State allows them to store grains, cereals at warehouses and sell them when prices are higher
To enable farmers get better returns for their produce, the state agriculture ministry has decided to launch Agricultural Produce Mortgage Scheme (APMS), by which farmers can mortgage their produce with nationalised banks and get loans. The scheme takes off on Tuesday.
The ministry has tied up with a collateral management agency, Staragri, which will help farmers complete the bank procedure to acquire a loan by mortgaging their produce.
Amit Agarwal, director of Staragri, told dna, “Under this scheme, the farmers can store their produce at Agriculture Produce Market Committee’s (APMC) warehouses. Thereafter, our officer would inspect the quality of the produce and accordingly calculate its market value and issue receipts to them. On the basis of the receipt, the bank will sanction loans to farmers.”
Officials of the Maharashtra Agriculture Marketing Board are of the opinion that the scheme will enable farmers to get loans by keeping their produce as collateral, thereby reducing dependence on money lenders. Moreover, small farmers have very limited access to markets and lack facilities to store their produce. As a result, they are forced to sell surplus produce during the harvest season at lower prices.
Officials from the state marketing department told dna, “The traders collect agricultural produce at very low prices and sell them when the market conditions are profitable. In addition, farmers face enormous difficulty in obtaining credit for their agricultural activities because of lack of financial services in rural areas. Moreover, banks require collateral that farmers cannot provide, as agricultural productivity is uncertain due to weather conditions and other factors. Thus farm produce cannot be used as safe collateral to obtain a loan.”
Milind Akre, a director of Maharashtra Agriculture Marketing Board, told dna, “Under this scheme, farmers can store their produce in warehouses during harvest, when prices are relatively low, and release them in the market at better prices during periods of low supply. To meet farmers’ immediate financial needs while they defer their incomes, the scheme enables them to access finance from the banks. The role of Staragri is to mediate and provide guarantees to banks on behalf of the farmers. Under the scheme, the farmers get 70 % of the produce value as loan from the bank. After selling his stored produce, he will have to repay the loan to the bank.”
Under the scheme, the farmers cannot store perishable produce like onions, potatoes and leafy vegetables but oil seeds, dry foods, pulses and cereals can be stored in the warehouses. The state agriculture ministry has opened 200 warehouses for farmers in the first phase. The ministry plans to open 500 warehouse in the second phase.
Agricultural Produce
Mortgage Scheme at a glance
Started by State agriculture ministry
Farmers can mortgage produce with nationalised banks, get loans.
Farmers can store oil seeds, dry foods, pulses and cereals at warehouses. No perishable produce
200 warehouses for farmers in first phase, 500 in second phase
Collateral management agency, Staragri, will help farmers complete procedure
Staragri official to inspect quality of produce, calculate market value, issue receipt
Bank will sanction loans to farmers on basis of receipt
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