The government and the State Level Bankers’ Committee have approached the Reserve Bank of India to consider providing an extension of moratorium on loan repayment by farmers up to December 31. The request follows the devastating floods in the middle of August last year as well as severe weather conditions leading to extreme crop damage earlier this year.
The deadlines set by the banks early this year have been found inadequate even as news of farmer suicides in districts such as Wayanad and Idukki have come in.
The government’s intention to provide some relief to farmers was caught in the election code of conduct as the Lok Sabha elections 2019 was declared and it was only after the conclusion of the long-drawn election process that the government and the bankers were able to approach the apex bank to provide relief to the farmers.
Tough rules
Though the bankers have been forthcoming in providing some relief to the farmers in the wake of mid-August 2018 floods, the rules governing repayment make it difficult for the system to technically allow them more time. The 90-day period after which a loan is considered a non-performing asset is a roadblock. The State government has requested the RBI’s help for rescheduling the loan repayments.
Complicated issue
Member of the State Planning Board Ravi Raman terms it a complicated issue, which needs a comprehensive approach. A post-flood disaster resolution is needed. But it should be a structural one on the basis of an integrated approach that includes a reduction in interest rate, raising of the collateral limit placed on farm loans as well as considering the loans on a case-to-case basis rather than taking the stand that one size is okay for all.
Cautious bankers
Baby John, a pineapple farmer, says that the bankers have been accommodative of the requests in the wake of the severe weather conditions and the floods in 2018. However, the bankers have now turned more cautious now by providing loans only to farmers with a stable history of repayment. This may be because of the market conditions now, he said.
Joseph Karukappally, a farmer as well as a businessman engaged in dealing farm produces, says farmers like him have been hit hard first by the mid-August floods in 2018. Following the floods, the severe heat conditions affected crops such as nutmeg and banana. The weather conditions also affected rubber tapping, leading to serious liquidity problem.
Figures from the Rubber Board have pointed to a serious drop in production during the months following the floods. For instance, the production figures for March showed that there was a gap of 15,000 tonnes in production between 2018 and 2019 for the month of March.
Agri sector down
The discussions on relief to farmers come as crops across the spectrum are going through a difficult period. Tea production is down by about 12 million kg so far this year compared to the previous year, said plantation industry sources.
Between January and December 2018, tea production was about 9.8 million kg lower than previous year. The cases of other crops such as cardamom and coffee are similar.
Pepper, another major crop, has seen production nearly stagnating at around 50,000 tonnes a year and the climate crisis and the floods and landslips in the hill district of Wayanad has added to the problem in a big way.
According to figures from the State Planning Board, the 2016-17 production was around 55,000 tonnes against 48,500 tonnes in 2015-16.
A leading pepper trader in Kochi points out that pepper farmers are in dire straits with rampant smuggling of the produce from neighbouring countries suppressing the price.
Cardamom price, in the meanwhile, has appreciated on the wings of drastic reduction in acreage under the crop following the 2018 floods.
A leading trader in Vandanmedu said cardamom acreage was down by about 40% and the average price had reached around ₹3,200 a kg as production last year came down to about 16,000 tonnes against 30,000 tonnes during a good crop season.
