THE Sindh government has come up with a support programme to help chilli growers invest in farm inputs. It envisages subsidised loans that will be offered by Habib Bank Ltd at a rate of Rs32,000 per acre, which is what a chilli farmer normally spends on inputs.
The growers would have to pay 6pc interest and the Sindh government would bear the difference. The Sindh Enterprises Development Fund (SEDF) of Sindh Board of Investment (SBI) will provide the subsidy.
Initially, 2,000 farmers would get this subsidy over a three-year period. An amount of Rs300m has been earmarked by the provincial government for this purpose. Around 30 farmers are said to have obtained the loans by the third week of June, while more cases are being processed and hopefully would be finalised soon. The loans vary from Rs0.5m to Rs2m.
It will help them reduce their borrowings from the informal sector. Normally, they had to make do with what is being provided by the ‘aarthis,’ who denied a fair price for their harvest.
A majority of growers cannot approach banks for loans due to cumbersome procedural requirements and prefer to get financing in the shape of inputs from the ‘aarthis’ whenever they need them.
But not many chilli producers are aware of the new facility, as it is the first crop season since the announcement of the subsidy scheme.
Initially 2,000 farmers would get the loan subsidy over a three-year period. An amount of Rs300m has been earmarked by the Sindh government for this purpose
Nadir Hussain, a small chilli grower, says he used to pay Rs20,000-22,000 per acre to the middlemen in the market for fertiliser and pesticides etc. “We also had to sell our crop to them instead in the open market for fear of not getting any loan next year,” he adds.
This year, Hussain obtained a loan of Rs600,000 under the government’s scheme. He is happy that he will not have to pay the kind of high mark-up that is common in informal financing, and also that he will be able to sell his crop freely in the open market or to food processors who pay a premium for better quality produce.
The Pakistan Agriculture Coalition’s (PAC) Shahjehan, who helped create a linkage between growers and HBL through the SEDF, hopes that the number of borrowers will increase by next year. He expects farmers to get to know about the advantages of the scheme when they repay their bank loans.
The SBI’s Mehboobul Haq says subsidised agricultural loans would help end the growers’ exploitation at the hands of informal lenders. Besides, buyer platforms are also being set up in Kunri’s main chilli market to help growers. The certification of the crop’s quality and logistical services like shipment would be also ensured through different firms. “This is how the role of the middlemen will be minimised as best as possible,” he says.
The evaluation of produce in the laboratory that is being set up would enable farmers to know the quality of their produce and discover the right price and even premium (if eligible) for their crop. Apart from this, the Small and Medium Enterprise Development Authority is establishing a dehydration plant to process chilli.
The farmers believe that this combination of initiatives is bound to yield positive productivity of red chilli and lead to higher exports of the crop to foreign markets.
Published in Dawn, Economic & Business ,July 13th, 2015