Coordinated efforts to win over farmer’s woes

A tripartite arrangement among the members of the commodity exchange, banks and the farmers is called for to win over the farmers’ problems. Along with this, there is a need for rural insurance fund to take care of any eventuality.

With the Government thrust on development of agriculture, the clearing members of the commodity exchanges can play a pivotal role for the economy. The farmers can hedge their position in the commodity exchanges through banks, by their Central Treasury. Of course, necessary amendments have to be carried out in the Forward Contracts Regulation Act. In this process, the farmers will be assured of their prices and the banker will also be protected.

The rural insurance will also give a boost when in the event of any unfortunate circumstances; the insurance claim will be used to pay out of the debts. In this way, there can be better use of the funds; banks can also provide credit for a longer term. This will enable them to get necessary inputs for cropping. At the same time, there must be agricultural clinics to provide the farmers useful information on cropping practices, technology, crop protection, market prices and trends, etc.

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The co-operative societies can play an active role and can become the clients of the clearing members. The central bank treasury of the bank can hedge on behalf of the farmers. The necessary costs can be recovered from the users. The minimum support price to be fixed for certain agricultural commodities should not become a political sensitive issue. Before fixation, there is need for taking into consideration the cost escalation, national and international prices of that commodity.

With the increase in the prices of agricultural commodities, there is need for creation of food security as otherwise, it will lead to social problems and other related issues. With banks in place, for providing credit, the farmers’ indebtedness can be reduced. There is need for inculcating the awareness among the farmers about the high interest rate that is being paid by them. For example, if a farmer borrows Rs 100 and returns Rs 110 in the evening, he has to realise that he is paying 380 per cent as interest. Along with providing credit, the need to inculcate savings habit among the farmers has to be achieved.

Bio-metric ATM cards can be given to farmers. This will ensure that they need not remember the PIN. There are around 66.5 million kisan credit cards in use in India. This will help to bring more people from rural and farming sector in to banking.

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