Thenkarai Food Security Program: Small Farmers’ Revolving Loan Fund

Economic Development and Cultural Changes in the Villages of South India

There are 82 small farmers organized through three farmers’ associations
(registered societies with their own bank account and elected officers).  Each farmer can borrow Rs. 15000 per crop and
then pay it back into their own respective association accounts.  What this means to the 82 farmers is
liberation from the loan sharks.  They
used to borrow at the rate of 3% pm interest at the beginning of each season of
cultivation.  They had to repay this with
the interest at the end of the 4 month crop harvest.  Most of these loan sharks are also the middle
men who take the un-hulled rice soon after harvest and sell it to the mills and
give back the money that is left after taking their money with interest.  In addition to the high interest and the
delay in giving back the balance, there is also cheating.

A mill owner was engaged to buy the paddy
at proper price, pay immediately on delivery of the paddy at the mill, have him
pay in accordance with electronic weighing, 
through these measures each farmer in addition to the saving on the
interest they also get a better price per bag which  for the exact weight.  So each farmer gains not less than Rs. 3000
per acre of cultivation.