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Magazine on Low External Input Sustainable Agriculture INDILEISA

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Finance for farmingFinance for farming

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LEISA is about Low-External-Input and Sustainable Agriculture. It is about the technicaland social options open to farmers who seek to improve productivity and income inan ecologically sound way. LEISA is about the optimal use of local resources andnatural processes and, if necessary, the safe and efficient use of external inputs. It isabout the empowerment of male and female farmers and the communities who seekto build their future on the bases of their own knowledge, skills, values, culture andinstitutions. LEISA is also about participatory methodologies to strengthen the capacityof farmers and other actors, to improve agriculture and adapt it to changing needs andconditions. LEISA seeks to combine indigenous and scientific knowledge and toinfluence policy formulation to create a conducive environment for its furtherdevelopment. LEISA is a concept, an approach and a political message.

ALEISA India is published quarterly by AMEFoundation in collaboration with ILEIA

Address : AME FoundationNo. 204, 100 Feet Ring Road,3rd Phase, Banashankari 2nd Block, 3rd Stage,Bangalore - 560 085, IndiaTel: +91-080- 2669 9512, +91-080- 2669 9522Fax: +91-080- 2669 9410E-mail: amebang@giasbg01.vsnl.net.in

LEISA IndiaChief Editor : K.V.S. PrasadManaging Editor : T.M. Radha

EDITORIAL TEAMThis issue has been compiled by T.M. Radha,K.V.S. Prasad and Poornima Kandi

ADMINISTRATIONM. Shobha Maiya

SUBSCRIPTIONSContact: M. Shobha Maiya

DESIGN AND LAYOUTS Jayaraj, Chennai

PRINTINGNagaraj & Co. Pvt. Ltd., Chennai

COVER PHOTOWomen farmers in Uttar Pradesh are adept inmanaging group accounts.Photo: S Jayaraj for GEAG

The AgriCultures Network

ILEIA is a member of the AgriCultures Network(http://www.leisa.info). Farming Matters ispublished quarterly by ILEIA. Eight organizationsof the AgriCultures Network that provideinformation on small-scale, sustainableagriculture worldwide, and publish are:LEISA Revista de Agroecología (Latin America),LEISA India (in English), SALAM MajalahPertanian Berkelanjutan (Indonesia),Agridape (West Africa, in French),Agriculturas, Experiências emAgroecologia (Brazil),LEISA China (China) andKilimo Endelevu Africa (East Africa, in English).

The editors have taken every care to ensurethat the contents of this magazine are as accurateas possible. The authors haveultimate responsibility, however, for thecontent of individual articles.The editors encourage readers to photocopyand circulate magazine articles.

June 2010 Volume 12 no. 2INDILEIS

Financial Inclusion is the new buzz word being heard everywhere, meaning different thingsto different people – from a mere credit access to a range of financial services to the poor.Most often, farm credit is inherently associated with large farmers, under the assumptionthat only commercial agriculture needed finance. But the reality is, majority of small holdersalso need credit which is timely and inexpensive, to remain in farming and make a reasonableliving.

A number of initiatives are being tried by formal as well as development agencies, usingdifferent models and methods with varying degrees of success. Also, there are a wide rangingissues and relevant questions - Is credit sufficient to promote sustainable livelihoods forsmall holders? Do farmer groups have a role to play in accessing credit? Are self help groupsbecoming an easy platform for reaching the credit targets by the government? Is sufficientinvestment being made in making these institutions sustainable? In this issue, we have includedexperiences which address some of these issues. Also, included are views of pioneers ofsome of these movements, and those making tremendous efforts even in mainstreaminstitutions. Hope you find them informative and inspirational.

Some of our readers are giving their feedback using our new website. We are extremelypleased with their response. We look forward to many more visiting our website, givingfeedback, and also initiating discussion on LEISA. You can see more details about the websiteon page 22.

We are also receiving a lot of encouragement and support for our language editions beingbrought out as special translated editions in Hindi, Kannada, Tamil, Telugu and Oriya. Theyare available on the website.

Many of our readers are contributing voluntarily and we thank them for their support. Wewould like to inform you that the contributions made to LEISA India are exempted under80CC of Income Tax regulations. Kindly avail this opportunity and donate generously.

The Editors

Dear Readers

Board of Trustees

Dr. R. Dwarakinath, ChairmanDr. Vithal Rajan, MemberMr. S.L. Srinivas, TreasurerDr. M. Mahadevappa, MemberDr. N.K. Sanghi, Member

ILEIA - the Centre for Learning on sustainableagriculture and the secretariat of the globalAgriCultures network promotes exchange ofinformation for small-scale farmers in the Souththrough identifying promising technologies involvingno or only marginal external inputs, but building onlocal knowledge and traditional technologies andthe involvement of the farmers themselves indevelopment. Information about these technologiesis exchanged mainly through Farming Mattersmagazine (http://ileia.leisa.info/).

AME Foundation promotes sustainable livelihoods through combining indigenous knowledge and innovative technologies for Low-External-Input natural resource management. Towards this objective, AME Foundation works with small and marginal farmers in the Deccan Plateauregion by generating farming alternatives, enriching the knowledge base, training, linking development agencies and sharing experience.

Dr. Lalitha Iyer, MemberDr. N.G. Hegde, MemberDr. V.N. Salimath, MemberDr. T.M. Thiyagarajan, Member

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AMEF is working closely with interested groups of farmers in clusters of villages,to enable them to generate and adopt alternative farming practices. Theselocations with enhanced visibility are utilised as learning situations for practitionersand promoters of eco-farming systems, which includes NGOs and NGO networks.www.amefound.org

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Linking small-scale farmers tocredit institutionsCh Ravinder Reddy, P Parthasarathy Rao , Ashok S Alur,A Rajashekar Reddy, Sanju Birajdhar, A Ashok Kumar,Belum VS Reddy and CLL Gowda

Improvement of farmers livelihoods depends on the strength of theircoming together. Access to resources is influenced by the extent towhich farmers are organized and the institutional arrangementsavailable and finally the contextual social and political structure.Farmers’ organizations, therefore, would have a vital role to play inrural change.

Financing small farmers – an innovativemethodologyL H Manjunath

Farmers need credit for various reasons.But their inability to repay has been animportant reason for not being able toaccess timely credit. Pragathibandhu is aninnovative programme which makes thepoor bankable by diversifying incomesources and facilitating labour sharing.

Community Biodiversity Management(CBM) Fund for sustainable rural financeShree Kumar Maharjan, Bhuwon Ratna Sthapit andPitambar Shrestha

Community empowerment is adriving force to motivate ruralpeople for conservation efforts.Access to knowledge andfinancial resources are basicrequirements for the communityto translate their acquiredknowledge and skills intopractices that lead to their wellbeing. The CBM fund is used asa mechanism to achieve the twin goal of biodiversity conservationand livelihood improvements in Western Tarai regions of Nepal.

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CONTENTSVol. 12 no. 2, June 2010

Including Selections from International Edition

4 Editorial

6 Marginal and small farmers require freedom andoptions, not financial inclusionAloysius Prakash Fernandez

9 Southern RevivalJeevan

11 Microfinance for livelihood improvementUtkarsh Ghate

13 Linking small-scale farmers to credit institutionsCh Ravinder Reddy, P Parthasarathy Rao , Ashok S Alur,A Rajashekar Reddy, Sanju Birajdhar, A Ashok Kumar,Belum VS Reddy and CLL Gowda

17 Self regulation of SHGs and SHG federationsS Rama Lakshmi

20 Strength lies in building empowered communitiesInterview with Dr Venkatesh Tagat

23 Financing small farmers – an innovative methodologyL H Manjunath

25 Financing sustainable farming through strong localinstitutionsD Ranganatha Babu

27 Thinking beyond creditJan Douwe van der Ploeg

30 Bank credits – boon or bane?Prasanth

31 Arecanut chain – adding value with lowerenvironment impactS3idf

32 The Narayana Reddy ColumnTimely credit is the key

33 Sources

34 New Books

35 Community Biodiversity Management (CBM) fund forsustainable rural financeShree Kumar Maharjan, Bhuwon Ratna Sthapit andPitambar Shrestha

Southern RevivalS S Jeevan

While management of natural resources iscrucial, micro finance is a catalyst forachieving sustainable agriculture. Theexperience of HIH shows how microfinance has played a supportive role in theecological journey of a large number offarmers in Tamil Nadu.

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Editorial

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Finance for farming

India’s rural poor are overwhelmingly dependent on agricultureas their primary source of income; the majority are marginalor small farmers, and the poorest households are landless. Rural

households typically depend on two types of incomes: farm incomewhich is seasonal and part-time wage labor which is highlyirregular. Farmers need money for various purposes which typicallyfalls under consumption needs and production needs. Also amajority of rural households have to deal with unexpectedexpenditures which they are forced to finance either from cash athome, or through informal loans from family, friends, ormoneylenders.

The need for multiple financial services

Credit is not the only financial service needed by small holders.They need to save and also want to cover themselves against risksthrough insurance. The poor need a wide range of financial services,from small advances to tide over consumption needs to loans forinvestment for productive purposes and long term saving that helpthem manage life cycle needs.

India has a range of rural financial service providers, includingthe formal sector financial institutions at one end of the spectrum,informal providers (mostly moneylenders) at the other end of thespectrum, and between these two extremes, a number of semi-formal/microfinance providers. The formal sector financialinstitutions which include Commercial banks, Regional rural banks,Cooperatives and Insurance Companies account for almost allinstitutional loans to rural areas. However, the formal loans arethe least preferred by farmers owing to longer processing timeand untimeliness of credit. Studies indicate that it takes, on anaverage, 33 weeks for a loan to be approved by a commercialbank. Bankers too find it high risk and high cost proposition toserve the rural poor. The transactions costs of rural lending inIndia are high, mainly due to the small loan size, high frequencyof transactions in rural finance, large geographical spread,heterogeneity of borrowers, and widespread illiteracy. Notsurprisingly, informal borrowing despite the high interest rates isvery important for the poorest, who are the most deprived of formalfinance.

Improving credit access - the micro finance models

As access to financial services reduces vulnerability and helps poorpeople increase their income, improving this access has becomean important part of many development initiatives. In light of theinefficiencies that characterize India’s rural finance markets andthe relative lack of success of the formal rural finance institutionsin delivering timely finance to the poor, NGOs, financialinstitutions, and government have made efforts, in partnership, todevelop new financial inclusion approaches to service the financialneeds of the rural poor. These approaches – or “microfinance”programs – have been designed to overcome some of the risks andcosts associated with formal financing.

One approach to microfinance that has gained prominence in recentyears is the self help group (SHG)-bank linkage program, pioneeredby a few NGOs such as MYRADA in Karnataka and PRADAN inRajasthan with strong support from NABARD. SHG-bank linkageinvolves organizing the poor, usually 15-20 women, into self-helpgroups (SHGs), inculcating in the group the habit of saving, linkingthe group to a bank and rotating the saved and borrowed fundsthrough lending within the group. The SHGs thus save, borrowand repay collectively.

Over the last 10 years, the SHG-linkage model has become thedominant mode of micro finance in India, and the model has beensuccessful in encouraging significant savings and high repaymentrates. The number of SHGs linked to banks has increased fromjust 500 in the early 1990s, to over 69,53,000 by 2010. The SHG-bank linkage program today reaches around 97 million poorhouseholds.

The other model is Micro Finance Institutions (MFI), which has areach of around 1 million clients. This sector has emerged to doleout small loans to poor people unable to access conventionallending mechanisms. In India, in the year 2010, the microfinancesector after growing into huge proportions, (supposedly 25000crore or 41 million euro industry) is facing a crisis. Presently, thesector is facing criticism for its rate of interest, the purpose forwhich it has lent, and extending multiple loans, ignoring the abilitiesto repay. Also it is felt that the micro finance institutions, bytargeting individuals has weakened the existing social cohesion.(Venkatesh Tagat, p. 20)

Moving beyond credit

In an impact assessment study carried out by BASIX six yearsafter inception, brought out that the micro credit programmeaddressed the issue of livelihoods only peripherally. The studyfound that only 52% percent of the three-year plus microcreditcustomers reported an increase in income, 23% reported no changewhile another 25% actually reported a decline. The reasons statedwere (i) un-managed risk (ii) low productivity in crop cultivationand livestock rearing and (iii) inability to get good prices from theinput and output markets. It is therefore necessary to broaden theparadigm from microcredit to Livelihood Finance.

“May be its time to suggest that the focus on credit for ‘agriculture’should shift to ‘credit to families’ living in rural areas”, saysAlsoyius Fernandez, former Director of MYRADA, who pioneeredthe SHG movement. Declining size of holdings, increasing risksgenerated by shifting to high cost inputs, declining quality of soilsand fluctuating market prices has made it difficult for small holdersto increase farm productivity using credit. With this changed focus,farming families especially small and marginal farmers in drylandareas can increase and diversify the income generating activitiesin their portfolio of livelihood activities and continue to be creditworthy (A. Fernandez, p. 6).

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Management of natural resources is crucial in enabling betterreturns from land. Micro finance is only a catalyst in achievingsustainable agriculture. Therefore focus should be on building upnatural resources using credit and not just dump credit withouthelping communities on how to use it productively. For instance,Hand in Hand besides providing access to credit has organizedworkshops and field training for farmers to take up organic farmingand guided them to practice sustainable agriculture. Today, manyfarmers in Thiruvannamalai district have switched over to organicpaddy cultivation and are reaping benefits.(Jeevan, p. 9). Similarlythe fishermen federation of Orissa used credit as a tool to conservethe marine biodiversity (Utkarsh, p. 11).

Some innovative mechanisms have been developed by thedevelopment agencies to help farmers access as well as strengthentheir repayment capacities. The Pragathinidhi, an innovativefinancing development fund promoted by SKDRDP in Karnataka(Manjunath, p. 23), encourages farmers to take up several farmrelated activities and enterprises which increases their incomesource. Similar is the Community Biodiversity Management Fundwhich is used as a mechanism to achieve the twin goal ofbiodiversity conservation and livelihood improvements in WesternTarai regions of Nepal (Shree Kumar Maharjan et.al., p. 35).

Also credit needs to be supplemented with supportive services.The support services like veterinary care, fodder and water are notavailable often because the poor do not have access to theseresources. Strong local institutions like the Social Affinity Groups(SAG) can help overcome even this hurdle by organised lobbying(A. Fernandez, p. 6).

It is assumed that credit can automatically translate into successfulmicro-enterprises. Micro credit is a necessary but not a sufficientcondition for micro enterprise promotion, says Vijay Mahajan ofBASIX. Other inputs are required, such as identification oflivelihood opportunities, selection and motivation of the micro-entrepreneurs, business and technical training, establishing ofmarket linkages for inputs and outputs, common infrastructure andsome times regulatory approvals. In the absence of these,microcredit by itself, works only for a limited set of activities –small farming, livestock rearing and petty trading, and even thosewhere market linkages are in place.

Strong organizations - Self regulation and management

Access to resources is influenced by the extent to which farmersare organized and the institutional arrangements available andfinally the contextual social and political structure. Farmers’associations are viable platforms to bring farmers together, buildtheir capacities and enable them to gain access to resources, credit,inputs and markets. This would directly help them in cuttinguncertainty and transaction costs, and empower them to makechoices relating to feasibility, productivity and profitability of farmenterprises. It would also help to pinpoint asymmetric access rules,and allow farmers to raise their voice and have it heard. Farmers’organizations, therefore, have a vital role to play in access to ruralfinance.

Handholding by an external agency like an NGO is imminent inbuilding the capacities of group members in using creditproductively, thus making the groups strong and sustainable.For instance, the dynamics of thousands of SHGs nurtured by Handin Hand over the years has been such that most farmers have beenable to pay back the amount and also improved their livelihoodstandards. It is also in the process of evolving a marketingmechanism to make products viable in different markets.Simultaneously, the organization has undertaken severalconfidence-building measures to motivate poor farmers(Jeevan, p. 9).

However, it is also important that these groups and their federationsat a higher level, become independent in all aspects and take fullownership. Future of SHGs and their federations lies in memberstaking full responsibility for the entire structure – the SHG andtheir federation. This means that the facilitating agencies shouldminimise their role, and enable representatives of the movementto take full ownership, especially for the agenda of promotingincreased member-control and ownership. Hence promotinginstitution needs to focus on bottom up approach and ensure thatthe self regulation of SHGs and their federations, should bedesigned, implemented and managed by the women themselves(Rama Lakshmi, p. 17).

Sustainability

While some of these programs have been more successful thanothers, their limited outreach, scalability and financial sustainabilityremain matters of concern. SHGs have become a means to quicklyreach targets in the government programmes. The emphasis ontargets without adequate attention to nurturing and strengtheningthe SHGs could lead to a general deterioration in the quality ofgroups promoted, threatening the longer term credibility andviability of the entire program.

Groups can become financially sustainable if their resources arebuilt on internal savings rather than depending on external fundingand subsidies. Big loans from formal sources could be riskyespecially for small and marginal farmers group when their meansare limited. This may push them into a new spiral of debts andsuicides as is evident with the experience of MFIs in several statesin India.

Making systems and procedures simpler can help increase accessto formal sources of finance. Also, better credit information anduse of ICTs like mobile phone banking, Kisan credit cards andbiometric ATMs can go a long way in reducing the transactioncosts, ultimately reaching out to larger number of small farmers.

References:

INDIA: Scaling-up Access to Finance for India’s Rural Poor;September 6, 2004; Finance And Private Sector Development Unit;South Asia Region, The World Bank.

NABARD, Status of Micro Finance in India - 2010.

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Marginal and small farmersrequire freedomand options,not financial inclusionAloysius Prakash Fernandez

What is a SAG?

There are a few features which constitute the DNA of an SHG:

i) The process starts by using PRA methods like wealthranking so that people can identify the poor in the village;

ii) The identified poor are given a short description aboutan SAG and requested to form groups;

iii) The members self select themselves – the basis is affinityamong members which is based on relations of mutualtrust and support and cuts across caste and religions andactivities;

iv) The groups are given institutional capacity building - atleast 12 modules;

v) Alongside they start regular meetings and savings;

vi) They start a group common fund in which their savingsgo and later the loans from Banks – there is only onegroup account;

vii) They start taking loans from the common fund;

viii) After 6 months the SHG Bank Linkage program kicks in –one loan to the entire group allowing the group to decideon individual loans. Different from all so called JLGswhere the Bank decides on each individual loan.

Marginal and small farmers especially in drylandareas have been the “target” of financial inclusion policyand practice since 1904 when the first Cooperative

Society was registered in Gadag taluk in Karnataka.. Since thenseveral major steps have been taken to expand the network offinancial institutions in order to “include” marginal and smallfarmers in to the country’s financial sector; the major ones beingthe nationalisation of banks in 1969; the launching of NationalBank for Agriculture and Rural Development (NABARD) in 1975;launching of Regional Rural Banks (RRB) in 1975-76 andintroduction of the SHG-Bank Linkage program in 1992. Severalmicro finance schemes managed by these institutions targetingthe small and marginal farmers were launched, starting with theIntegrated Agricultural Development Program (IADP) in 1960-67 to the SGSY in 2000. These institutions, especially the RRBsand SHGs and the various schemes provided micro finance (MF)as well as subsidies, no frills accounts, kisan credit cards etc.

The word “Micro Finance” was not used till the for-Profit NBFIs(Non-Banking Financial Institutions) gained momentum after1999. They targeted “inclusion” of the poor not into the formalfinancial system of the country but more into the more efficientand extractive neo liberal globalised financial sector withconsequences which have unfurled in the past few months. Thefeatures which characterise the neo liberal model are: investmentfrom private and venture capitalist, quick growth, high profits,high costs (interest and salaries), IPOs and quick exits. Littleconcern is given to value creation and building skills of clients touse capital effectively; hence the impact on poverty mitigation isminimal.

In spite of these initiatives of Government to include the smalland marginal farmers into the country’s financial sector, studiesshow that the number of small loans provided by financial

institutions for agriculture is declining steadily over the years. Thecredit-deposit indicates an outflow of credit from the rural areas.The percentage of rural savings is less than urban and overall thegrowth in the agricultural sector has languished behind the servicesand manufacturing sectors. Though the government has takenseveral measures to increase credit flow to the rural sector (whichis interpreted and restricted to agriculture) the demand does notseem to be improving.

Small farmers need credit and other supporting services fordiverse activities which comprise a family’s livelihood strategy.Self Help Affinity Groups (SAGs) are the most appropriateinstitutions which provide the necessary space, resources andskills required by a poor family to develop a livelihood strategy.

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Maybe its time to suggest that the focus on credit for “agriculture”should shift to “credit to families” living in rural areas. The majorreason for this shift is the declining size of holdings, increasingrisks generated by shifting to high cost inputs, declining quality ofsoils and fluctuating market prices. As a result, farming familiesespecially small and marginal farmers in dryland areas haveincreased the number of income generating activities in theirportfolio of livelihood activities. They now have livelihoodstrategies which comprise several activities. This has resulted inthe need for credit for a variety of purposes including several nonagricultural ones which are not provided by the regular schemeswhich focus on agriculture. There are other reasons like thestandardised credit packages and asset units (3-5 cows, 20 plus1 sheep) which may be considered “viable” but which the familycannot manage, fixed repayment schedule (monthly /weekly) whenrural incomes are lumpy and the same interest rates for all types ofloans.

One reason for Government’s policy to remain restricted to “creditfor agriculture” is the data from surveys like the NSSO which

show that about 60%-70% of the population are “farmers”. Thequestion asked is: “During the part year have you done agriculturefor 30 days?” If the answer is “yes” the person is listed as a “farmer”even though he does other activities for the rest of the year. Besides,other members of the family also take up activities which are oftennot related to agriculture. This needs to be changed. Loans need tobe given to the rural family, not for agriculture alone.

SAGs – the most appropriate institutions

The position taken in this article is that the Self Help AffinityGroups (SAGs) are the most appropriate institutions to providethe space, resources and skills required by a poor family to developa livelihood strategy which enables it rise and remain abovepoverty. The SAGs provided space to invest in many diverselivelihood activities which comprise a family’s livelihood strategy,they customise the size of loans and interest rates and cope withirregular cash flows of the family when repayment to Banks/MFIsis difficult since Banks/MFIs have a fixed schedule ofrepayment.

Box 1: Two cases of members of Self Help Affinity group Chikkajajur, Holalkere Taluk, Chitradurga Dt.,Karnataka

(1) Kausar Banu *(2) Nagarathnamma1996 1,000 Trading 1997 2,000 Education1996 3,000 Trading 1997 500 Education

1997 5,000 Trading 1997 2,000 Education1997 500 Education 1998 4,000 LPG for home use1997 5,000 Medical expenses 1998 5,000 Education1997 300 Medical expenses 1998 5,000 Vehicle loan repayment

1998 4,000 Trading 1999 7,100 House repair1998 5,000 Trading 1999 8,000 Vehicle loan repayment1998 5,000 Trading 2000 8,000 Vehicle loan repayment1999 5,000 Trading 2000 15,000 Vehicle loan repayment

1999 12,000 Trading 2000 325 To purchase SHG uniform2000 25,000 To release house mortgage 2001 18,000 Business2000 325 To purchase SHG uniform 2002 30,000 Vehicle repairs2001 2,000 Education 2003 28,000 Vehicle loan repayment

2002 40,000 House purchase 2003 8,325 Sewing machine (SGSY)2003 325 Household expenses 2004 2,300 LPG for home use2003 8325 Sewing machine (SGSY) 2005 40,000 Vehicle repairs2003 50,000 Agriculture land purchase 2005 1000 Jewellery loan

2004 2300 LPG for home use 2006 2,000 Jewellery loan2005 58,000 To release agriculture land 2007 62,000 Tempo purchase and gold

from mortgage2005 6,000 House repair 2008 22,820 Tempo repair and insurance2005 1,000 Jewellery loan 2009 11,000 Tempo repair

2006 2,000 Jewellery loan 2010 40,500 House repair and gold2007 2,000 Gold2008 53,820 Cycle shop business and gold2009 Nil -

2010 500 Gold

Total 4,59,390 Total 3, 22,870

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Let us give two profiles of the livelihood strategies of two membersof Self Help Affinity groups in Myrada which bring out the diversityin livelihood strategies (See Box 1).

In case of Kausar Banu, the major traditional activity of the family’slivelihood strategy was trading; their land had been mortgagedbefore the SAG was formed for capital to do trading; later severalloans were taken from the SAG for trading. As income from tradingincreased, the family reclaimed the mortgaged land and purchasedland and dug a well. Income generating activities increased to three:i) trading ii) cycle shop iii) agriculture and long term investmenteducation. They took only one small loan for household expenses.Finally, loans were taken for gold and jewellery- a sign that theyare now confident. The total investment was Rs 4.5 lakhs.

In case of Nagarathamma, the family owned dry land but decidednot to invest in agriculture. Instead it opted to invest in a pre-owned Tempo. The SAG provided capital for maintenance.Alongside, they gave priority to education. She also purchased gold.The total investment in family livelihood strategy -Rs. 3.2 lakhs.

The SAG strategy gave the family the space and freedom to decidein what activities to invest, how much to invest and when. Thesewere not imposed as standardised product.

The criticism therefore that SAGs provide loans only forconsumption is wrong. Further the data which gives the averageloan size as Rs 4000 is misleading. The members of SAGs take anumber of loans of different sizes as per their requirement. Thetotal amount must be taken into consideration. Schemes like theIRDP and SGSY provide one or two loans amounting to approxRs 50,000; this is insufficient. Even if the lending institutions haveestimated that the asset is “viable” ( 3-5 cows or 20 plus 1 sheep),the support services like veterinary care, fodder and water are notavailable often because the poor do not have access to these

resources. The SAG helps to overcome even this hurdle byorganised lobbying; SAGs and their federations have been able tochange oppressive power relations. There was no subsidy attached;but the family only took loans when it was sure that it has all thesupport services required to make the loan productive and to earnan income.

The second reason why SAGs are appropriate is that they do nothave fixed or standardised packages or products related to creditor assets. The different purposes of loans and of loans sizes takenby the two families brings this out clearly.

The third reason is that the repayment rates of a member in anSAG can be adjusted when unexpected problems arise. Yet theSAG is able to repay the Bank/MFI loans in time because of i)cash flow from other members and ii) savings and interest whichaccrues to the groups common fund. Has this eroded the groupscommon fund? There is no evidence that it has. The total commonfund has increased year after year.

When the SAGs first emerged in Myrada’s projects in 1984-85 asa result of the large Cooperative Societies breaking down thepractice was to apply differential interest rates. The rates for loanstaken for health and food were very low (2%-5% per annum) whilethe rates for trading were high (15% to 25%). This was very similarto one of the features of sharia or Islamic Banking where the incometo the investor is a share in profits. Unfortunately, the demand forstandardisation imposed by software changed this practice.

Aloysius Prakash FernandezFormer Director,MyradaE-mail: Fernandez@myrada.org

Vol. 13 No. 1, March 2011The role of a new generation of farmers

As agreed by the UN General Assembly, the year starting on12 August 2010 has been proclaimed as the InternationalYear of Youth. Twenty-five years after the first InternationalYouth Year was celebrated, the world has seen many changes.

What impact do these changes have on the younger membersof the 400 million farmer families all over the world? TheMarch 2011 issue of Farming Matters will look at the specificrole which youngsters play in family farming.

Youngsters form the largest population group in manycountries, and their numbers and relative size keep ongrowing. What is the capacity of agriculture and small-scale

family farming for attracting and “absorbing” them, providingthem with work, income and a decent livelihood? Recentdecades have seen a strong trend of migration. With moreyoung people moving to the cities, what is the future of familyfarming?

We want to look not only at the roles and responsibilities ofyoung people, but also at the contributions that they canmake. Youngsters are known to be much more interested in(and knowledgeable about) mass media tools andcommunication devices than the older generation. Whatbenefits can the information highway bring to farming? Weare also interested in youngsters’ own perspectives on farming,the specific difficulties they face and the steps needed tosolve them.

Please send your articles to the Editor atleisaindia@yahoo.co.in

Deadline for submission of articles - 1st March, 2011

Themes forLEISA India

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Southern RevivalJeevan

While management of natural resources is crucial,micro finance is a catalyst for achievingsustainable agriculture. The experience of HIHshows how micro finance has played a supportiverole in the ecological journey of a large numberof farmers in Tamil Nadu.

In the past 100 years or so, the role of the State has been criticalto the changes in the ecological chain in India. While rapidurbanization has cast its shadow over traditional water sources

and farm lands, the role of the local communities in managingnatural resources has decreased. Simultaneously, there has been agrowing dependence on surface water and groundwater, and lesson rainwater and floodwaters. This has not only led to a decline ingroundwater tables and agricultural yields, but led to more areasbecoming highly degraded throwing millions of poor farm peopleout of jobs. Finding ways to harvest and store rain water in ruralIndia as well as to involve communities in the management ofnatural resources has become the challenge.

The Natural Resource Management Programme (NRM) of Handin Hand was launched in October 2006 with the major objectiveof reviving a degraded environment and involving local people inits management. The way to do this was to forge partnerships withgovernment agencies and local organizations to fund projects thatwould not only protect natural resources and revive agriculturalactivities, but more importantly, by undertaking the restoration ofwatersheds, so that the poorest of the poor in rural India wouldgain employment and improve their living standards. This wouldcheck ecological imbalances, promote clean living and greenfarming and create avenues for new marketing mechanisms.

Today, nine micro watersheds have been taken up for regenerationtill now in three districts of Tamil Nadu – Kancheepuram,Thiruvannamalai and Cuddalore – and Chamrajanagar district inKarnataka, directly benefiting over 2,500 poor people, andgenerating nearly 10,473 man days of work. The NRM activitiesform a part of the Environment Pillar of Hand in Hand – one ofthe five Pillars of the organization. The other pillars are Self-HelpGroups, Microfinance, Health and Citizen Centers Pillars.

Hand in Hand is working towards the goal of creating 1.3 millionjobs to eliminate extreme poverty and strengthen livelihoods amongimpoverished communities.

Adimoolam, who has a tiny agricultural land in Arapedu,Kancheepuram, Tamil Nadu, has benefitted from the integratedwatershed management approaches of Hand in Hand. The smallloose rock check dams and stone outlets have enabled the retentionand proper flow of water in his farms. These structures have alsohelped increase soil fertility because of the retention of the moisturein the soil and also checked the velocity of water during heavyrains. “Hand in Hand initiatives have helped recharge wells inthe area. We are able to store water almost throughout the yearand yields too have gone up,” says Adimoolam. Today, thousandsof poor people such as Adimoolam as well as those who wereinvolved in the watershed restoration activities have reason tosmile.

Now, other states too want to be part of the NRM programme. Forinstance, in Karnataka in collaboration with the VivekanandaGirijana Kalyana Kendra (VGKK), a local NGO, watershedprogramme, and, WADI, an orchard development programme fortribals in Chamrajanagar district are being implemented.Government programmes have often been designed to cover poorpopulations, but the delivery and scale have not been enough; andin many cases insufficient, not scaled-up enough to cover the vastimpoverished populations. The NRM programme attempts toaddress the gaps that exist in the agricultural and agro-basedsectors.

Methods and ApproachThe Arapedu watershed comprising four villages and three hamletscovers an area of 1,092 hectares. It was planned at a cost of

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Rs 96 lakh, with financial assistance of Rs 85 lakh from NABARD,and the remaining amount was mobilized from communitycontribution. The watershed activities are based on traditional waterharvesting technologies pioneered by people for centuries andlocalized to suit the environment and its inhabitants. For instance,water absorption trenches were constructed along the foothills ofthe mountains to hold and regulate the flow of water from thehills. And digging ponds, contour trenches and supply channelsenabled and augmented the water flow.

The mammoth task involved over 3,200 members who are part ofthe water associations in four villages, and they take collectivedecisions to implement the watershed activities. WatershedAssociations were formed and they elected members to theWatershed Committee, who are involved in the restoration andmanagement of watershed activities. The Watershed Committeeworks in close coordination with different stakeholders includingthe panchayats – village-level democratic institutions. “Thewatershed initiatives have had a positive impact on the village,”says R Rajendran, vice-president of Arapedu village. Crop yieldshave doubled in the area, he adds.

Financing NRM activitiesThe organization is also making innovation as the key to widenthe scope of its activities. For instance, Hand in Hand has started arevolving fund and gives loans to farmer groups or Self-Help Group(SHG) members so that they take up agricultural or agro-basedactivity. The dynamics of thousands of SHGs nurtured by Hand inHand over the years has been such that most farmers have beenable to pay back the amount and also improved their livelihoodstandards. The organization has also started another revolving fundwith the help of NABARD, wherein landless farmers becomeeligible for loans to start any livelihood-based activity.

But the microfinance component is only a way to provide economicmobility. The NRM programme has organized workshops and fieldtraining for farmers to take up organic farming and guided themto practice sustainable agriculture. Today, many farmers such asJayaraman in Murukeri village in Thiruvannamalai district have

switched over to organic paddy cultivation. “Earlier, our inputcost was high because of the use of pesticides and fertilizers. Butafter switching over to organic farming, we use less expensive(natural) inputs. This has increased the net profit,” says Jayaraman.

Evolving a marketing mechanism to make such products viable indifferent markets is in the process. Simultaneously, severalconfidence-building measures to motivate poor farmers wereundertaken. It took a six acre degraded land about 80 km fromKancheepuram on a five-year lease in December 2008. Here, ithas constructed two ponds in the area and leveled the fields to dohorticulture plantation.

In the adjoining villages it has adopted different approaches in thereclamation of land. In Murukkeri for instance – a tiny hamletlocated in Thiruvannamalai district – local people got involved inthe clearing of Prosopis juliflora, a wild weed and used machinesin leveling the land and promoted agricultural activities. InVilangadu village in the same district, this strategy has reclaimedover 100 acres of degraded lands. The NRM activities of Hand inHand connect us to the ecological journey ahead of us, one of theways to realize the potential of our poor rich planet.

S S JeevanDirector - Communications Hand in Hand,No. 12/26, 3rd Floor,Coats Villa/Southern FoundationCoats Road, T. Nagar,Chennai - 600017Website: www.hihseed.org

Adimoolam on his farm Trench-cum-bund with plantation

11L E I S A I N D I A • J U N E 2 0 1 0

Microfinance forlivelihoodimprovementUtkarsh Ghate

Microfinance can be profitable and viable if used as a capitalto promote micro enterprise. Samudram fishermen federationin Orissa used micro finance as an investment tool to achievebiodiversity conservation, income generation and women’sempowerment.

Climate Change has hit the coastal ecosystem, the worst,with unprecedented decline in coral reefs and loss of fishyield, shift in their occurrence zone and migration routes.

This has endangered not only many species like the Olive RidleyTurtle but also the livelihoods of fishermen who are poor, illiterateand lack assets, dependent entirely on coastal biodiversity.Moreover, the recent Coastal Management Zone (CMZ) regulationhas impoverished them further by giving freeway to the industrialoccupations of the coast. Industrial and urban effluents havereduced fish catch. Also, aquaculture ponds along the coast ownedby private parties exclude communities and pollute the coastfurther. Addressing the issue of pollution calls for shift to organicmethods of cultivation and also huge capital investments. Withthe land ownership resting with the rich, the poor have no optionto improve their incomes but to add value for better markets.Samudram fisherwomen federation in Orissa used microfinanceas an investment tool to achieve this.

The Initiative

Fishermen in the coastal regions of Orissa face problems commonto many other coastal sites such as reducing fish catch and quality,exploitation and cheating by the traders, apathy of the governmentetc. Their fishing rights have been further constrained owing tothe conservation initiative taken up on this coast to protect OliveRidley Turtle (ORT), an endangered species.

With fishing rights severely constrained around three ORT nestingsites, many fisher families were prevented from fishing and had totake up other occupations or migrate. Few even committed suicidedue to indebtedness, hunger and loss of dignity after harassmentby wildlife sanctuary officials who confiscated their boats and nets,the only means of their livelihood. This triggered the formation ofSamudram Fisherwomen Federation.

Orissa Marine Resource Conservation Consortium (OMRCC)emerged out of protest against this exploitation. OMRCC iscoordinated by the NGO United Artists Association (UAA) andaided by larger NGOs like Greenpeace. They decided to protectfishing rights of fisherwomen and enhance their income by valueaddition.

Samudram activities include–

a) Collective fish purchase.b) Hygienic drying/ processing.c) Collective sales to bulk buyers and retailers.d) Obtain bank loan to groups/ women members for doing

business.e) Conservation campaign, against pollution and over fishing,

through CBO, NGO’s and media.f) Conservation efforts like artificial reef, ORT watch & ward,

rescue, beach cleaning (of plastic/garbage).g) Alternative income generation programs (crab tattering,

poultry, duckers).

UAA assists Samudram in getting technology inputs for valueaddition, conservation, credit linkages and access to distantmarkets. Both the artificial reef and value addition technology areprovided by OMRCC partners. Artificial reef technology isprovided by CMFRI (Coastal Marine Fisheries Research Institute)of Govt. of India. It was funded by Ford Foundation through aproject of CCD, an OMRCC partner. Technologies were first triedand tested at Pulicat lake coastal ecosystem near Chennai by NGOPLANT, a CCD partner, in 2006-08. Since it was found successful,Samudram replicated it in 2009.

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Jaya

raj

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Other partners in OMRCC like Greenpeace and ATREE (AshokaTrust for Research in Ecology and Environment, an NGO fromBangalore), Dakshin Foundation etc., assist Samudram incampaigns against upcoming port at Dhamra Special EconomicZones (for industries that may pollute the coast), foreign shippingvessels coastal intrusion etc.

The management of Samudram federation rests with the womenleaders of the group, elected to the federation body. They reviewprogress periodically and decide action. Each group is assignedspecific responsibilities. The women groups purchase fish in coastalauctions from fishermen union (who are spouses sometimes) anddry them in a hygienic manner. Income from collective sales goesto the federation which is then distributed among the members.Financial documentation is well maintained at the federation level.

Sustainability

Samudram is partly self sustainable. It can do local collectivemarketing of dry fish besides fresh fish on its own. But to seekdistant market access in India and abroad for dry fish and othervalue added products, it needs external support from UAA. It alsoneeds venture capital or donor grants to start these ventures thatmay incur initial losses in the first 2-3 years. Then, bank loan canfuel its growth and sustenance.

So far, Samudram financed its activities by itself (30%), throughgrants from UAA (30%) and loans (30%). However, due to theirgrowing business character, bank loans will be sought. Grant willbe availed only for the welfare of the disabled, old, malnourishedetc. However, Samudram may still need to finance about 15% ofits budget by grants for another 2-3 years on training groups,providing documentation material, business development tools andservices, exposure visits and building linkage with banks andgovernment schemes.

Impacts

Hygienic drying methods have enhanced product price by about15%, increased fisher women income by 5-10% and has enhancedconsumer satisfaction. Other technologies like picking appears tobe promising to raise incomes through high product price. But,full benefits are yet to be realized by the majority of the communitydue to limited productivity and market access achieved so far.

About 1,000 women earned about 15% extra income i.e. Rs. 500(five hundred) extra in their total fish sales of Rs. 3,000 each lastyear. This implies Rs. 0.5 million of total benefits. Another 5,000had marginal benefit of 5% extra income by aggregation, totallingRs. 0.75 million. The total benefit is around Rs. 1.25 million for2,500 women who are not yet Samudram members. Thus, there isalso a multiplier effect. About 2,500 women also got bank creditof Rs. 15 to 20 thousand each totalling, Rs. 5 million. About 60%repayment is on schedule.

Environmental protection has ensured decent fish breeding andcatch. This is evident from sustained income despite decliningcatch. Rising number of turtle nests and eggs each year indicatesthis. Conservation campaign has succeeded in reducing industrialpollution in all the 3 sites. The fight against polluting industries

along the coast and protest against increased trawling has kept thecoast safe and clean despite mounting pressures. Reconsiderationby the government on its SEZ policy is a huge achievement forclean environment.

Disaster Risk Reduction (DRR) is another area where Samudramand OMRCC had some success. The government of Orissa startedproviding compensation (livelihood) allowance to the fishermen’scooperatives in monsoon which is declared as no fishing period,to ensure breeding. Similarly, cheap credit, basic amenities likedrinking water, sanitation, housing, electricity are gradually beingavailed by the fishermen families.

Women leadership has been nurtured. Ms. Chittama, SamudramChairperson, an illiterate woman, became a role model. Nationalmagazines published features on her dynamism in addressing theissues of poverty and vulnerability of her community. She alsoreceived the UN Equator award for biodiversity conservation andpoverty alleviation. Other women leaders like Ms. Devaki haveparticipated actively in many state and national level campaignsand workshops.

Miles to go

Even after five years since Samudram’s inception and a decade ofstruggle by OMRCC, the problematic situation continues to persist.Some problems are solved while new ones have emerged. Marketaccess problem is solved partly by the value addition. But industrialencroachment on the coast is growing, now aided by thegovernment policy such as SEZ.

Samudram has been able to benefit only one thousand fisherwomenso far, through enterprise development. Samudram has to reachabout ten thousand families at the 3 ORT nesting sites who needthis type of help. Thus, much more needs to be done.

Utkarsh GhateCovenant Centre for Development (CCD)North India office,2/25, Padmanabhpur,Durg City,Chattisgarh,India 491001E-mail:ccdnorth@gmail.comWebsite: www.ccd.org.in

13L E I S A I N D I A • J U N E 2 0 1 0

Linking small-scale farmers to creditinstitutionsCh Ravinder Reddy, P Parthasarathy Rao ,Ashok S Alur, A Rajashekar Reddy,Sanju Birajdhar, A Ashok Kumar,Belum VS Reddy and CLL Gowda

The demand for poultry feed is increasing in India due tofast growth (by 15-20%) of poultry sector, while the usualenergy source in the poultry feed, maize’s growth rate is

limited to only 2-4% annually. This is because poultry feedmanufacturers are using sorghum and pearl millet in poultry feedformulations to some extent whenever there is a shortage of maizesupply. To improve the farm income and livelihoods of small-scale sorghum and pearl millet farmers in SAT regions of India, acollaborative project was launched by Common Fund forCommodities (CFC), The Netherlands, ICRISAT and FAO.

The CFC-ICRISAT-FAO project titled ‘Enhanced utilization ofsorghum and pearl millet grains in poultry feed industry to improvelivelihoods of small-scale farmers in Asia’ aimed at mobilizinggroups of small-scale sorghum and pearl millet farmers in orderto improve the crop productivity and income by providing supportin terms of improved inputs, better information services, creditlinkages and post harvest operations. This paper exclusively dealswith the credit linkages component of the project.

ApproachStrategic interventions were jointly made by ICRISAT and theconsortium partners along with ICRISAT to train the farmers, buildtheir technical capabilities and provide them further withinformation on improved crop production practices to enhancethe yields per unit area. Institutional linkages with various actorsin supply and market chains helped the farmers in reducing theoverall production and post harvest handling costs. However, it isa well-known phenomenon that the farmers in the absence ofsufficient funds dump their produce in the local markets or withmiddle men. They fall victim to the brokers and traders who takeadvantage of this distress sale position of the small-scale farmersand procure the commodities at low prices, un-remunerative tothe farmers.

Thus, the importance of credit becomes very evident not only atthe time when the farmers have stored their produce to meet theirregular expenses but also when they are growing crop they needto buy various inputs like improved cultivar seeds, fertilizers, andpesticides.

The baseline survey conducted before commencement of theproject was helpful in getting realistic picture of the constraintsfaced by the farmers prior to the project with regard to institutionalcredit. The major sources of credit prevalent in the villages wereprivate money lenders (individuals), local input dealers and grainmerchants, private finance companies, local agriculturecooperatives and public sector banks.

The baseline survey results indicated that secure and equitableaccess to resources and markets was key to improving the incomesof small-scale farmers. This was the foremost action needed toaddress poverty issues and promote the overall development offarm families. Therefore, all the interventions in the project wereaimed to address these constraints.

Organising farmer groupsOn the basis of interactions with farmers and the project team’sprevious experiences, it was felt that farmers’ associations wereviable platforms to bring farmers together, build their capacitiesand enable them to gain access to resources, credit, inputs andmarkets. This would directly help them in reducing uncertaintyand transaction costs, and empower them to make choices relatingto feasibility, productivity and profitability of farm enterprises.It would also help to pinpoint asymmetric access rules, and allowfarmers to raise their voice and have it heard.

One of the major interventions of the project was to help increasefarm productivity. Farmers were organsied into groups as it was

Improvement in farmers livelihoods depends on the strengthof their coming together. Access to resources is influencedby the extent to which farmers are organized and theinstitutional arrangements available and finally thecontextual social and political structure. Farmers’organizations, therefore, would have a vital role to play inrural change.

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Project overview

The project addressed various constraints identified through abaseline survey. Important interventions included introductionof farmer preferred best cultivars of sorghum and pearl millet,establishing sustainable linkages for long-term input supply,constitution of 5 farmers associations (one for each cluster) andbuilding their capacities to carry forward the interventions onlong term basis. Demonstrations on the farmer’s fields helpedthe farmers to test the performance of new cultivars, integratednutrient and crop management technologies that enhancedgrain yields from 19 to 111 percent in sorghum and 36 to 120percent in pearl millet; and fodder yields by around 25 percent.Farmer’s field days, expert’s visits, exposure trips and learningevents facilitated sharing of the knowledge and experiencesbetween the scientific community and the farmers. The ruralstorage structures constructed under the project helped thefarmers adopt safe and scientific storage of the bulked produceand thus avoid distress sale. Linking of farmers with alternativeend users (food, poultry feed, liquor industries) has beenachieved through a series of Farmers-Buyers dialogues. Lessonsacross the clusters indicate that multi-stakeholder initiativescan bring in synergistic and long lasting positive impacts onrural poverty reduction. Other important learnings includedproviding sufficient start-up time for planning; building strongcoherence and trust among partners; role clarity; capacitybuilding; adopting process-oriented systems.

Constraints in Farm Credit

• Non-availability of timely credit• High rates of interest when borrowed from private sources• Lengthy and complex procedures involved in availing farm

credit from banks• Complex credit-processing procedures• Time taken to process loan applications• Middlemen facilitating loans on a commission basis• Loan periods are usually shortThese constraints are related to• Policies of the government, which govern the overall outlay

of finance for the farm sector• Legal and regulatory framework of farm credit agencies• Institutional diversity of credit/finance organizations provid-

ing credit to farmers• Formalities and procedures of credit disbursement

confidence and assurance on loan repayment. Both the banks werepositive on providing credit facilities to farmers associations bothin Andhra Pradesh and Maharashtra states and passed on positivemessages to the concerned cluster level branch managers.

It was decided that for Andhra Pradesh, the State Bank of Indiaand for Maharashtra, the State Bank of Hyderabad would be invitedto initiate the process of providing loans to the farmers. This wasto be given both against their stored produce in the current season

realised as the best mode of reaching them with improvedtechnologies. Linkages with institutions were fostered. This projectalso identified a few areas for immediate collaboration indeveloping a common understanding of the issues of technologydevelopment as they relate to the needs of the rural poor: forinstance, sharing of experience between scientists and farmers,higher levels of coordination for ongoing field operations andsupport for initiative-linked activity, focusing on the developmentof farmers’ learning platforms.

Access to institutional creditCredit is required usually for the period of crop production (sowingto harvest), mainly for purchase of quality seeds, fertilizers,pesticides and farm equipment/equipment hire charges; paymentof labour charges for sowing and harvest. The baseline surveyconducted in for this project clearly indicated that farmers alsoneed cash after the harvest for storing produce as well as for meetingimmediate family requirements. In the absence of institutionalcredit facilities, they sell their produce in the local markets or tomiddlemen soon after harvest at non- remunerative prices. Thus,post-production credit needs were given equal importance whiledesigning credit requirement strategies.

In the first year of project execution, various possibilities of linkingbanks with the farmers were explored at the local (cluster) level.The branch managers of various banks located near to the clustervillages were briefed about the concept of the project. The privatebanks expressed that the amount of loan availed was very low,maintaining farmers records is cumbersome and it would not beeconomical for bank to cover up their costs. Moreover, for thewarehouses, there are collateral management charges that are tobe borne by the borrower and it will be very high and would raisethe cost of finance per farmer exorbitantly.

In addition, most of the branch managers of nationalized banks atcluster level were reluctant to provide loans on the stored producein the godowns constructed under the project in the absence ofclear cut instructions or guidelines to finance private warehouses.They had clear guidelines for financing against produce stored inpublic warehouses such as the warehouses owned by CentralWarehouse Corporation (CWC) and State Warehouse Corporation(SWC). They however suggested that if they were giveninstructions from the top management to provide loans for CFCfunded godowns, they would have no procedural problems inproviding the loans.

Top-down approachFrom the experience in the first year it was thought that in thesecond year a “top-down approach” would be best whereconsortium team members first talk to the top level departmentalheads of various nationalized banks namely State Bank ofHyderabad (SBH) and State Bank of India (SBI). Following this,a series of discussions with the different levels of departmentalmanagers of these banks was carried out by explaining projectobjectives and activities. Method of project approach wheremarketing linkages were established with the poultry feed industryfor buy-back of the produce of small-scale farmers gave them

15L E I S A I N D I A • J U N E 2 0 1 0

Fig.1 The linkages developed in the project

Consortium Partners

Input linkage (credit, seeds, fertilizers etc.)

Training on improved crop production practices

Small-scale farmers

Banks/ financial Institutions

High grain and fodder yield

Grain storage ( ware house)

(Poultry farmers and feed industry)

Enhanced utilization in feed

Credit linkage

and issue Kissan Credit Cards to the eligiblefarmers in the next year rainy (Kharif) season2006 to meet their crop productionexpenditure. With this decision two jointmeetings were organized at ICRISAT thatformed the major guiding activity withregard to making the model operational,effective and establishing sustainablelinkages between the farmers and thebankers.

Facilitating joint meetings

Several meetings were organized at thevillage and cluster levels to highlight theimportance of credit linkages with public sector banks. Thesemeetings also served to set at rest any apprehensions the farmersmay have had about sharing information with field-level workers.These meetings became platforms upon which farmers shared theircredit problems. To further gain the farmers’ confidence, publicsector bankers were invited to join these meetings to explain loanprocedures. Applications were filled and loan procedures madesimple for the farmers.

The project partners and bank officials fixed convenient dates forthe farmers to visit the bank to discuss matters pertaining to loans.This was helpful in building confidence in the farmers. This practicehas become popular because farmers get undivided attention frombankers on these days.

A joint meeting was held at ICRISAT with the participation ofvarious project partners, representatives from ICRISAT and alsofarmers from the clusters and farmers association office bears andwith the divisional and local heads of the Banks with the followingagenda.

1. Finalizing the procedures for linking farmers’ associations(Udityal, Balanagar mandal, and Palavai, Maldakal mandal ofMahabubnagar district, Andhra Pradesh) with State Bank of India(SBI) for agricultural credit. Similarly joint meetings wereconducted in Anjanpur and Rohatwadi clusters in Beed districtand Koke cluster in Parbhani district of Maharashtra state.

2. Issuing Kissan credit cards to project farmers.

3. Finalizing the procedures for providing short-term credit toproject farmers against stored agricultural produce (sorghum andpearl millet) for the produce.

A number of points emerged out of these discussions, the mainitem being that the bank would simplify the application proceduresand processing time to finance the project farmers based on certainessential conditions being met according to guidelines set by thebank administration. The concerned bank official will visit thevillage once in a week or fortnight and scrutinize the applications.The farmers association secretary will process all applications ofproject farmers with minimum documents sets, prior to the visitof bank officials and submit to the bank a set of 20 applicationsper group. This facility will avoid all the farmers visiting the bankto prove their identity and present their case for loan.

A number of other points also emerged in this meeting. The bankersadvocated bundling the two products (KCC and warehouse loans)into a single product called ‘Cyclic Credit’ to be implemented nextyear and organization of farmers into groups as it wouldsignificantly reduce their transaction costs. The requirements ofthe short-term loans based on warehouse receipts are:• The farmers’ committee to have the capacity of maintaining

the required records such as Stock accounting register and otherbooks required at the warehouse

• Identity of the farmer by the association - The association wouldmake arrangements to issue a numbered photo identificationcard to its member farmers indicating their name, address, landholdings and other details

• Committee to operate and maintain the godowns• Committee to authorize signatories for issuing the warehouse

receipt to the farmers who stock their produce.• Signing of a MoU with the bank for not releasing the stock till

the bank loan is cleared and receipt is returned.• Scientific storage support to be sought for the safe and scientific

storage of grains by consortium institutions• Godown insurance and produce insurance to be sought against

any eventualities

During farmer-banker interaction meetings at the village level,senior bankers provided information regarding various farm creditschemes, including short and medium-term loans. Project partnerswere advised to help the banks in identifying the farmers who wouldbe eligible for the loans. The size of loan amount was based on thesize of the farmers’ land holding and credit requirement. Thedocumentation for obtaining a credit card was also made simple.

Impact

Project interventions has increased the participation of small-scalefarmers in credit linkages. They have availed more loan amountfrom other sources of finance with less effort, low interest rateand low processing fee. The impact study assessed farmer’sperceptions of benefits accrued to them from different componentsof the project (Table 1). About 83% of them said the crop productioncomponent held the most benefiting to them followed by formationof farmers association (76%). Bulking (61%) and credit linkages(56%) and bulk marketing (54%) were other components that were

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Cluster Percent benefits gained by project farmers from village initiativesCrop Farmers Bulking and Bulk Credit Remarksproduction association storage marketing linkages

Andhra Pradesh1.Palavai 88 75 72 71 722. Uditiyal 82 86 78 71 78

Maharashtra1. Koak 70 47 49 42 372. Anjanpur 92 93 61 55 573. Rohatwadi 85 82 47 31 40

Average 83.4 76.6 61.4 54 56.8

On an average 75% of projectfarmers benefited by creditlinkages in AP clusters

On an average 45% of projectfarmers benefited by creditlinkages in Maharashtra clusters

Table 1. Farmers feedback on project components

cited as beneficial by the respondents. On an average, 75% ofproject farmers benefited by credit linkages in Andhra Pradeshand 45% farmers in Maharashtra cluster villages.

Establishment of credit linkages targeted at small and marginalfarmers drew their credit preferences away from informal sourcesto formal sources with low interest charges. A majority ofparticipants in the project borrowed loans from formal sources.Around 75 percent farm families got benefited by credit linkagesin Andhra Pradesh and 45 percent in Maharashtra clusters, at lowinterest. Majority of the farmers were interested in linking withbanks rather than cooperatives and private money lenders as theinterest rates and processing fee was lower. Only about 10% ofthe project farmers revealed that they still depend on money lenders.

The interventions undertaken by the project succeeded in makingthe farmers’ voice heard by finance institutions. The joint dialoguebetween farmers and financial institutions brought abouttremendous changes in the mindsets on either side. The farmerswere able to provide inputs to the bankers in the design of loanproducts for the farm sector. This mutual understanding of prioritiesand constraints had an effective impact on loan decisions. Forinstance, banks modified several of their administrative proceduresfor processing loan applications. They also gave priority to projectfarmers.

Evidently, improvement of farmers livelihoods depends on thestrength of their coming together. Access to resources is influencedby the extent to which farmers are organized and the institutionalarrangements available and finally the contextual social andpolitical structure. Farmers’ organizations, therefore, would havea vital role to play in rural change. This study is one classicalexample in that direction.

Ch Ravinder ReddyScientist (Technology Exchange)ICRISAT, Patancheru – 502324,Andhra Pradesh, IndiaE-mail: c.reddy@cgiar.org

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17L E I S A I N D I A • J U N E 2 0 1 0

Self regulation of SHGsand SHG federationsS Rama Lakshmi

The slow pace of rural development in India has beenattributed to lack of production assets and credit. To addressthis issue, the Government of India took major policy

measures like the nationalization of private banks in 1969, theexpansion of rural branch network, priority sector lending and theintroduction of Regional Rural Banks in 1975. Also large amountsof donor funding substantially increased outreach to better-offfarmers. Yet, all this failed to reach the vast numbers of landlesspeople, agricultural labourers, illiterate women and microentrepreneurs.

In the 1980s, policy makers took notice and worked withdevelopment organizations and bankers to discuss the possibilityof promoting SHGs. Banks which had found it difficult to lend tomeet their priority sector lending obligations, suddenly found, inthe SHGs, an amenable opportunity to meet those obligations, andprofitably. On the basis of an assessment, NABARD initiatedmainstreaming of SHG banking. With a small beginning as a PilotProgramme launched by NABARD by linking 255 SHGs withbanks in 1992, the programme has reached 69.5 lakh saving-linkedSHGs and 48.5 lakh credit-linked SHGs covering about 9.7 crorehouseholds under the programme. By the 1990s, SHGs wereviewed by state governments and NGOs to be more than just afinancial intermediation but as a common interest group, workingon other concerns as well. The agenda of SHGs included social,political and livelihood issues as well.

The support of livelihoods is increasingly being seen as animportant area related to microfinance. Indeed, the term oflivelihood finance has been coined and is en vogue at leadingNGOs. SHGs provided credit from their own fund to memberswho were engaged in farming activities. Some SHGs introducedthe strategy of converting the grants provided to the watershed

SHG and their federations have become a movement inIndia. To sustain the benefits emerging from thismovement, it is important that they become independentin all aspects and take full ownership. This means that thefacilitating agencies should minimise their role,withdrawing gradually. Self regulation of SHGs and theirfederations, designed, implemented and managed by thewomen themselves will ensure this process.

development institutions for watershed activities into loans fortreatment on members’ lands. The SHGs also lobbied withWatershed Management Institutions to give the landless the rightto harvest fodder from the protected areas (private lands lyingfallow, common lands). This strategy also helped to convertneglected lands into regenerated parks which increased biomassand played a more effective role in managing soil erosion but alsohelped to provide a livelihood base to landless by accessing fodderand the landless were able to purchase cattle with loans from SHGs.These types of interventions improved the quality of land and therewas significant diversification of crops.

SHG Federations and promotion of livelihoodsNetworking of SHGs was inspired by the felt need of the SHGsunable to deal with issues beyond their reach. The small size ofSHGs leads to a low generation of internal funds, which hinderstheir ability to meet the financial needs of the members from theirown savings or to leverage funds from banks. Their ability tonegotiate with higher level institutions and to gain bargaining poweris limited. This is one of the reasons for informal SHG networkingbeing initiated. SHG federations have been promoted by NGOsand the Government since the mid 1990s to address the issues ofensuring quality while up-scaling, ensuring that promotion costsare low, and creating sustainable institutions. These federationsoffer different types of services - social, financial and livelihoodservices. In many cases, the SHG federations in India offer a rangeof services and can be termed as multi-purpose federations.

The need for livelihood support is critical to SHGs developmentas livelihoods are typically financed by the loans that membersreceive from the SHG. In order to make SHGs and their federationsmore sustainable, promoting agencies have invested a lot incapacity building, and in making corpus and bank funds available

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to them, to increase their business. In addition, recurring grants,too, are provided to the movement. Many State governmentprograms have executed livelihood interventions to increase cashflows to SHG members as they have been able to bypassmiddlemen and sell their goods at market and cut costs. Experiencehas indicated that these benefits would not have been possiblewithout federations as well as external intervention.

Impact of SHGs and SHG federationsVarious studies on SHGs and SHG bank linkage program hasrevealed that, there is a significant impact on members habit ofsavings, their income, their access to credit, and on health, foodand education status in their families. An evaluation of SAGspromoted by Myrada by APMAS, on August 2009 revealed thatthough the SHG members were poor and started with small amountof savings per week/month, over a period, they have mobilized alarge amount of savings. Groups utilized members’ savingsoptimally to earn income for the group and to provide quality creditservices to members. The dependency on money lenders alsoreduced and noticeable changes came in the lending practices ofmoney lenders such as reducing interest rates, not insisting oncollateral and soft recovery methods. Though members still dependon money lenders, there is no continuous debt bondage.

A recurrent study conducted by APMAS on Self Help Group BankLinkage Programme in AP shows around a third of the membersof SHGs had an increase in employment opportunities. The signsof increased income were seen in increased expenses on food, andon improved education and health status. The indebtedness of themembers has come down with most members.

Need for self regulationA few studies conducted on federations indicate that federationscreate economies of scale, reduce promotional and transactioncosts, enable provision of value added services and increaseempowerment of the poor. However, promotion of livelihoodsrequires long-term thinking and continuous capacity building orskill upgradation plans. In this back ground, APMAS study (SHGfederations in India 2007) also reveals that the SHG federationmodel could travel to a degree of extending credit services topromotion of sustainable livelihood initiatives with the help ofdonors, formal financial institutions and also by making use oftheir own funds. Considering the level of sophistication required,federations could facilitate linkages with livelihood promotionorganisations or promote new subsidiary organisations.

Promotion of livelihoods relies on institutionalisation process withappropriate internal systems, standards, controlling mechanisms,legal entity to do business activities, internal governance andtransparency. To promote these aspects, federations require strongself-regulation and supervision system. Providing reliableinformation about the performance of the SHGs and SHGfederations, facilitating proper management and reducing risk aremain pillars of self regulation. Moreover, it increases trust on thepart of other stakeholders like banks and other financial institutions,and thus facilitates access to additional funds.

In 2007, APMAS, in collaboration with Society for Eliminationof Rural Poverty (SERP), DGRV - Germany, initiated a pilot projectamong SHGs and their federations in Kamareddy area covering 6Mandals (sub-districts) in Nizamabad district, Andhra Pradesh stateto promote Sector Own Control (SOC) or Swayam NiyantranaUdyamam (SNU). Though the intervention on self regulation byAPMAS is still in its early stages, it has provided several lessons,both for the facilitators and for the women themselves.

Elements of self regulation:The overall objective of self regulation for SHGs and SHGfederations is to ensure that SHG members set their own agendaand manage and control the processes, so that the SHG systemsuccessfully and sustainably works for the benefit of SHGmembers. The specific objectives of self regulation are: economicand social development of the members and building sustainabledemocratic and legal institutions. The focus of the self regulationis on building capacities of SHG members and their representativesat various levels in the following key aspects to achieve the selfregulation objectives. Those are:

• Adequate norms and standards (external and internal)• Approved common bookkeeping and accounting• Effective internal control of management and risks• Sector-wide reporting, monitoring and rating (off-site sector

control)• Compulsory cooperative audit• Follow-up activities• Institutional protection, deposit insurance• Linkage to the financial regulator for regulatory and supervisory

duties.

Organisation and ManagementIt is necessary that the SHG members and SHG federations agreeupon the need for self regulation, declare their willingness to acceptownership, and be willing to implement self regulation effectively(Member-Control and Self Reliance for sustainability of the SHGmovement by APMAS). Hence following approach is suggestedto initiate the process. A Coordination Committee may be formedwith office bearers of the federation to carryout self regulationprocess. The committee mainly focuses on developing strategiesand propagating the self-regulation process. The committee guidesthe executive committee in developing and establishing internalcontrol systems, finalize key performance standards and to planthe activities. To provide support to Coordination Committee, anAdvisory Group may be formed with representation from promoterand technical organisations. The Advisory Group supports thecommittee in material/module development, organizing capacityand knowledge building trainings and exposures, propagating self-audit and assessment procedures and provides advisory serviceslike mobilization of internal resources, legal compliances etc. basedon the need. The Advisory group may also need to prepare workingpapers on various elements of self regulation and places thembefore Coordination Committee for discussion, debate, decision,and where approved, for finalization.

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Capacity buildingIn each federation, Executive Committee identifies few SHGmembers as the facilitators based on the need and requirementsfor base level trainings. These facilitators in turn train bookkeepers,representatives of the SHGs and federations on various aspectslike annual planning, bookkeeping, election process etc. Whenfacilitators are conducting trainings in the field, advisory groupand federation representatives may make few field visits to provideon the job support.

During the process, Executive Committees of sub-district levelfederation at various levels are also trained on different aspectssuch as understanding financial statements, monitoring reports,internal and external audit, election process etc. Staffs of thesefederations are also trained on specific aspects like bookkeeping,interest calculations, reporting systems etc.

In each federation, few members are identified as the facilitatorsto run financial literacy centers at village level for membereducation. These facilitators are trained on various aspects to runthe financial literacy centers. They in turn run literacy centers foreach SHG for 2-3 days to increase the members understanding onvarious aspects, facilitate family level livelihoods plans andfacilitate process of elections and SHG level planning.

Mobilising fundsUsually, SHGs and their federations should finance their selfregulation through annual contributions and service fees. Thatshould be the ultimate focus for the self regulation in order toensure independence and avoid external interference. However,up front external financial support is required from the promotinginstitutions, particularly, for capacity building and the establishmentof proper systems.

ConclusionThough the intervention on self regulation by APMAS is still inits early stages, it has provided several lessons, both for thefacilitators and for the women themselves. What is emerging clearlyis that the future of SHGs and their federations lies in memberstaking full responsibility for the entire structure – the SHG andtheir federation. What has also emerged is that the women aremore than willing to take full responsibility and can do so ably.For this to become a reality sooner, rather than later, it appearsnecessary that the facilitating organisations minimise their directroles even further, and enable representatives of the movement totake full ownership, especially for the agenda of promotingincreased member-control and ownership. Hence promotinginstitution needs to focus on bottom up approach and ensure thatthe self regulation of SHGs and their federations, should bedesigned, implemented and managed by the women themselves.

S. Rama LakshmiAssociate Vice President (QA), APMASPlot No.2p, Road No.2, Banjara Hills,Hyderabad – 500004Email: shggateway.in; srama@apmas.orgWebsite: www.apmas.org

References• Hans Dieter Seibel, APMAS: Ensuring Quality in Self Help

banking an assessment, July 2006.• Myrada, Putting the institutions first – Even in Micro

Finance.• CS Reddy, Self-Help Groups: A Keystone of Microfinance in

India - Women empowerment & social security, APMAS• Status of Micro Finance in India: 2009-10

Shaping the Future of AgricultureB.Sc. Study course Sustainable Agriculture

Contact:Dean of Department of LifeSciences: Prof. Wichernflorian.wichern@hsrw.euwww.hsrw.eu

Holistic approach: environmentalstewardship, economic profitability,and social responsibility

Instructional language: English

Study in Kleve/Rhine, Germany,invicinity of the Netherlands

Shaping the Future of AgricultureB.Sc. Study course Sustainable Agriculture

L E I S A I N D I A • J U N E 2 0 1 020

INTERVIEW

NABARD is set up by the Government of India as adevelopment bank with the mandate of facilitating

credit flow for promotion and development ofagriculture and integrated rural development. The

mandate also covers supporting all other alliedeconomic activities in rural areas, promoting

sustainable rural development and ushering inprosperity in the rural areas.

Dr. Venkatesh Tagat is theChief General Manager, Karnataka Region.

What is the role of NABARD in agricultural credit?It is an apex institution handling matters concerning policy,planning and operations in the field of credit for agriculture andfor other economic and developmental activities in rural areas.Essentially, it is a refinancing agency for financial institutionsoffering production credit and investment credit for promotingagriculture and developmental activities in rural areas. Itcoordinates the rural financing activities of all the institutionsengaged in developmental work at the field level and maintainsliaison with the government of India, State governments, theReserve Bank of India and other national level institutionsconcerned with policy formulation. It functions as a regulatoryauthority, supervising, monitoring and guiding cooperative banksand regional rural banks.

In Karnataka, NABARD has been playing the role of ensuringadequate credit flows to farmers, rural groups and enterprises, toscale up production or activity. These include means andinstruments like providing additional financial resources,refinancing etc.

What have been the ways of reaching the smallholders with credit?We have been following two models in reaching the unreached.One is the SHG - Bank Linkage Model wherein the SHGs arefinanced directly by the banks. The other is the - JLG - BankLinkage Model wherein the JLGs are financed by banks.

For NABARD, financial inclusion means credit and other financialservices, building skills of these organized groups like SHGs,farmer clubs in handling technologies as well as markets. Besidesfacilitating training programmes to organize themselves to availcredit, help potential individuals to become entrepreneurs inassociation with institutes like RUDSETI. Also, the trainings arenot only focused on recipients but also banking staff dealing withcommunities.

It is also believed that bank loans are alwayspackages, not giving need based flexibility to theborrower?It is not entirely true. Kisan credit cards were meant for thatpurpose. They combined agricultural loan, personal accident coveras well as consumer loan, with a certain cash credit limit. However,instead of using them judiciously, as an after thought are beingused for borrowing the total amount. In fact, payment in time isencouraged by certain states to charge zero percent (Tamil Nadu)when repayment is done in time.

What has been the most effective way of reachingthe poor and why?It is definitely through the SHGs. SHGs are small, cohesive andparticipative groups of the poor, who pool their thrift regularlyand use it to make small interest bearing loans to members and inthe process learn the nuances of financial discipline. Subsequentlythey graduate to access bank credit to augment their resources forlending to their members in need of financial assistance for meetingtheir credit needs. Over the years the pooled resources of the SHGsbecome a sizeable corpus, which complimented by higher volume

Strength lies in buildingempowered communities

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21L E I S A I N D I A • J U N E 2 0 1 0

of bank loan enables them to take up livelihood activities whichresults in improving their standard of living.

Self Help Groups (SHGs) have become the common vehicle ofdevelopment process, converging all development programmes.SHG–Bank Linkage Programme launched by NABARD way backin 1992 envisaging synthesis of formal financial system andinformal sector has become a movement throughout the country.According to the Status of Micro Finance in India 2009-2010released recently by National Bank for Agriculture and RuralDevelopment (NABARD) there are 69,53,000 SHGs in the countrywhose savings are linked with banks. The estimated number offamilies covered under this model is about 970 lakhs. The totalsavings amount of all the SHGs with banks as on 31 March 2010amounts to Rs.6198.71 crore and the total amount of loansoutstanding against SHGs as on 31 March 2010 is Rs.28038.28crore.

NABARD has also been bringing out simple guidelines for NGOsas well as involving in street plays, ‘Yaksha Gana’ in buildingawareness. IT enabled services have helped simple transactions attheir door step like withdrawals and deposits while bringing downthe transaction costs. Business Correspondents (BCs) and BusinessFacilitators (BFs) were instruments created to strengthen financialinclusion processes. With advancement in technologies, thetransaction costs would come down further.

What has the above model achieved?The SHG-Bank Linkage Model is the largest financial inclusionprogramme in the world. It is considered as the largest microfinanceprogramme in terms of outreach in the world and many othercountries are keen to replicate this model. This programme is alsothe main contributor towards the Financial Inclusion process inthe country. This model pioneered by NABARD was not just meantfor financial inclusion for rural poor women who usually belongto backward classes, scheduled castes and tribes. It had an holisticapproach, i.e. besides financial inclusion, economic and socialempowerment of poor women.

Overall findings indicate that the decision making capacity ofwomen members with various SHG activities has improved frompre-SHG situation. SHG members were part of the decision makingprocess in children’s education, purchase of assets, marriage oftheir daughters, etc. Members also reported in changing undesirablehabits of their husbands.

Therefore, it is apparent that over the years, the SHG-Bank LinkageModel has invested sufficiently in building social capital in thecountryside. This investment in the form of training and capacitybuilding has enabled the rural poor woman to undertakeresponsibilities which she was not capable of taking up in pre-SHG situation.

Will credit not become expensive to the small holderswith high interest rates being levied in a SHG?Money saved by the members are lent internally among the needymembers of the group and the interest charged vary between 12-24-36%. Some might say the interest rates or high. But one has tounderstand that the interest rates are decided by members and notby any outsider. Further, the interest earned on internal loansremains within the group and becomes part of its corpus. It is notsucked out.

Moreover, SHGs work out Differential Rates of Interest. Theserates are worked very well by the group members. While for healthloans no interest is charged, for education it is a small percentageand higher rates are charged for economic purposes. Farmer isseen as a productive asset. Therefore, loans taken for health andeducation are also considered to increase his productivity.

How does MFI – bank linkage model differ fromSHG-bank linkage model?SHG-bank linkage is still in operation. However, loans to MFIwas considered as lending to priority sector and from 2005-06,MFIs started lending credit to the poor in a big way.

It is given that MFIs are not the pioneers in microfinance. Theyhave come into existence only after the SHG-Bank Linkage Modelproved that poor are bankable. Most of the MFIs are operating inplaces where the banking density is quite high in the country andcredit to deposit ratio is satisfactory. MFIs are focussing more inirrigated areas of Andhra Pradesh, Tamil Nadu and Karnataka fortheir lending activities rather than reaching out to the poor in otherregions of the country.

MFIs do not spend time and resources in formation of groups andtheir capacity building. They usually poach members fromestablished SHGs and form groups only to lend and recover loans.There is no capacity building to make them aware about the benefitsof savings, smart borrowings, intelligent investments and financialdiscipline. In this method, the MFIs do not incur any cost information and capacity building of groups. Therefore, the highrates of interest charged by MFIs even to these groups is totallyunjustified. In the SHG-Bank Linkage Model, capacity buildinggains precedence over credit. This has resulted in strengtheningcommunities through investments in social capital.

The biggest bane in MFI model is transparency in interest rates.Borrowers are not aware of the actual rate of interest they pay tothe MFIs on their loans. Apart from the interest, which is often ata flat rate, there are other charges like document charges, upfrontfees, etc. MFIs and their defenders argue that a member of SHGmay be charged an interest rate of 12-24-36% on the loans takenfrom SHGs. But what they miss to see is that the interest paid by

SHG-Bank Linkage model proved thatpoor are bankable

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L E I S A I N D I A • J U N E 2 0 1 022

the members only accrues to the corpus of the group. Whereas,the high interests paid by the rural poor on loans from MFIs, donot stay within the group as in SHG-Bank Linkage model, butenriches the bottom line of the MFIs.

Micro finance institutions, by targeting individuals weakened theexisting social cohesion. Greed replaced need, a sense of ‘giveand take’ compromised which has caused the precarious situation- thus, ‘biting the hand which feeds you’.

How could credit access made easier for smallholders?Credit agencies have a great responsibility in making a genuinecredit access to the small holders. If you don’t make genuine creditaccess then people are forced to go to MFI. For example inKarnataka out of 576000 SHGs around one-third have loansoutstanding while the two-thirds are the potential customers ofMFI. In 2009-10 in Karnataka alone around 2700 crores has beendisbursed through MFIs. Earlier it was a money lender…and nowit is MFIs. When the poor are unable to repay this leads to suicides.Banks assessment should be made strong. Infact banks never wentback to those SHGs which received loans once.

Though majority of MFI have become profit making forgettingthe small holders, there are still MFIs like SKDRDP, IDF whohelp borrowers to generate income by diversifying livelihoods.Banks need to play an active role in neutralizing MFIs.

Empowering women groups is the key to successful microfinancing. SHG-bank linkage programme enabled this. It was likebeing with the communities…building relationships. Entry ofdivisive forces within the community in the form of MFIsdismantled the SHGs. Social cohesion went for a toss. Moreoverif SHG are federated, people are empowered to jointly managethe finance and the activities. Federations like Mandal Samakhyain AP is a fine example where members directly started accessingtimely credit and doing financial services. Only such stronginstitutions can deal with the threat from larger corporations likeWalmarts.

Community owned enterprises are the future in managing credit.They ensure ownership, manage economies of scale and enableefficient delivery of services. In short, empower communities toavail technologies, credit and markets through financial services.Strength lies in building such empowered communities.

www.leisaindia.orgA website for learning and sharingexperiences on LEISA practices.

Main features

• Space to share your LEISA experience.

• A source for LEISA practices followed byfarmers.

• An archive of LEISA India magazines - Englishedition and regional editions (Tamil, Kannada,Hindi). LEISA India in Oriya and Telugu will beavailable shortly.

• Photos and videos on LEISA practices.• Interesting cases of people following LEISA

practices.

L E I S A I N D I A • J U N E 2 0 1 022

Micro finance institutions, by targeting individuals weakened theexisting social cohesion. Greed replaced need, a sense of ‘give and take’

compromised which has caused the precarious situation - thus,‘biting the hand which feeds you’

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Financing small farmers –an innovativemethodologyL H Manjunath

Increasing biodiversity and income from integrated farm unit

Hanumanthappa of the Jadalli village in Banavasi, Sirsi talukof Uttara Kannada district has been practicing integratedfarming for the last two years by availing the loan and subsidyfrom SKDRDP. Today, his garden of 3.75 acres boasts of22 crops along with dairy farming, farm pond and a biologicalfence. Mr. Hanumanthappa says that he gets a net return ofRs. 1.4 lakhs from his sustainable farming practices. He doesnot use chemical fertiliser anymore.

Financial problems faced by small farmers trying to takeupsustainable farming are not new. Farmers need money togrow crops, buy livestock, to raise trees and plantation crops,

take up watershed activities etc. But with no access to timely creditthese farmers have remained poor unable to maximize returns fromtheir small holdings.

Pragathibandhu is an innovative programme promoted by ShriKshethra Dhamasthala Rural Development Project (SKDRDP) totake care of the needs of the small farmers. SKDRDP, an NGOworking with the small farmers of Dharmasthala in the state ofKarnataka has been using the self help group approach forpromoting union of small farmers. These groups called as“pragathibandhu” groups are engaged in improving the agriculturepractices, sharing labour with one another and accessing creditfacilities.

In the year 1982, SKDRDP which was promoted as a charitableorganization, to provide temple subsidy to small farmers in villagesaround Dharmasthala, is today, one of the bigger NGOs in thecountry. Over the years the organisation has started promoting selfhelp groups of small farmers and women.

Pragathibandhu SHGs

Pragathibandhu SHGs are organized 5 to 8 members, each of whomown upto 2 hectares of land and come from similar background.The pragathibandhu SHGs are predominantly made up of menmembers although one or two women members may also be in thegroup. The members are trained in group management, financialmanagement and documentation.

Group members are trained on various activities related toimproved farming. Organising various short duration trainingprogramme followed by frequent followup by the staff of SKDRDPare an integral part of the pragathibandhu programme. Further the

Farmers need credit for various reasons. But their inabilityto repay has been an important reason for not being able toaccess timely credit. Pragathibandhu is an innovativeprogramme which makes the poor bankable by diversifyingincome sources and facilitating labour sharing.

farmers capacities are strengthened by organising field visits tomodel farms, Krishi Vijnan Kendras, interaction with experts etc.

Planning farm activitiesThe members are also guided in their farm activities. They arehelped in preparing farm plans based on the landholdings andcropping pattern. The farm plan is unique to each member and ismade along with budgetary estimates. Aspects like multiplecropping to give continuous income, sustainable farming,sustainable water supply and ancillary activities are given dueimportance while preparing the plan. Different models of waterconservation, harvesting and irrigation systems also are includedin the farm plan.The plans are recorded in a book kept in the members house.Meaningful preparation of farm plan gives a new focus and goalto the small farmer. It will dare him to conceive a dream and apossibility of realizing his dreams.The integrated farm unit model also called as Samagra KrushiGhataka is promoted among small farmers wherein they areencouraged to cultivate multiple crops including field crops,plantation crops and forest crops by intensive practices in his smallholding. Farmers are encouraged to use organic inputs, helping

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UPPA group is proud to share labour

Uppa pragathibandhu is one of the earliest SHGs formed in1993 located in Mogru village of Belthangady taluk in DakshinaKannada district. It is also one of the bigger pragathibandhuSHG with 11 working members. They share labour on Tuesdayevery week. So far, the Uppa pragathi bandhu group has shared8,976 labour days valued at Rs. 8.97 lakhs.

Developing plantation crops like areca, coconut, rubber, coco,dug well, tending to vegetable garden, carrying the manure,harvesting the crops are some of the common activities undertaken by all the members of the group. All farmers in the groupcultivate vegetables to supply it to the Mangalore city market,where they get better price for their produce. Majority alsohave dairy farming as subsidiary occupation which helps themto produce farm yard manure which has reduced usage ofchemical fertilizer, on the farm.

The group has a total savings of Rs. 94,820/-. The group hasavailed loans to the extent of Rs. 6,21,000/- over the last 17years. The members have shared this money amongstthemselves for a whopping turnover of Rs. 17,36,170/-. All themembers unanimously agree that the pragathibandhu SHG isvaluable for them, both in terms of providing labour and timelyfinance.

him/her to completely avoid external inputs within three years ofstarting the integrated farm unit. Also multiple farming activitieslike cultivation of field crops, vegetables, floriculture, dairyfarming, poultry, bee keeping, sericulture etc., are promoted sothat the farmer is able to get continuous income.

Labour sharingLabour shortage has acutely affected the small farmers and thecrop production. To overcome this labour problem, sharing oflabour between the members once a week has been embedded as afeature of the pragathibandhu SHG. The members of the groupwork on members farm without receiving any wages. The work tobe done and the house to be visited will be predetermined. On theday of the laboursharing, hospitality is the ‘hosts’ responsibility.The same day next week they go to another members house. As aresult, each small farmer gets five to six free labour days in twomonths. As a result, the small farmers get the labour so essentialfor farming – that too without payment.

The labour sharing programme of the pragathibandhu SHGs is aunique answer to the labour shortage suffered by the small farmers.In this method the farmer does not pay the labourers in cash, instead,returns the labour day to the member farmer, by working on hisfarm. In the process the affinity between the members of the groupbecomes stronger. They learn from each other, and help each otherin times of crisis. It is very common to see pragathibandhus workingfor 8 to 9 hours on the laboursharing day to complete the plannedtask rather than postponing it for another day.

Pragathinidhi, an innovative financing development fundThe loan product of SKDRDP helps in realizing the dream farmplan of the pragathibandhu SHG members. The SHG memberssave Rs. 10/- every week. SKDRDP provides financial assistanceof upto 40 times their savings. This is called as Nidhi (fund) andnot loan as SKDRDP expects to treat this money with respect.

The pragathinidhi is available for all possible purposes includingagriculture. The groups which have completed 12 weeks ofsuccessful savings can aspire for pragathinidhi. Initial loans willbe to the extent of Rs. 10,000/- per member going up in subsequentreleases. Groups can seek a second loan while the first one isoutstanding and three months after the previous loan is released.Members can avail loans from the group based on their savingsand purpose. For instance a member can avail upto Rs. 25,000/- or10 times the savings for emergency purposes, 20 times the savingsor Rs. 50,000/- for taking up income generation activities and Rs.50,000/- or 20 times for building infrastructures like well, pumpset,pipelines etc.

The application for the loan is generated by the group afterdiscussion with the members and based on the farm plans of eachmember. The applications are then vetted by the village levelfederation of the SHGs who constitute a subcommittee forrecommending the loan. The applications are generally submittedto the field worker after the recommendation of the subcommittee,who then submits it to the appropriate authority for sanction.

The members get a repayment period of 3 to 5 years. However,the money is to be repaid in weekly installments only. For example,

a farmer borrowing Rs. 20,000/- for taking up arecanut cultivationwhich has a gestation period of 5 years, has to repay in 156 weeksat Rs. 156/- a week. For this purpose, the member will have toresort to subsidiary occupations like dairy, floriculture, betel leafor labour work to repay the loan.

ConclusionToday, SKDRDP working in 9 districts of Karnataka has beenworking with 1,16,500 SHGs covering 12,85,000 families. With acumulative savings of 258 crores, nearly 1,75,000 small farmersin Karnataka are able to avail credit for their farming activities inadequate quantities, in time and without hassles, thus improvingtheir lives and livelihoods.

The innovation has developed a new methodology of financingthe small farms. The pragathi bandhu innovation looks at dailyincome of the farmer and encourages him to take up several farmrelated activities and enterprises which increases his income source.Infact by the time the crop comes to harvest, most of the loan ispaid back, avoiding distress sale. SKDRDP has truly redefinedlending to small farmers.

L H ManjunathExecutive DirectorSKDRDPDharmashri Building, Dharmasthala,Blethangady Taluk, Dakshin Kannada District,Karnataka – 574216Email: ed@skdrdpindia.org; Website: skdrdpindia.org

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Financing sustainablefarming throughstrong local institutionsD Ranganatha Babu

SHG movement, one with the quickest growth in thedevelopment sector in India, has been instrumental inhelping many rural women in accessing finance for meeting

out their requirements. The SHGs which started small at the grassroot level, mainly supported by NGOs, gradually became a channelfor development interventions for the government as well.

Of late, we see that many SHGs have become defunct or havebeen dissolved due to combination of several factors. They havenot been able to sustain beyond the project periods supported byexternal agencies. Strengthening local institutions and workingtowards their sustainability from the beginning of the projectinterventions is crucial. The following case is a typical example ofhow SHGs could be made sustainable over a period of time withplanned strategies in place.

The CaseD.Upparahalli is a small village in Malur taluk of Kolar District inKarnataka consisting of 40 households. The women from thesepoor households were organised into a SHG in 2002, under a WorldBank supported watershed project. During the project period, themembers benefited through various project interventions. Theproject was withdrawn after five years and no specific measureswere taken to ensure the continuity of the SHG institution.

In year 2009, Sir Ratan Tata Trust (SRTT) supported SRIJAN, anNGO to promote livelihood activities among these communities.The objective was to strengthen the existing community institutionsand link them to credit for taking up livelihood activities. Whenthe team visited D. Upparahalli it was found that there was noSHG functioning and people were dependant on money lendersfor their financial needs. The SHG formed under the watershedproject did not exist anymore.

Building local human resources and simple financial systemsat the grassroot level ensures sustainability of SHG fundingactivities. Belaku, an organization working for sustainablerural initiatives brings out its experience with a case.

During discussions the women quoted the following reasons fornot being able to continue with the SHG institution

• No guidance on their day-to-day transactions.• Mis-utilisation of SHG funds by the outside agencies as well

as by a few of their own groups.• Inability to maintain proper books of accounts, as most of the

members are not literate.• Banker’s resistance to link them with credit.

With the women’s consent, in 2009, SRIJAN once again formedthe group called Lakshmi Mahila Raitra Sangha with 14 members.The group evolved the byelaws in a participatory mode. SRIJANteam facilitated on the systems that were necessary to strengthenthe SHG. Members started saving Rs.100 per month and internallending was started from the first meeting. In the initial meetingsthe loan was availed to meet the consumption as well as for healthneeds.

All the members belonged to farming households owning smallpieces of land of about 0.5 -2 acres. Ragi is the major crop grownwhich had a low productivity of 6 quintals/acre. SRIJAN teamguided the members on enhancing ragi crop productivity bycombining sustainable agricultural practices. This resulted inincrease in the yield by1-1.5 quintal/acre.

In 2010, when SRIJAN had to shift its base from Malur to Kadur,BELAKU, another NGO active in the village took the responsibilityof guiding the group further in moving forward. BELAKU whichhas been working with 30 SHGs in Malur area strongly believesin preparing rural youth to be employed in the field of developmentsector. Accordingly, one rural youth was identified to maintain thebooks of the SHG and was sufficiently trained to handle the job.SHG members agreed to pay him Rs.100 for the service renderedby him thus building up their ownership.

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Gradually as the days progressed the members were in need ofmoney and decided to approach banks for credit. BELAKU teammembers approached the local nationalized bank but the responsewas not encouraging initially. Meanwhile, the MFIs were preparedto give loan to the SHG but the groups refused to avail loans fromMFI owing to weekly repayment, higher interest rate, no flexibilityin repayment and no scope for saving. However, with continuousfollow-up by Belaku team, the group was able to avail bank loanin 8 months time, from State Bank of India, Malur branch.

The loan of one lakh rupees was availed by 8 members of thegroup. 60% of the loan component was used for purchase of sheepand remaining 40% for other purposes like repair of house,education, repay the existing loan availed at higher interest rate.

Though the members were interested in taking up dairy activitythey were made aware of the situation prevailing in the area which

was not congenial for taking up dairy. There was scarcity of waterand shortage for fodder. Moreover, farmers were familiar withsheep rearing and their feeding aspects. They also knew that withsheep rearing they could repay their loans in one and half years.

After making informed choices, the group is now confidentlymoving ahead. The group members are also planning to provideinsurance to all the SHG members by the profit earned so far.Every member knows that there is a serious threat to theenvironment by farmers taking the eucalyptus plantation on a largescale in their village. They are also exploring alternative activitiesthat can arrest the spread of Eucalyptus plantation.

Way forward

Belaku has a lot of lessons to share which it has gained over aperiod of time. At the community level, it is necessary thatinstitutions need to be strengthened before implementing projectactivities. More importantly the external agencies should only befacilitators ensuring ownership among communities. This can beachieved by building capacities of local people, especially the youthby a team which is extremely committed.

D.Ranganatha BabuExecutive DirectorBELAKU – an organization for sustainable rural initiativesGPM Building, Maruthi Extension, Malur,Kolar Dist, KarnatakaE-mail: belaku2004@gmail.com; ranganatha_babu@yahoo.co.in

Ways to improve financial efficiency

Design simpler systems – It is important to keep theoperational systems at the community level simple whichcan be handled by the communities.

Involve Service Providers – While the group members mostlywomen find it difficult to access services on their own owingto limited mobility, the concept of paid service provider willhelp women in leveraging services and sustaining the groupactivities.

Build transparency in accounting systems – Majority of themembers have no idea about the financial details of theirindividual accounts. Generating monthly consolidatedstatement of accounts will go a long way in buildingtransparency and confidence among the members.

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The need for credit plays a key role in many sad realities.Take for example Peru, where many smallholder householdsare never far from hunger despite having fields laying idle

which could well be worked, providing food and additional incometo the family. What is lacking is the money to provide seeds andfertiliser, hire a donkey or tractor to prepare the land and pay forthe irrigation water. No hay medios, as they say in Peru. “We don’thave the means.” Credit really does seem to be part of the way outof such a situation, even though the combination of credit, highlyvolatile markets and a risky climate has ruined many farmersbefore. Many farmers have had to sell their resources to pay backprevious loans and have outstanding debts that they cannot repay.For them credit is unobtainable as the banks consider them to bedelinquents. Here we have one of the rural development dramasin a nutshell: credit got people into trouble, yet it is what theyneed to get out of trouble and they cannot obtain it anymore.

Autonomy and freedom

Farming always requires a multi-facetted resource base. Alongsideland, water, animals, seed, fertiliser, labour, knowledge, buildings,instruments and networks, farmers need working capital. Often,this working capital comes from the savings created duringprevious cycles of production. In fact, farming is not only aboutusing these resources in order to produce. It is as much about thereproduction and development of this resource base. During theprocess of production, the resources are reproduced. Heifers arebred to be at least as productive as the cows they are replacing.The fertility of the soil needs to be maintained – and preferablyimproved. When harvesting potatoes, the seeds for next year needto be selected and put aside. All these resources carry the promisefor good and hopefully better harvests in the future. This processof reproduction not only applies to the material resources, but alsoto social resources, the labour force within the family (and/or thewider community), to networks and knowledge. It also applies toworking capital.

Text and photos: Jan Douwe van derPloeg

Credit is often seen as an indispensable vehicle forthe poor to get out of poverty, or as the tool that allowsfarmers to get access to new technologies, to increaseproductivity and their incomes. But many existingcredit programmes often undermine farmers’independence, tie them into dependency relationships,and oblige them to take all the risk. There are betterways to help farmers build their own resource baseand independence.

Thinking beyondcredit

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The resource base available to farmers is the result of previouscycles. It has been created through the sturdy work and thededication of the farming family. As the outcome of their ownlabour it represents autonomy (or independence, as farmersthemselves often say).

It avoids the need to enter into dependency relations with others.The means needed to produce are at hand. Slicher van Bath, thegreat agrarian historian, referred to this as “farmer’s freedom”.He argued that this was a double freedom. First, it is freedom fromdependency and associated exploitation. There is no need to rentland from a big landowner and no need to get a loan from a locallender requiring high interest payment. But there is also freedomto farm in a way that corresponds with the interests and prospectsof the farming family. Others cannot prescribe how the farmershould operate. Farmers themselves design the way they want tofarm and to develop their farms. “Freedom from” and “freedomto” are indispensable ingredients of a prosperous farming sector.

The history of farming can be seen as a struggle for autonomy, astruggle that occurs within single farms, but also takes place at thelevel of farming communities and farmers’ movements. Many co-operatives have grown out of such movements, including creditand savings co-operatives set up to address the credit issue.

Dependency and survival

The historically created and autonomous resource base is beingthreatened in many parts of the world. The squeeze on agriculture(increasing costs together with stagnating or even decreasing outputprices), the urban bias in state policies and technological modelsthat imply many external inputs, have all contributed to erodingthe self-governed resource base. Where once autonomy was central,

there is now a wide and dense network of dependency relations onthe input-side of the farm. These add to the dependency relationson the output-side of the farming. Very often, the former areconsiderably tightening the latter. Dependency on the capital marketis a typical example. Credit obtained from banks often links farmsclosely to agro-industrial groups. Agricultural co-operatives andindividual smallholders in Peru, for instance, received loans fromthe Banco Agrario in the form of “permissions for withdrawal”which they could only use at the large agro-commercial companiesto access prescribed seeds and agrochemicals. There was nopossibility to use the credit in an alternative way for, say, cattle orfruit trees.

These loans came with strings that specified which crops had tobe grown, in what way and, especially, to whom they had to besold. Thus, the credit mechanism closely tied farmers to the logicand needs of agro-industry. Through such tied credit the “freedomto” is nearly completely lost. There are considerable differencesbetween farms, regions and countries in the balance betweenautonomy and dependency. In some countries farmers and theirinstitutions have far more autonomy over their resources. In manyother countries, poor market conditions and adverse rural andagrarian policies have impoverished farmers and eroded theirresource base. Despite this, some farms have been able to maintain– or to reconstruct – a strong resource base, often by minimisingthe use of external inputs and avoiding high financial burdens.The relevance of this strategy of “farming economically” becomesmore evident in times of crisis, as these relatively autonomousfarms are better placed to survive the difficult times.

“Credit often closely ties farming practices to theagro-industrial logic and the needs of the agro-industry”

“Autonomous” farms are far better placed to cope with difficulttimes

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Alternative mechanisms

But what is to be done when, for whatever reason, farm householdsget into trouble? Let us first scrutinise the different mechanismsthat might be employed. At the level of the single farm there is awide array of potential solutions. Informal credit (often betweendifferent farmers, where one of them contributes land and labourand the other the required capital), saving groups (such as tontinesin several African countries) and social networks (for mutual help)are the first category. Co-operation and an equal distribution ofrisks are important features of these strategies. This is in starkcontrast with the unequal risk distribution entailed in formal credit.

Secondly, there are mechanisms like multiple job holding (veryimportant in Chinese agriculture), and temporary transnationalmigration (very important in considerable parts of Latin Americaand Eastern Europe, but also, not that long ago, in countries likePortugal). These mechanisms allow farmers to earn an incomethat they subsequently invest in their agricultural activities. In thisway farmers construct their own working capital. Thirdly, thereare new mechanisms based upon creating new economic activitieswithin the farm (such as on-farm processing, direct marketing,agro-tourism, energy production, etc.) that can generate aconsiderable cash-flow and reduce the need for credit. The problem,though, is that considerable working capital is often needed tostart up such new activities. But sometimes a step-bystepdevelopment is possible.

At the regional level, social movements may help considerably.The agro-ecological movement in Latin America for example, helpsfarmers to change to farm practices that require far less externalinputs, and this may help to reduce dependency on capital markets.The same movements may also help to change rural and agrarianpolicies. The delivery of microcredit is another example – it isespecially relevant for rural women and the very poor. Nationalpolicies that favour agriculture can also considerably help tostrengthen the autonomous resource base of farms. Often thesepolicies are far more effective. Brazil’s recent experiences areexemplary. The programmes for public procurement (that includesthe distribution of school meals) are now increasingly linked to

local small-scale farmers. At least 30 percent of the food purchasedfor these schemes has to be acquired locally from small-scaleproducers. This provides an enormous stimulus for farmers. Accessto this newly created “market” means that they can considerablyimprove their livelihoods and build savings that subsequently helpto improve their farming. The supply of school meals, rather thanrelying on supermarkets and/or large corporate farms, has beenlinked into an attractive and highly effective programme tostrengthen the resource base of smallscale farmers.

The agenda

An autonomous base of selfcontrolled resources is essential foragricultural growth and the emancipation of the peasantry.However, the creation (or recovery) of such an autonomousresource base is hardly possible through existing formal creditmechanisms. Of course, credit can be helpful, but only under someconditions. First, it needs to be part of a wider programme thataims at strengthening the resource base of farms. Second, it needsto be untied so as to allow farmers to use it in the way they deemappropriate. Thirdly, the implied risk needs to be equally shared.Reviews of successful experiments may well reveal additionalcriteria. Just as farmers design ways of farming that carry thepromise of progress, new credit mechanisms that can help themare crucial.

Jan Douwe van der Ploeg is professor of rural sociology at WageningenUniversity, the Netherlands. His latest book, “New peasantries:Struggles for autonomy and sustainability in an era of empire andglobalization” (Earthscan, London, 2009), has been translated intoSpanish, Portuguese, Italian and Chinese. Jan Douwe van der Ploegcan be contacted at jandouwe.vanderploeg@wur.nl. He also has hisown website: www.jandouwevanderploeg.com

All over the world, farmers are showing that there are alternative mechanisms to a tied credit

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Dulal, an NGO in Orissa has been working with communitygroups helping them improve their livelihoods. The groupswhich were facilitated by Dulal initially were supported

through grants and subsidies. Later these groups were enabled tostart their own savings and were linked to bank credits andgovernment programmes to avail the benefits. Dulal felt thatproviding access to credit through bank linkages would strengthenthe groups and help them improve their lives by taking up incomegenerating activities. But the experience on the ground provedsomething different – that the inflexible bank credit and subsidiesoften end up with farmers getting into huge debt situations.Experience of Shibaparbati SHG illustrates this.

Shibaparbati SHG of Indusahi, Kuliana was formed in 2001. In2004 they initiated groundnut cultivation as an income generatingactivity (IGP) on a small scale of less than one acre of leased land.This expanded to 12 acres by the year 2007. In 2007, the groupavailed financial support of Rs.2.5 lakhs from the governmentprogramme, SGSY (Swarna Jayanthi Sawarozgar Yojana) forexpanding their activities. The group first withdrew Rs.70000 ofwhich Rs.40000 was invested in groundnut cultivation. Theremaining Rs.30000 was divided among members who investedin their individual business. They realized Rs.27000 as profit inthat phase and repaid Rs.8000 towards the interest amount in thebank. The group members calculated that if they were to pay theinterests to the principal amount they would have to pay Rs.16000annually. To reduce the interest amount, the members planned topay Rs19000 towards the principal amount borrowed. But the Bankrefused to accept the amount at that time.

The members then withdrew the rest of the Rs. 1.8 lakhs fromtheir group account. They invested Rs.60000 in groundnutcultivation and Rs. 32000 for Mahua business. That year the marketprice for Mahua flower was low. The group had to sell the entirestock before it was destroyed by pests at this low price. Similarly,

Bank credits –boon or bane?Prasanth

Big loans are a great risk for small groups. Investmentsshould match the group’s ability to save and produce.Strengthening groups, forming federations and building upgroup fund is a better option of accessing timely credit, alsoleading to building up social capital.

heavy rains affected groundnut production. However, the group’squick action and multiple approaches of not just relying on oneIGP but doing ground nut cultivation, Mahua and paddy retailinghelped them make net profits - Rs.8000 from Mahua business,Rs.7000 from groundnut cultivation and Rs. 40000 from paddyretailing. This helped them repay the interest on loan.

From this experience the group members realized that big loansare always a great risk for small groups. Investments should matchthe ability to save and produce. It is not worth availing hugeamounts just because they are being offered through schemes.Instead, building up the group fund and forming a cooperativewith several such groups would be a better option. This will alsohelp in leveraging collective action.

Though Shibaparbati group members had saved themselves froma sure debt situation by taking quick action and responding wiselyto external fluctuations of market and climate, they strongly feelthat big money affected the group unity. The group has since thennot taken credits from Banks and they rely on their group’s savingsfor business investments which is around Rs.1.45 lakhs. Havinglearnt lessons from the experience of Shibaparbati SHG, twelveother groups in the working areas in Kuliana who are ‘credit’worthy as per the Banks criteria have refused support from SGSYscheme.

PrasanthDULALConvent Road, Baripada P.OMayurbhanj district,Orissa – 757001E-mail: dulalbaripada@yahoo.co.in; dulalorissa@gmail.comWebsite: www.dulal.in

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Arecanut (or Betel nut) plays an important and popular partin Asian culture, especially in India. Arecanut is a widelygrown cash crop in the malnad belt (hill belt) of Karnataka.

A significant portion of Shimoga and its immediate neighboringdistricts is an agrarian economy belonging to this hill belt. Arecanutis among the most important crops (along with coconut and paddy)of most farmers in these regions. A significant number of thesefarmers are small farmers with small land holding between 1 to 5acres. The post harvest processing consists of deshelling thearecanut, boiling of the arecanut followed by drying (typically sundrying) of the boiled arecanuts. This results in significant valueaddition to the arecanut. However, on the farmer’s part, it requires,upfront investment for the process.

Value addition in Areca chain

Typically, the boiling is carried out in traditional stoves withbiomass (normally dried arecanut shell) as fuel. Farmers normallystore dried arecanut shells to be used the subsequent year as fueland this requires considerable investment in terms of storage spaceand labor to dry the shells. The boiling process is a batch processand the traditional stoves typically have around 70 kgcapacity (though some stoves custom-designed for larger orsmaller capacities do exist), and are relatively heavy in fuelconsumption.

An ‘efficient’ solution

TIDE (Technology and Informatics Design Endeavor), an NGObased in Bangalore had developed an improved arecanut boilingstove, and trained entrepreneurs to manufacture, install andcommission the same. This stove provides a 30%-40% reductionin fuel usage and a 30% reduction in batch processing time, thus

resulting in improved productivity and fuel economy for thefarmers. It is significantly energy efficient in comparison to thetraditional stove.

Among the entrepreneurs trained by TIDE is Mr S D Nataraj ownerof informal enterprise Sahyadri Advanced Technologies (SAT)operating from Shimoga town, the district headquarters ofShimoga. SAT installed and commissioned these stoves. By takingup the manufacturing in-house, SAT could achieve higher margins,more timely delivery and better control over the stove quality. Thekey hurdles for SAT to begin manufacturing, however, were lackof adequate working capital, no strong relationship with the localfinancial institution and a market that needed a mechanism to payfor the installation of the stoves over multiple (typically three tofour) installments.

S3IDF makes it possibleIn 2006, based on an analysis of SAT’s sales plans and financialneeds, S3IDF designed an enterprise support transaction throughwhich SAT’s immediate financial needs would be satisfied andSAT would gain access to an ongoing line of credit from a localformal financial institution. As a first step towards a relationshipwith a formal financial institution, the local branch of Syndicatebank was convinced to open an account for SAT. A working capitalof Rs. 1,50,000 (~USD 3800) was created. More than a year later,SAT is well into the business of installing the new-improved arecastoves. Till date, SAT has installed almost a hundred such stoves,each costing around Rs. 5000.

Nataraj faces problems with the repayments for these stoves, suchas lack of advance payments, tracking and collecting ininstallments, and the huge distances to be covered to collect theserepayments.

But Nataraj continues his business, knowing that his customersare trustworthy and hoping to expand into other products.

Small Scale Sustainable Infrastructure Development FundNo. 700, 15th Cross, 24th Main, J P Nagar 2nd Phase,Bangalore – 560078Email: info@s3idf.org; Website: www.s3idf.org

Arecanut chain – addingvalue with lowerenvironment impactS3idf

“These stoves are more efficient, so we require less amountof arecanut shells” says Shekarappa of Bhadravati Taluk.

Small Scale Sustainable Infrastructure Development Fund (S3idf)employs its Social Merchant Bank approach in South India bybuilding a portfolio of pro-poor, pro-environment, financiallyviable small-scale infrastructure and related productive-useinvestments and enterprises. S3IDF is supporting a stream offinancially self-sustaining micro-enterprises that can supplyinfrastructure services to poor people in ways that tap into existingsources of small-scale finance. By ensuring the creation of suchlocally owned small/micro-enterprises run by poor/ marginalized/disabled people, women, NGOs, SHGs etc., S3IDF helps startfundable business ventures in poor communities that benefit thepoor both as consumers and owners/operators. S3IDF’s goal isnot only to solve the infrastructure problem but to do so in away that leads to healthier and more self-reliant communities.

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Before 1970, in rural India, borrowing money was a shamefulact. In 1971, I borrowed Rs. 5000 from a rich family frommy neighbouring village as a goodwill loan without any

interest. My father abused me even though I wanted to use thatmoney to buy land. Surprisingly, by the year 1980, it became verycommon to borrow money even for household expenses. By 1990,everyone in the village started borrowing money from banks,Cooperative Societies and even private moneylenders for buyingagriculture inputs or for personal and household purposes. By 2000the government announced the waiving off the interest and by 2005even loans were waived off. Inspite of all these financial aids,farmers suicides are continuing unchecked. This indicates that nofinancial support can ensure one’s sustainability in any profession.If a farmer has a vision and a goal of leading an honourable life, itis possible to save enough from his earning by sacrificing unwantedexpenses.

The government has many schemes to provide financial supportsin agriculture, the farmers can avail them and use for the purposethey are given. The authorities should understand the situation ofthe beneficiary before he is given any loan or subsidy. For example,if a landless labourer who has no fodder or even a place to house adairy cow, is given a loan and subsidy for purchasing cow, then hehas to leave the cow at some body’s house and loose all his cowdung and cow urine which could have been 30% of income. Alsoas he has no access to fodder grown on his farm, he or his wife hasto spend the whole day in collecting grass for the dairy cowsacrificing their wages. Instead of a dairy cow, he could have beengiven 3 or 4 sheep or goats, which could have been accommodatedin a corner of their house, and have all the droppings as manure,and be left for grazing near the field where they go to earn theirdaily wages. Similarly, they could start small vermi compostproduction, which does not require the whole day’s work.

I am totally against external financial support provided to the farmerunless he gets it at a right time when he needs it, without wastinghis time to get it, at his own place. A very good development inIndia in the past 10 years is the growth of Self-Help Groups in therural areas. The group members save a certain amount every weekand the group decides to lend for the member of the group whoneeds the money for a good reason. They charge the borrowervery nominal interest and the whole group takes the responsibilityof repayment. Many a times, during a worst situation, theycollectively subscribe to clear one’s debt. All the profit goes backto the group and it grows bigger and bigger and also richer. TheState governments also support them with little free contributions.

In my opinion, the Union and state governments have spent billionsof rupees in the name of rural development during the last 63 yearsafter independence. Unfortunately, the real benefit has not reachedthe needy and right communities. Institutions like NABARD haveto be strengthened to support the self help groups through training,financial and marketing support. If these groups can be independentand kept away from political affiliation, they are bound to meet allthe financial requirements at the right time, without wasting theirworkable time. My opinion based on my experience is thatsubsidies have to be stopped and a scientific and remunerativeprice has to be given to the agriculturists. During a worst situation,farmer should be entitled to get Rs. 20,000 per acre instantly fromany ATM centers against a credit card, provided he has clearedhis/her borrowings. Otherwise, the present system of getting loansthrough banks, particularly the co-operative land developmentbanks is not easy for a common farmer to access without the supportof politicians.

Shri Narayana Reddy is a legendary organic farmer and is one of themost sought after resource persons on ecological agriculture.

L Narayana ReddySrinivasapura, (near) Marelanahalli,Hanabe Post-561 203Doddaballapur Taluk,Bangalore Rural District,Karnataka, India.Mobile: 9242950017, 9620588974

The Narayana Reddy Column

Timely credit is the key

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Microfinance in India: Issues & ChallengesEdited by J U Ahmed, D Bhagat & G. Singaiah – NEHU; August2010. Hardback. 314 Pages. Price: INR 950.00Source:www.booksfordevelopment.orgMicrofinance as a discipline in the field of global financial system hasgained inclusive acceptance. The issues relating to the sustainabilityof microfinance is a much needed exercise particularly in the Indiancontex which would help develop tailor made models consideringcultural diversity of the country. The book offers a vital stand forchoosing the real pathway for success and sustainability of microfinancerevolution. The books covers issues and challenges of microfinance,microfinance delivery models, bank linkages programs and ruralempowerment.

Financial Promise for the Poor: How Groups Build MicrosavingsEdited by Kim Wilson, Malcolm Harper & Mathew Griffith, June 2010.ISBN: 9781565493391; Kumarian Press, Paperback. 256 Pages. Price:INR 1713.00The entry of the private sector into financialservices for the poor is a relatively newdevelopment, but already the glossy promises ofcredit-led microfinance are facing scrutiny fromthe development community. Policymakers andeconomists have begun picking through the hypeof microfinance to identify where and how top-down loans might fit into broader humandevelopment efforts. To many, the answerinvolves shifting focus to another financialservice: savings. Serving as a strong and perhaps more effective toolthan microcredit, microsavings is quickly becoming a lauded poverty-alleviation tool.Contributors to Financial Promise for the Poor cover currentinnovations in microsavings happening around the world. They describehow savings group members in the developing world are avoidingmany of the financial liabilities and debt of other microfinance programswhile gaining skills and finding opportunities in collective enterprise.The turn from credit to savings speaks to the growing empowermentof individuals and communities as they break the bonds of indebtednessand find their own paths to financial security.

Savings of the Poor: How They Do It………Edited by Sankar Datta, S L Narayana & S Srinivas – The LivelihoodSchool & BASIX; 2010. Paperback. Publisher: Ipd Alternatives.ISBN:978-8182910874; 252 Pages Price: Rs 650.00/US$ 39.95Savings of the Poor portrays the concepts of savings behaviour of thepoor, various inclusive approaches and insights into the regulatorymechanisms in India.This book has captured the wide literature on the behaviour of poortowards savings and distilled the key lessons for the practitioners andpolicy makers. Linking products to purpose, catering to multiple needs,focus on short-term savings, priority to convenience, appropriateincentive design, saving in kind and building trust are the key learningshighlighted in this book.

The insights assume significant importance in the background of theRBI’s Financial Literacy thrust as well significant importance tolivelihood promoting organizations, academic institutions, MFIs,academic institutions etc.

Multiple Meanings of Money: How Women see MicrofinanceBy Smitha Premchander; V. Prameela, M. Chidambaranathan,L. Jeyaseelan, November 2009. Pbk. ISBN: 978-8132101697; SagePublications (ca) 280 Pages. Price: INR 595/US$ 29.95This book analyzes what microfinance moneymeans to women; and in doing so, it focuses onthe perspectives of individual women and ofwomen-only groups. It explores women’s ownmoney management strategies, group dynamicsand learning processes in groups, and in thiscontext, discusses the divergence between theperspectives of external intervening agencies,and those of women who are members of self-help groups. One of the important aspects of thisstudy is taking into cognizance women’s own experiences. Based oncase studies and participatory research methods, it spans issues frommacro to micro level, and focuses on women as agents of change intheir own livelihoods.

The book does not consciously follow a feminist methodology; yetthe perspective is feminist, as it questions the benefits and costs towomen from development programs. The feminist principles usedinclude a focus on gender, valuing women’s experiences andemphasizing women’s empowerment, political change andemancipation.

Microfinance Self-Help Groups in India: Living Up to TheirPromise?Author: Frances Sinha, October 2009. Paperback. 180 Pages.Price: INR 695/US$ 29.95. Source:www.booksfordevelopment.orgSelf-Help Groups (SHGs), a means of reachingrural women with savings and credit services,have taken off dramatically in India, where anestimated 25 million women are members. Theirbenefits are social as well as economic: SHGsencourage women to become active in villageaffairs, or take action against domestic violence,the dowry system, or the lack of schools. Butsome questions remain. How effective andtransparent are the groups in managing theirfinances? Are the groups sustainable? Do thepoorest benefit? What does it take for SHGs to mobilize for socialaction? How effective are such actions? For the first time, detailedfield research probes beneath the surface of India’s world-renownedSHGs. It explores both social and financial performance in theSHG movement. This book reveals that whilst there are importantachievements, especially on the social side, without more strategicattention and more resources these are unlikely to be sustainable.This is a essential reading for those studying and practicingmicrofinance, and for bankers and policymakers considering bankingfor the poor.

SOURCES

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NEW BOOKSRainfed Agriculture in IndiaMacro & Micro-Aspects (2-Volume Set). By Dr. Surjit Singh & Prof. MS Rathore, IDS – Jaipur; 2010. 336 Pages. Hardbound. Price: US$ 44.95India’s agriculture growth after independence hasmoved the country from the severe food crisis of thesixties to aggregate food surplus today and rainfedagriculture has played an important role in this. InIndia about two-third of total net sown area comesunder rainfed lands. Rainfed crops account for 48per cent area under food crops and 68 per cent undernon-food crops. One of the major challenges facingrainfed agriculture in India today is its sustainabledevelopment through conserving and enhancing the inherent capacityof its land and other natural resources to sustain it. Any erosion of thiscapacity will threaten country’s food security and agriculturesubstantially. In order to constantly address this concern, along withincreasing production of food grains and other agricultural products, itis necessary to enhance and conserve the stock of available land, waterand other natural resources and develop improved technologies, whichmaintain and improve the productive capacity of natural resources.

“Climate-Smart” AgriculturePolicies, Practices and Financing for Food Security, Adaptation andMitigation. By FAO, Viale delle Terme di Caracalla, 00153 Rome, Italy,© FAO 2010 www.fao.org/climatechange; climate-change@fao.orgThe document was prepared as a technical input for the Hague Conferenceon Agriculture, Food Security and Climate Change, to be held 31 Octoberto 5 November 2010.Agriculture in developing countries must undergo asignificant transformation in order to meet the relatedchallenges of achieving food security and respondingto climate change. Projections based on populationgrowth and food consumption patterns indicate thatagricultural production will need to increase by at least70 percent to meet demands by 2050. Most estimatesalso indicate that climate change is likely to reduceagricultural productivity, production stability andincomes in some areas that already have high levels of food insecurity.Developing climate smart agriculture is thus crucial to achieving futurefood security and climate change goals. This paper examines some ofthe key technical, institutional, policy and financial responses requiredto achieve this transformation. Building on case studies from the field,the paper outlines a range of practices, approaches and tools aimed atincreasing the resilience and productivity of agricultural productionsystems, while also reducing and removing emissions. The second partof the paper surveys institutional and policy options available to promotethe transition to climate smart agriculture at the smallholder level. Finally,the paper considers current financing gaps and makes innovativesuggestions regarding the combined use of different sources, financingmechanisms and delivery systems.

Agriculture Risk & Insurance in IndiaBy Dr. S S Raju & Dr. Ramesh Chand, NCAEPR, New Delhi; 2010. 106Pages. HB.Price: US$ 39.95.Source:www.booksfordevelopment.orgAgriculture production and farm incomes in India are frequently affectedby weather and climatic aberrations like droughts, floods, cyclone, frost,storms, land slides, etc. Outbreak of epidemics, fire, and marketfluctuations are the other factors which seriously affect production andfarm income. All these events are beyond the control of the farmers.

With the growing commercialization of agriculture, the magnitude ofshock due to unfavourable eventualities is increasing and the need toprotect farmers against production and income losses is becomingstronger. Agricultural insurance is considered an important mechanismto effectively address the risk to output and income resulting from variousnatural and manmade events. Despite various schemes launched fromtime to time, agricultural insurance in India has not made much headwayeven though the need to protect country’s farmers from agriculturalvariability has been a continuing concern of agriculture policy. This bookexamines the genesis of agricultural insurance in India and discussesvarious agricultural insurance schemes launched in the country fromtime to time and the coverage provided by them. The book also looksinto the role of government in implementing various agriculturalinsurance schemes and suggest effective agriculture insuranceprogramme for India.

Saris on Scooters: How MicroCredit is changing Village IndiaBy Sheila Mcleod, Dundurn Group Publisher, June 2010. ISBN1554887224; Paperback. 352 Pages. Price: Rs.1958.00;Renowned author and journalist Sheila McLeodArnopoulos uses her talent for investigativereporting to take us deep into the poorest villagesin India. Yet, far from being passive victims of theircircumstances, the women who live there havejoined forces and are making astute use ofmicrocredit to break the cycle of poverty.Microcredit was made famous by Bangladeshieconomist Muhammad Yunus and consists of verysmall loans made primarily to women for the production of essentialcommodities or to start small businesses. Basing the book on a numberof trips to India between 2001 and 2008, Arnopoulos shows her sense ofsolidarity and desire for authenticity by sharing the daily life of thesevillagers. The first-person account of her extensive travels focusesprimarily on these women’s inspiring success stories. After witnessingmany such situations first-hand, she believes that these villages have apotential strength equal to that of the modern, high-tech cities in India.

Microfinance India 2010 - State of the Sector ReportNovember 2010, Access Publication, ISBN – 9788132105886; Pages :160; Price: Rs.750/-Microfinance India: State of the Sector Report 2010presents the growth of the microfinance sector in Indiain its entirety. It offers in-depth, well-researched andwell-analyzed evidence on how the sector has madean impact at various levels of the economy and society.The report provides most recent statistical data relatingto the sector’s growth and expansion across models.It highlights perspectives on current issues anddocuments new interest, new investments and innovations in the sector.The report collects information from authoritative sources, studies andreports on the sector and field studies on specific developments of interest.Included in the report are: a comparison of the performance of SHG andMFI models, Microfinance Penetration Indices that compare clientoutreach across states and discussions on innovations and novelexperiments in the sector and themes of topical relevance. It also identifiesknowledge and practice gaps that require further research and study.The best reference book on the annual trends and progress of the Indianmicrofinance sector, the report is a must for every microfinancepractitioner.

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Western Terai Landscape Complex Project (WTLCP) isa multi-stakeholders’ partnership project, aiming toensure conservation and sustainable use of globally

significant biodiversity in Nepal’s Western Terai Landscapes.Implemented from 2005, the project has been adoptingCommunity-based biodiversity management approach toimplement on-farm conservation of agro-biodiversity in sixvillages. Community biodiversity management (CBM) is acommunity led participatory approach to strengthen thecommunity’s capacity for conservation, use and sustainablemanagement of local biodiversity with a blend of traditional andscientific knowledge system. The project focuses on encouragingleadership by the local level institutions in setting the researchand development agenda. The project was implemented by UnitedNations Development Programme (UNDP) and Ministry ofForestry and Soil Conservation (MoFSC) in collaboration withGEF, SNV, WWF, Biodiversity International, National AgriculturalResearch Council and LI-BIRD.

Setting agenda

Traditionally, biodiversity planning always followed top downapproaches in which local priorities and preferences were seldomconsidered in shaping the biodiversity agenda. Though this projectwas also formulated top down, LI-BIRD, with its successfulexperiences from community based works in Biodiversity GlobalProject (1997-2004), used local level institutions as the platformfor decentralized agenda setting. In each project village, VillageDevelopment Committee (VDC) and biodiversity conservation anddevelopment committee (BCDC) were formed. This formed an

Community BiodiversityManagement (CBM)fund for sustainablerural financeShree Kumar Maharjan, BhuwonRatna Sthapit and Pitambar Shrestha

Community empowerment is a driving force to motivate ruralpeople for conservation efforts. Access to knowledge andfinancial resources are basic requirements for the communityto translate their acquired knowledge and skills into practicesthat lead to their well being. The CBM fund is used as amechanism to achieve the twin goal of biodiversityconservation and livelihood improvements in Western Tarairegions of Nepal.

umbrella structure at the ward level (smallest political unit in Nepal)and these were linked to the other groups in the ward and to thedistrict level line agencies especially with district agriculturedevelopment office (DADO) and district level biodiversityconservation and development committee. Capacities of thesecommittees and farmers groups were strengthened by a series oftrainings, orientations, exposure/exchange visits to ensure that theiragendas are considered in planning process and they become partof the process.

CBM Fund

In each BCDC, a community biodiversity management (CBM)fund was established with farmers monthly savings beingsupplemented with a seed money provided by the project. Theconditions of the CBM fund are that the local women groups shouldbe officially organized as community based organization withtransparent governance system. They should have set their ownlocal income generating activities and also work together to supportcommunity based conservation efforts. The funds help to bringtogether rural community for participation in collective action andin the process allows strengthening local capacity in decisionmaking and individual member’s benefits from participation.

The CBM funds are given to farmers as loan with minimum interestrate for different income generating activities (IGA) like pigrearing, goat farming, bull purchasing, poultry farming, beekeeping, fish farming, vegetable production, fruit production and

Farmers distributing CBM fund in Shankarpur

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improved crop production. Basic idea is to identify best localgenetic resources for multiplication and spread to other membersof the network. A small amount of fund is set aside to capitalizenatural assets for further enhancing financial and other assets ofpoor farmers (See Box 1). The group has its own rules and supportsthose members with loans who combine income generationactivities with conservation efforts. The condition is that eachfarmer getting loan from the CBM fund must conserve at leastone local landrace in his home garden.

Positive results

In the year 2009, a total of 272 farming households from 6 VDCsbenefited from mobilization of such fund (ranges from NRs. 2000to 3500 i.e., equivalent to 27-47USD) for several income generatingactivities with the total amount for NRs. 70,9000 (9576 USD).Majority of farmers used the money for activities like goat rearingand pig rearing while some was used for setting rural enterprisessuch as fruit cultivation and fish farming (Box 1).

The farmers using the CBM fund have conserved traditionallandraces like Satha dulhaniya, Anjana, Anadi, Sauthyari,Lalchand, Anjani of rice and other vegetables in their homegardens.

Management and Sustainability of CBM Fund

BCDC owns and manages this fund in the form of micro savingand credit scheme which receives from community members andusing it for conservation and development activities. The interestgenerated from investment to different IGAs help to increase theamount of fund that can be used for its management. The fund isalso providing incentives for access and benefit sharing, ascommunity benefited from the fund for conserving local cropgenetic resources. Everyone in the BCDC has equal opportunityof getting loans from the fund. The benefits accrued from use ofcommunity genetic resources directly go to the fund and are laterused for the welfare of farmers.

CBM fund established in the western terai landscapes is increasingyear after year with the interests added and farmers’ monthlysavings from farmers’ groups, supported by fund mobilizationguidelines developed by community with the technical supportfrom project. This makes it a sustainable mechanism to financerural farmers for conservation and development activities in Nepalto uplift their livelihood strategies.

Conclusion

Farmers are not interested in any agro-biodiversity just for thesake of conservation without seeing utility and incentives inconserving them. The conservation efforts will be sustainable if itis supportive to the livelihoods of rural people. CBM fund hasachieved the twin purpose of biodiversity conservation as well aslivelihood improvements.

Funds like CBM do generate good initial participation from thecommunity. But it can also be a source of community conflict ifthe governance mechanisms are inadequate. Hand holding by a

local level community organizer who is a part of the communitywill help in overcoming this problem.

Focused group discussions reveal that there are positive resultsfrom the CBM fund initiative. It is yet to be seen whether suchcommunity-driven CBM guidelines support the conservation ofrich local biodiversity in the long run.

Shree Kumar Maharjan and Pitambar ShresthaLocal Initiatives for Biodiversity,Research and Development (LI-BIRD),P.O Box 324,Pokhara, Gairapatan,Kaski, Nepal.

Bhuwon Ratna SthapitBioversity International,India Regional Office,C G Centres Block, Dev Prakash Shastri Marg,Pusa Campus, New Delhi - 110 012,India.

Box1

Ms. Bandiha Chaudhary, is a member of Pragatishil groupin Gadariya VDC-1, Kharuwakheda, Kailali district. Sheborrowed NRs. 2000 (USD 27) from the CBM and used itto buy a piglet in 2009. She fed the pig with householdwastes and after one year was able to sell it NRs. 10000(USD 135.14). She had been interested in rearing swinebefore, but was not able to afford the 5% interest rate fromlocal money lender in the village. But after establishmentof CBM fund, her interest was fulfilled. In 2010, she broughtanother piglet without availing a loan.