Canola cultivation in flood-hit areas

SBP launches Rs 500 million financing scheme

Staff Report

KARACHI: The State Bank of Pakistan (SBP) has launched a concessional financing and guarantee scheme, under which an amount of Rs 500 million has been allocated to encourage farmers to sow canola in the flood affected areas of the country for the current Rabi season.

According to a circular (SMEFD Circular No 15) issued on Tuesday – under the scheme, financing will be provided at affordable/concessional markup rates through banks.

Banks and Zarai Taraqiati Bank Limited (ZTBL) are allowed to obtain following refinance facility to finance the farmers of notified flood affected areas, it added.

Refinance under the scheme will be provided to banks at 5.0% per annum – while the banks will be permitted to charge a maximum spread of 3.0% p.a. from the borrowers, therefore credit to farmers will be available at 8% p.a., according to the circular. This scheme will remain valid up to October 31, 2011.

This new scheme is in line with the government of Pakistan policy for revival of agriculture activities and SBP relief measures for improving access to financing in flood affected areas. “In this regard it is expected that MINFA (Federal Ministry of Food and Agriculture) and provincial agriculture departments would ensure timely availability of hybrid seeds, fertilizer, pesticides and on ground technical guidance to the farmers,” it added.

Under the scheme, agricultural credit will be provided to the farmers for canola cultivation in 17 affected districts as identified by MINFA. Out of the 17 districts, six districts are of Punjab (Layyah, Muzaffargarh, Rajanpur, Rahim Yar Khan, Multan and D.G. Khan), four districts are from Khyber Pakhtunkhwa (Nowshera, Charsadah, D.I. Khan and Peshawar), four are from Sindh (Sukkur, Nausheroferoz, Benazirabad and Larkana) and three districts are from Balochistan (Nasirabad, Jaffarabad and Jhal Magsi).

According to the circular, agricultural credit shall mean only farm credit for meeting the production/working capital requirements, as defined in Prudential Regulations for agriculture financing while all categories of farmers (owner, owner-cum tenant and tenant) of the specified areas will be eligible for agricultural loans under the scheme.

It said the time period of the crop production loans and its repayment will be based on the cropping cycle up to a maximum period of 6 months while there will be no maximum limit for borrowing by the farmers under this scheme. However, the borrowing limit of farmer shall be fixed by the bank keeping in view production cost, cash flows, repayment capacity, risk profile of the borrower, etc., it added.

Principal amount of loans under the scheme shall have to be repaid on the agreed date between the bank and the borrower, however, not later than 60 days from the date of harvest of the crop, it said and added that banks shall not take more than 5 working days in evaluating an application for credit under the scheme from the date of receipt of complete information from the borrower. “Where the request is declined, the bank will explicitly apprise the applicant reasons for rejecting the application,” it added.

Under the Scheme, SBP would share bona fide losses to the extent of 30% out of which 50% claims of losses shall be reimbursed by the SBP when the loan is categorised as doubtful and the remaining 50% at the time of loss. Claims shall be submitted to the SBP on semiannual basis i.e. April 30th and October 31st duly verified/certified by the bank’s internal audit. “However, this reimbursement shall not obviate the lending institutions from the right of recovery of the defaulted amount,” the circular said. Dailytimes

ZTBL urged to start issuance of new agriculture loans to farmers

LAHORE: Farmers Associates of Pakistan (FAP) has demanded of the Zarai Taraqiati Bank Ltd (ZTBL) to start issuance of new agricultural loans to the farmers and honour its past commitments with regard to loaning for purchase of tractors.

Talking to Business Recorder here on Sunday Director and Chief Co-ordinator FAP, Dr. Mohammad Tariq Bucha said that the bank has not only stopped all the loans for the purchase of tractors but the farmers whose loans were previously approved and the "Supply Orders" released are facing problems in obtaining "Demand Drafts" for the same.

"When FAP contacted the tractor manufacturers, they said the tractors are ready in accordance with "Supply Orders" from ZTBL. However, due to the non issuance of "Demand Drafts" for these tractors, they cannot deliver tractors", he added.

Bucha said while the recent floods have shaken and devastated the nation and its economy besides the lives lost, the damage to property, the floodwater also washed away crops from the farmlands. Millions of acres of farms and agricultural lands belonging to thousands of farmers will not be able to produce a single grain of food this season. The farmers struck by this calamity now look towards the government and the Zarai Taraqiati Bank Limited (ZTBL) for relief, assistance and rehabilitation.

He said adding to the tragedy is the recent policy of ZTBL, which has not only refused to issue new agricultural loans to the farmers but also backed out on its past commitments. FAP members and farmers are unable to understand this anti farmer policy of ZTBL whose duty is to provide credit to the farmers, as they would not be able to prepare their devastated lands for sowing of wheat. The farmers felt that there is an unfaithful hand depriving credit at this critical juncture to the farmers.

Due this policy it will be impossible to plough lakhs of acres of land thus rendering it uncultivated this year. This will result in severe food shortages for the next year besides unwarranted rise in the price of wheat and will force the government to import wheat at a higher cost in order to meet the food requirement.

FAP members passed on urgent resolution as per the spokesman of FAP Dr. Mohammad Tariq Bucha to press upon the government and ZTBL to ensure prompt release of previously granted loans besides immediately releasing fresh loans to the farmers. Their "Demand Drafts" should be issued immediately to ensure timely delivery of tractors to assist the farmers and the agricultural sector of the country to recover from this shock. The provision of new agricultural loans should be guaranteed so that in the coming days the rich soil brought in by the flood waters can be put to benefit and lakhs of affectees may start ploughing their land to sow wheat on time.

FAP head by Foreign Minister Shah Mahmood Qureshi also appealed to the Prime Minister of Pakistan, Syed Yousuf Raza Gilani to intervene in this matter for the benefit and rights of the poor farmers so that Pakistan's economy and the agricultural sector can perform its appropriate role to rehabilitate the farmers after the havoc caused by recent floods.

However, when contacted by this scribe, senior managers of ZTBL told that the bank was facing cash crunch due to non-recoveries of its agricultural loans and the writing off loans in the flood hit vast areas of the country.
Copyright Business Recorder, 2010

US Ambassador for supporting agri sector

ISLAMABAD, Sept 30 (APP): The US Ambassador Robin Raphel here on Thursday reiterated the US support for the development of agriculture sector in Pakistan. A high level USAID delegation led by Ambassador Robin Raphel visited Zarai Taraqiati Bank Limited (ZTBL) and met with its president Muhammad Zaka.A comprehensive presentation was made by ZTBL to the delegation in which role of agriculture sector in the country’s economy was highlighted.

ZTBL President Zaka Ashraf explained the specialized role of the bank in the agriculture sector, which was the only institution playing a vital role by providing a combination of technology alongwith credit for enhancing the agriculture productivity in Pakistan. 

He informed that ZTBL has an extensive outreach through its country wide network of 353 branches and over 1300 MCOs contributing towards helping the small farmers even in the remote areas.
Zaka Ashraf appreciated the role of the US government and particularly USAID in assisting the development of the agriculture sector of the country.
The delegation was also briefed about the restructuring and revamping of the bank with particular reference on introducing new technologies and initiatives diversifying sectoral exposure and meeting the supply demand credit gap of over 430 billion.
The model of private public partnership and collaboration with international agencies was shared with the delegation.
The potential areas of cooperation between USAID and ZTBL were also discussed at length especially in view of the present situation in the agriculture sector caused by floods.

The delegation was also briefed on the initiatives like  soil improvement, seed development, water conservation (Drip Irrigation, Sprinkler irrigation), horticulture, orchards development, tunnel farming, livestock development, which need to be taken on fast track basis to increase agriculture productivity. 

The US Ambassador appreciated the commendable job carried out by ZTBL for transforming Pakistan’s agriculture and efforts made by ZTBL in taking a pro-active role towards agricultural development through introduction of new technologies.

She discussed the damages caused by current flood disaster in Pakistan and the possible role ZTBL can undertake to alleviate this situation.

New policy unveiled: Sunflower, canola procurement price fixed

Federal Minister for Food and Agriculture Nazar Mohammad Gondal on Monday announced Rs1,800 per 40 kg procurement price for canola and sunflower and set a target of one million acres of land to be utilised for sowing the two crops in the flood-affected areas.
Unveiling the new policy on canola and sunflower at a press conference the minister said the policy was aimed at providing financial benefit of Rs3 billion to the growers.

The government will procure canola against cash payment in order to give maximum benefit to farmers, he announced.

The government is seriously considering measures to provide relief to the farming community, which has lost its only source of bread and butter. “The canola policy is the beginning and with the start of Rabi season, the government will come up with policies on other crops,” Mr Gondal told newsmen.

The minister said that the government would help and assist the flood-affected farmers to enable them revive the agriculture sector. He said that a package of incentives would be announced before the sowing of each crop in the flood-hit areas.

He said fields would be ready in Khyber Pakhtunkhwa within next fortnight for sowing of canola and sunflower. The seed companies would provide hybrid seeds to farmers on no-loss-no-profit basis through the Zarai Taraqqiati Bank (ZTBL) on deferred payment basis.

Mr Gondal disclosed that the government would provide free of cost seeds to those farmers who would grow canola on at least 50 acres.

On a query, officials of the Ministry of Food and Agriculture told Dawn that the government had with it 50 tons of hybrid seeds and over 100 tons of non-hybrid seeds which would be given to farmers.

Mr Gondal dispelled the speculations that the country might face a severe wheat shortage as the floods damaged the stocks of the commodity. He said that enough strategic reserve was laying in the public sector to meet the local needs. He however said that the exact status would be clear once the floods were totally over and the needs for the next crop seed were calculated.

Mr Gondal stated that the government has in its stock enough wheat and there was no possibility of food insecurity in any province. To ensure food security, the possible export of two million tons of wheat had been deferred till next bumper season.

Reuters adds: Pakistan, Asia’s third-largest wheat producer, said in April it would export 2 million tons of wheat after a bumper crop of 23.86 million tons in 2009/10, and a carryover of 4.2 million tons from the previous crop.

But it held back exports because of low prices in the international market until a recent rally.

“When the next crop is sown then we will have an idea of how big the surplus is and then we will make a decision,” Mr Gondal told the news conference.

Wheat is sown in Pakistan from late October to December.

“We need to see on how much area we can plant wheat,” the minister said.Two food ministry officials had said last week the export plan would likely be shelved over flood worries.

Pakistan has lost at least 725,000 tons of wheat in the country’s worst flooding in 80 years, and experts say water and more rains could complicate planting of the next crop.

The government has 10 million tons of wheat stocks, besides those held by the private sector, Gondal said.

Flood-hit farmers: Govt asked to offer cheap loans

ISLAMABAD: The National Assembly Standing Committee on Food and Agriculture has suggested to the government to disburse the $900 million World Bank loan to the flood-hit farmers at one per cent interest rate and declare the entire cropping zone as ‘calamity area’.
 

The committee which met here on Thursday also demanded the government to draw a relief policy for the flood-affected areas and recommended that long-term loans granted by all commercial banks and Zarai Taraqqiati Bank Ltd (ZTBL) should be waived.

It also asked the government to pay Rs56 billion to the ZTBL which were waived in the past. The committee asked the ZTBL to dispose of the claims of farmers affected by the flood on priority basis.

The meeting chaired by Javed Iqbal Warraich asked the ministry of food and agriculture to issue notification for declaration of calamity area in view of cropping zone, disease zone and crop susceptibility. The ministry should also devise the crop insurance policy.

The committee asked the ZTBL to issue loans on war-footing to rehabilitate agricultural land damaged by floods. At the same time, the ministry of food and agriculture should develop a comprehensive working plan for detailed survey of flood-hit areas, including a water policy for irrigation purposes.

With regard to establishing model villages, the Standing Committee suggested to re-name the scheme. It decided to visit such a village in Sargodha district.

The committee recommended that the ZTBL should reorganise and improve its credit scheme, and introduce innovation and modern technology of tractors, tube-wells, to farmers through private sector.

With regard to insurance policy, the committee recommended that the ZTBL should devise a clear loan policy for individual small farmers. In this regard, a full working plan should be prepared by the ministry of food and agriculture in collaboration with the ministry of finance, FBR and insurance companies.

The committee asserted that ZTBL should come up with efficient ways to revolutionise agricultural lending. The bank should devise strategies for lending to small and marginalised farmers. It should also ensure lending to farmers in livestock, dairy and fisheries and for development purposes including farmers in livestock and dairy fisheries.[DAWN]