Proagro to provide lower interest credits to farmers

Move aimed at eradicating child labour in cottonseed production

Proagro-Bayer CropScience has signed a memorandum of understanding (MoU) with the State Bank of India to arrange lower interest credits to cottonseed growers as a part of its initiative to improve productivity and profitability under its Harvest of Happiness project to eradicate child labour.

Under the new scheme, the grower is eligible for a loan up to Rs 1 lakh from the bank based on the seed production agreement with Proagro without any collateral security.

The mode is payment of cash in two to three installments as per the cropping requirement. Credit beyond Rs 1 lakh may need collateral security. However, most of the farmers' credit requirement remains within Rs 1 lakh limit.

The scheme has been envisaged to improve growers' profitability to further enable them to meet all legal requirements including 'no child labour'. The first installment will be extended to farmers before the beginning of the sowing season.

Farmers will open accounts with the bank where the company will deposit the procurement payments. After deducting the debt, the bank would make the remaining amount available to the farmers.

In the first phase, the scheme is open to Proagro growers in Tamil Nadu, Karnataka and Andhra Pradesh. In the second phase, it will be extended to the company's farmers spread across the states of Uttar Pradesh, Chattisgarh, Bihar, Punjab and Haryana.

Though the scheme is primarily aimed at eradicating child labour in cottonseed production, it is being extended to all farmers who are engaged in the production of corn, rice, sunflower, grain sorghum and millets for Proagro.

The eligibility under this scheme is grower's track record with respect to productivity and credit worthiness. In addition to almost halving the cost of borrowing money, the scheme is expected to ensure timely availability of credit so that farmers can buy and use the necessary farm inputs without any delay.

"Child labour in cottonseed production is a deep-rooted socio-economic problem that has developed in the last three decades in this industry. The financial distress of many rural families has contributed a great deal in intensifying this problem. This scheme will provide timely and organised financial support and significantly reduce borrowing costs. We hope that this scheme will improve their profitability and further enable them to discontinue the use of child labour," Clive J Pegg, managing director of Proagro, told Business Standard.