.AGRICULTURE
Increasing farm productivity
By Nadeem Akmal and Sajida Taj
The agriculture sector
occupies key position in the economy of the country. It earns foreign exchange,
provides employment to over 42 per cent, and contributes about 23 per cent to
the GDP. Moreover, other sectors are directly or indirectly dependent on
agriculture for their development. However, the productivity of country's
agriculture is far below from other agriculture sectors of the developing
countries in the world. Many factors are responsible for the low productivity of
agriculture including the non-availability of funds for purchasing various
critical inputs.
The importance of
providing credit to the agricultural production is recognized worldwide.
Adoption of green revolution technologies of high yielding seed, fertilizer and
pesticide - most of which are purchased against cash - had turned more and more
farmers towards reliance on credit market.
A detailed study was
carried out by the scientists of Social Sciences Institute (NARC) to assess the
short-term impact of micro credit for financing farm inputs. Data were collected
from both male and female credit beneficiaries through a survey in barani
Village Development Project (BVDP) area. Although the credit is provided to all
the community organization members without discrimination but the farmers who
had water resources at their farm like dug-well or tube-well and turbine, gained
maximum benefits. It was revealed that the use of quality inputs in terms of
both seed and fertilizer were improved after the availability of credit. Crop
productivity along with cropping intensity was also improved.
No doubt the
productivity of agriculture sector could be enhanced by timely availability of
the inputs including micro credit. Micro-credit is the special form of small
loans to farmers, who are too poor to qualify for traditional bank loans. It has
proven to be an effective and popular measure in the ongoing struggle against
poverty in recent years.
Due to small and
scattered land holdings and other variety of constraints, the farmers of areas
such as Pothwar are under economic pressure. In addition, it is difficult for
the farmers living, for example in barani area, to use recommended level of
inputs from their own resources.
In the absence of
credit, farmers purchased inputs on credit from the input dealers, who were free
to charge prices much higher than the actual market rates. The availability of
credit enabled farmers to buy inputs from reputed sources at market prices.
Therefore the access to finances also increased the risk bearing capacity of the
households, thus leading to adoption of new technologies and the diversification
of crop mix and income sources. The cropping intensity also increased with the
availability of sufficient amounts of inputs because of credit.
Therefore the
availability of credit on easy terms and conditions allow optimum consumption
and increased use of inputs to achieve optimum production levels leading to the
welfare of farming community.
The use of recommended
inputs both in quantity and the quality improved with credit. It was found that
the use of only improved seed could increase the yield up to 20 per cent. The
major change was that before the credit availability, seed was available to
farmers from informal sources like their own farm produced (43 per cent) and
fellow farmers (18 per cent), whereas after the provision of credit, the
majority of beneficiary farmers (78 per cent) purchased improved seeds from
formal sources.
Therefore agricultural
credit for farm inputs is instrumental for adoption of recommended crop
production technologies to improve the productivity and economic conditions of
farmers. Timeliness of the operation, particularly use of quality inputs, plays
a pivotal role in the optimal production. Results also show significant change
in the yield in almost all major crops of the sample respondents after taking
credit for input purchase in the project area. It was observed that most of the
respondents, who received benefits from credit, were not satisfied with credit
ceiling(s) with higher interest rates.
The following
suggestions are therefore given which if implemented can enhance the efficiency
of the micro credit program for increasing farm productivity:
* Increase in credit
ceilings should be made according to the needs and pay-back capacity of the
farmers.
* The 20 per cent
interest rate currently being charged by NRSP may be curtailed to 10 per cent.
* The credit
utilization and benefits should be enhanced through proper follow-up in order to
ensure the use of purchased seed and application of recommended fertilizers.