Enhancing agriculture credit

Enhancing agriculture credit

Chairing the annual meeting of Agriculture Credit Advisory Committee, Governor State Bank Reza Baqir appreciated the increase in the quantum of agriculture credit disbursement over Rs.1 trillion. However, he emphasised diversion of more financial resources to provinces which had not received its due share in agriculture financing. The central bank governor told that agriculture credit disbursement will go up to Rs.1350 billion in the next fiscal year.

The agriculture credit policy of the past and present governments has not been beneficial for the farmers and they always shied away from acquiring bank loans for both religious and financial reasons. A vast majority of farmers are small land holders as 89 percent of them have less than 5 hectare of agriculture land. The rapid population growth has further lowered the man-land ratio. They cannot increase per acre yield without substantial credit facility from the government. But at the same time they are not interested in acquiring agriculture credit because of high rate of interest. That is why in the past different credit schemes of successive governments could not attract small farmers to avail this facility. The only reason was the interest payments. Most often the loan instalments are not paid on time and banks increase the mark up rate further. Therefore the incumbent government has to come up with agriculture credit facility which does not require interest payment. The credit provision model of Grahmeen Bank of Bangladesh can be followed.

Small farmer has always served as main engine of growth in agriculture sector. But easy agriculture alone cannot achieve the desired results obboosting agriculture productivity. The most critical area of government intervention is thus land reforms to make man-land ratio favourable. In Pakistan there had been never any serious effort to undertake drastic land reforms. To derive full potential of the sector, true land reforms have to be introduced without the manipulative yardstick of produce index unit and allowing the feudal class to transfer big land holdings to their faithful servants. The land reforms in India can serve a model.

Another bottleneck that hinders growth of agriculture sector is the unaffordable price of inputs like high yield hybrid seeds, fertilizer, insecticide and pesticides. Over, the past two decades the prices of these inputs have increased abnormally and yield per acre cannot be increased. Consequently, the import bill of agriculture commodities including pulses, Cotton and edible oil has gone up to over $3 billion. Now tomatoes, potatoes, onions and garlic have to be included in the list of importable items.

Last but not the least water shortages is taking a heavy toll on the agriculture sector causing sharp decline in the production of all major crops. Over the past 40 years the construction of storage dams has not been a priority in development planning. Construction of Kalabagh dam was made politically controversial and all the provincial government stopped spending on launching small dams on the potential sites. The present government is now seriously pursuing a policy of building storage dams. A comprehensive policy of agriculture development needs to be worked out and jointly implemented by the central and provincial governments.

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