CB in talks with donor agencies to boost commercial agriculture

The country’s monetary authority the Central Bank is currently engaging in discussions with international development funds to set up model farms to venture into commercial agriculture and uplift the country’s rural economy. “We’re experimenting. In the Central Bank itself, we’re reaching out to some of the big donor agencies, like FMO in Holland and DEG in Germany etc. Tthey are already funding our farmers to set up model farms,” Central Bank Governor Arjuna Mahendran said. He added that expertise would be sought from the international agencies to implement systems to predict and maximize harvests, crop rotations and pricing. “We’ve also talked to McKinsey, the global consultancy firm who does this.

They have very interesting systems, where they package all these extension services and get the best knowledge from international experts to maximize yields and cultivation productivity,” he added. However, he said that banks will have to ramp up lending to farmers to bring commercial agriculture to fruition. “If we get into commercial farming with entire families involved, and credit flowing through banks, that will be good,” Mahendran said. Farmers currently finance their volatile operations mostly through pawning.

The recent budget restricted banks from pawning activities, which economists say would push farmers towards informal financing, increasing the risk factor. Mahendran went on to say that the state will also have to release the vast land it owns to farmers in a systematic manner. “We have to work with the government to see that land allocation is efficient and quick.

At the moment in the land registry, particularly government land is lying fallow. It’s difficult to get government land handed over on a rental basis to farmers to increase their livelihoods,” he said. Mahendran added that rural poverty must be attacked from different angles, including the setting up of marketplaces in regions to allow supermarkets and multinational companies to purchase produce directly from the farmer.

“They have to get into a bus and go into the nearest big towns. Food perishes on the way and there are all sorts of issues. To get through all this is to get large buyers, and integrate them through banks to small farmers to sell their produce,” he said.