mortgage their land. Those who do not have land will also get this loan, but in that case, they have to submit the lease agreement. But the reality is different. Last year, when the government announced stimulus package for farmers, considering the coronavirus outbreak, Bangladesh Bank promised to provide loans at an interest rate of Tk 4 percent. However, many sharecroppers called me and said they didn't get any loan. They had leased the land but they did not have any contract, since the landowner doesn't usually provide the agreement. This is because if the land is allotted through a written agreement, the landowner has to pay a certain amount of fee to the government.

I can see some ray of hope amid frustration regarding loans. I have always been an optimistic person. I believe that one day everything will be in favour of the farmers. In this crisis of corona, many of us have realized the importance of agriculture. Anyway, I was talking about hope. Last year, I heard that Rupali Bank was giving interest-free loans to farmers for tomato cultivation. I inquired about their programme with great interest. They gave a loan of Tk 50,000 to 500 tomato growers in Natore through a pilot project. I have repeatedly spoken of such a programme. In my 'Krishi Budget Krishoker Budget' programme, many farmers have shared their bitter experiences on getting loans or failing to receive a loan.

Some have also criticized the debt trap of the NGOs. One day I had a long talk with Rezvi Newaz, special correspondent of Channel i News. I was telling him that in any programme on agriculture, the farmer's end should be considered most. The farmer has to make sure that he gets the right price for his produce. Developing the farming sector and the farmers will be the key to the sustainable development of Bangladesh. I think the real farmer has the right to get a loan at 4 percent interest without any other conditions. Whereas, we see farmers have to take high-interest loans from various NGOs or intermediaries. Where industrialists get loans at 9 to 15 percent interest rate, small farmers have to pay more than 20 percent interest rate. Considering the number of defaulters, write-offs, corruption and irregularities in the banking sector, the government can provide interest-free loans of Tk 15,000 crore to Tk 20,000 crore (USD 1764 to 2353 million) without interest.

Our country is entering the era of agricultural industrialization. Industrialists are investing in farming and agricultural technology is evolving and spreading fast. Small and medium farmers have to survive, otherwise, many will leave the profession and the number of unemployed people will rise. Small and micro-enterprises should be given a chance to succeed. Agricultural loans should be made easy and available. Government banks specialized in agriculture should come forward with more earnestness.