Rural credit boost agro economy

16 February 2014 Kazi Zahidul Hasan

Thousands of farmers are overcoming poverty to a considerable extend every year taking advantage of agriculture and rural credit policy of Bangladesh Bank (BB), officials said on Friday.   
They also believed that the production of potato, onion, garlic, zinger and seasonal vegetables went up manifold in the recent years with the help of BB's agro-credit policy coupled with the ministry's initiative to timely supply of fertilizer and seeds among the farmers.  BB officials said the central bank formulated the credit policy to ensure food security and alleviation of rural poverty by extending the scope agricultural credit for the poor and marginal farmers through financial inclusion.
Along with the crop loan, the policy provided the score  for extending adequate loan facilities for income generating activities in rural areas and agro allied sectors including fishery and livestock.
According to a BB statistics, around 3.31 million farmers got agricultural and rural credit during the fiscal 2012-13 and of the farmers 0.44 million were women.
Different banks have disbursed Tk 146.67 billion as agro and rural credit among the farmers in FY 13 against the target of Tk 141.30 billion.  This was 11.69 per cent higher than the disbursement of Tk 131.32 billion in FY 12.
Out of the amount, 72.35 per cent of the disbursements were as short-term lending and the remaining 27.65 per cent was in the form of long-terms loans provided for irrigation equipment, agricultural machinery, livestock etc.  
"The lion share of the short-term loan was given for the crops production and poverty alleviation programmes," a senior central bank official told The New Nation yesterday.          
He said, BB had rollout agriculture loans with an aim to boost crop production and poverty alleviation. Under the arrangement, farmers were allowed to given low interest credit and repay it after harvesting and selling their crops.
The core objective of the scheme was helping rural people get out of poverty, he noted.
Commenting on the issue, former BB governor Dr Salehuddin Ahmed said, in fact the agro-credit policy of the central bank that creates access to bank finance for the small and marginal farmers has left a positive impact on the agro sector by boosting production of crops and other allied agro sub-sectors.
"A boost in crop, fish and livestock production is ultimately helping not only uplift the livelihood of poor farmers but many of them are also getting out of poverty," he added.
He further said, no doubt the central bank did a tremendous job by bringing the commercial banks under the umbrella of the agro lending although they were earlier reluctant on financing in the sector.
But, there were reports that many farmers are facing harassments in getting farm loans from the banks and banks are diverting loans to other sectors in the name of agro-credit. BB should look into the matter immediately to ease sufferings of the poor farmers as well as stop loopholes in the existing policy, he noted. Dr Salehuddin Ahmed said, there is no denying that the policy helped a lot to improve production side and the main task is now to improve marketing side.
"Farmers are depriving from getting fair prices of their produce in absence of proper marketing channels. As there was limited scope for direct marketing, the middlemen are eating up the benefit of higher production," he noted.
He further said that the task of creating grower's market does not go to the central bank, but it can invite the concerned departments for the formation of such markets. "Once a smooth marketing channel was developed for the farmers, it can bring drastic change in their livelihood giving a fresh boost in rural economy," he added.       
"The main objective of the central bank's programme was to improve crop production through connecting farmers with the agro-lending," said BB Deputy Governor SK Sur Chowdhury.
He noted that extending credit support by the financial institutors helped the rural farmers boost their production capacity ultimately receding poverty level to a great extend to thousands of small and marginal farmers.
"The challenge now lies on creating the agro marketing chain for the farmers could be solved with joint efforts from the ministries concerned," added Sur Chowdhury.
He, however, advised the banks to target farmers who deal in fast-growing crops and those with medium to big farming projects.

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