Banking institutions support farmers with GHC 4.5 million

Tamale, July 22, GNA - A total of 1,255 farmers, in various groups, are to benefit from a credit facility of over GHc4.5 million from some financial institutions for the cultivation of maize, sorghum and soya bean.

The cultivation would be under a new approach to value chain financing introduced by the Northern Rural Growth Programme (NGRP).

The farmers 1,255 are made up of 7,910 males 3, 262 females.

Under the value chain financing approach, farmers are linked backward to input dealers, mechanization services providers, extension technical services and then forward linkage to buyers' i.e. (marketing and processing companies) to ensure ready inputs and markets for the farmers.

Mr. Roy Ayariga, National Coordinator of the NRGP, announced this at a forum on the NRGP approach to agricultural commodities value chain financing, in Tamale, on Thursday.

The forum brought together bank managers from the Apex Bank, Agricultural Development Bank, and some rural banks and project officers.

District directors of Agriculture from the participating NRGP areas in the Northern region and five districts in the Brong Ahafo region were also present.

They discussed the potentials and challenges of the value chain approach in order to promote profitable agri-business for all the actors along each commodity value chain.

He said that under the value chain financing approach, the NRGP had introduced "the cashless credit system" whereby farmer groups, the banks and the facilitating agencies, such as the Ministry of Food and Agriculture and agricultural-oriented NGOs agree and certify input dealers and mechanization service providers and marketing companies in advance.

He explained that when this was done and a loan was approved for a farmer group, then the group gets land prepared by a tractor service provider, the area is measured and the bank pays the service provider and debits the groups' account.

He said the purchase of fertilizer was also done in a similar arrangement.

Giving reasons for the introduction of the "cashless credit system," Mr. Ayariga said, farmers usually pick cash loans and some urgent social needs compel them to divert some of the funds for non profitable social ventures, thereby, making repayment of the loan a serious challenge.

Other reasons, he said, were situations where the farmer picks the cash and could not get the right inputs such as improved seeds, fertilizers and agro-chemicals to buy on time, therefore, end up misappropriating the money.

Additionally, some farmers actually needed the money for some other business but found it easier to take agricultural loans.

Mr. Ayariga expressed the hope that the introduction of the value chain financing approach would solve the problems associated with agricultural credit delivery while farmers on the one hand accuse the banks for not releasing loans on time.

The loan given may be inadequate while the banks on the other hand complain that farmers groups do not apply for the loans on time and also fail to pay back.