Farmers have suffered severe losses due to floods in the last three consecutive seasons. To make-up the losses, the affected farmers took loans from the local mahajans (informal money lenders) and different non-government organisations (NGOs). They have been trapped in debt with the passing of a dull year.
Usually the peasants and landless farmers of Gaibandha district do not have work for four or five months after the Boro harvest. During these months, the farmers temporarily migrate to Dhaka, Narayanganj, Gazipur and other towns in search of work. This year, the coronavirus restrictions hindered their search for work. They had no option but to take loans from local sources. These farmers are now migrating to the capital city Dhaka for work as the government has lifted the Covid restrictions.
Three floods damaged the standing crops on 8,531 hectares of land during the 2020-21 season, affecting 182,522 farmers. According to the concerned authorities, the floods caused financial losses of Tk 960 million (Tk 96 crore).
A farmer from Dariapur of Gaibandha sadar upazila, Shahidul Islam, told Prothom Alo that he was confused about the next sowing of Aman paddy on his three bighas of lands, fearing zero harvest. Two-third of the land was two-crop.
According to the agricultural extension department (DAE), there are 678,606 farmers in Bangladesh. Like Shahidul, who has been categorised as small famer by DAE, there are more than 200,000 farmers here.
Shahidul said, he borrowed Tk 150,000 against half of his croplands in 2019 as floods damaged his Aman crops. He did not cultivate Aman the next year, but took Tk 30,000 loan from a local NGO to meet his family needs.
Farmer from Ghagoa union under Gaibandha sadar, Abdur Jalil’s cropland has decreased to 17 decimals from five bighas–meaning that the medium farmer has now been demoted to a marginalised one. Sometimes, Jalil sells his labour on a daily basis. He said, “Floods damaged the paddy. I incurred huge losses. I took loans at high interest and mortgaged my lands. I have given up agriculture.”
Peasants Qayes, Saju, Rafiq and Rashidul also live at Ghagoa union. They work at the Keraniganj-based brick kilns during Agrahayan- Jyaistha (mid-December to mid-June). In the jobless months of this year, they had to take Tk 10,000 to Tk 12,000 as individual loans from a local money lender. According to the loan terms, the money lender will send them to work at particular brick kilns a few months later. The peasants will be bound to work only there for the next six months.
The government is giving soft loans and agricultural loans at nominal interest rates. But the farmers driven by instinct of borrowing are taking loans from the informal money lenders at higher interest rates. They are being trapped in debt. Here, the borrowers need to change their mind-setMd Abdul Matin, deputy commissioner of Gaibandha district
Some money borrowers and money lenders said that the money lending business continues with periodical (monthly-weekly-daily) installments of money or seasonal crops (paddy).
If a farmer borrows Tk 100,000, the money lender will collect 20 maunds of Boro and 10 maunds of Aman paddy from him. In case a farmer borrows Tk 10,000, he will have to pay Tk 1,000 as monthly interest at 120 per cent interest rate. Besides, Tk 100 installment will be fixed upon him against a loan of Tk 1,000 on ‘current interest’. Under the ‘haatra’ system, a borrower of Tk 1,000 pays Tk 160 as interest in every haat day (weekly market day).
Farmers who regularly borrow money from the informal money lenders said taking bank loans seems complicated to them.
Gaibandha deputy commissioner Md Abdul Matin told Prothom Alo, the government is giving soft loans and agricultural loans at nominal interest rates. But the farmers driven by instinct of borrowing are taking loans from the informal money lenders at higher interest rates. They are being trapped in debt. Here, the borrowers need to change their mind-set.
Replying to questions about why the farmers are getting trapped in debt, whether they get the government-set stimulus packages and is the stimulus adequate for them, Abdul Matin said, “The government is allocating and distributing fertilizers and seeds according to the district-wise demands. The government is not defaulting in this matter.”
In Gaibandha, 19 scheduled banks and Bangladesh Rural Development Board distributed Tk 2.13 billion (Tk 213.93 crore) as agricultural loan in last fiscal.
Member secretary of the Gaibandha-based agro-loan committee, Golam Faruq, also the deputy manager at district area office of Janata Bank, said farmers taking loan under the committee management pay installment at 8 per cent interest rate.
Some NGOs like ASA, Brac, Grameen Bank, SKS, BEES, SSS, TMSS, GUK, RDRS and Bureau Bangladesh manage agricultural loan distribution in the district. The NGOs charge 12 to 13 per cent interest. In the pre-pandemic period, the NGOs distributed more than Tk 10 billion (Tk 1,000 crore) per year.
ASA NGO’s Dariapur branch manager Shahidur Rahman said, 60 per cent of the people from this riverine district have suffered economic hardship as they could not work outside because of the pandemic situation. Many of them needed more money than their earning capacity.
Some of them could not wait for the time required for processing loan application. That’s why they borrowed from the money lenders at high interest rates.
A resident of Kamarjani union, Emdadul, tried to explain the culture of money lending at his area. “Previously, persons with a capital of Tk 300,000-400,000 would run wholesale paddy and jute business. Now, people with that much money are operating money lending business. Unauthorised cooperatives to lend money are mushrooming at localities and market places.
Kholahati Union Parishad member Anwar Hossain told Prothom Alo that some of the money borrowers of his area are fleeing summons from the money lenders. At Dariapur bazar on 17 August, an informal money lender seized a three-wheeler belonging to a family member of one borrower. Such incidents have become very common in the area.
Citing that the government rehabilitates flood-affected farmers while the financial institutions provide soft loans with the farmers, the district DAE deputy director Md Masudur Rahman, expressed his doubt over the number of debt-ridden farmers.
In Gaibandha, the government is implementing an integrated programme for eradication of rural poverty. Under the programme, 15,000 beneficiaries have received 15-day basic training on sewing, embroidery, repairing television sets, refrigerators, welding and other trades. Besides, 8,000 among the trainees have received Tk 20,000-75,000 as soft loan.
The official concerned, Md Abdus Sabur, told Prothom Alo, access to the necessary loan at formal sectors is crucial to free the borrowers from the trap of informal money lending.
Former president of Sachetan Nagarik Committee (a committee of concerned citizens) Zahrul Quayum demanded that the government bring the poor and the ultra poor under the social safety net programmes so that the pandemic-hit people in debt can overcome their crisis.
* The original report appeared in the print and online editions of Prothom Alo, has been rewritten in English by Sadiqur Rahman.