Farmers who receive agricultural loans should be included in the government's food procurement drive on priority basis, a study report recommended.
The smallholder farmers, who could get loan under the government's agricultural credit disbursement facility, should have access to sell rice, paddy and wheat to the food directorate, it said.
"This way, loanee farmers would be able to get profitable price for their crops and could repay the loans in time," the study pointed out.
The study report was released at a workshop on "Access to Financial Services for Smallholder Farmers," organised by Helvetas Bangladesh jointly with the ICCO Cooperation, Gana Unnayan Kendra at the BRAC Center Inn.
The study was conducted under a project "Strategic Partnership for Convening and Convincing (SPCC)" of Helvetas Swiss Intercoope-ration, aiming to empower smallholder farmers through their financial inclusion.
Prof Golam Hafeez, chairman of the Agri Finance Department, Bangladesh Agricultural University, conducted the study titled "Present Status, Policy and Barriers to Access to Adaptive Finance by Poor Smallholder Farmers" in Gaibandha and Dhaka districts.
Former deputy governor of Bangladesh Bank (BB) Khondker Ibrahim Khaled, additional secretary of Financial Institutions Division Arijit Chowdhury, executive director of Bangladesh Bank (BB) Qazi Enayet Hossain, general manager of BB Agricultural Credit Department Md Abdul Hakim, ICCO Cooperation country representative Shakeb Nabi, among others, spoke at the workshop presided over by Helvetas country director Celestine Krösschell.
Prof Hafeez presented the key points of the study.
The study said the policy initiatives of BB has been framed for adequate financing to agriculture with focus on providing credit to women, marginal and tenant farmers.
"But still a large segment of poor farm households are excluded from institutional financing as they do not have enough assets to give as collateral. As a result, they have to borrow money from informal sources at an exorbitant rate." It said.
Prof Hafeez said that as the country is shifting from subsistence to commercial agriculture, the smallholder farmers require funds.
Collection of required documents/land title papers is not only cumbersome but also costly for farmers who want to get rid of such sufferings and turn to local mahajans or micro credit providers, said the study report.
As a regulatory body of the banking sector, Bangladesh Bank has issued numerous guidelines with a view to widening the coverage of financial services, it said.
But participating banks cannot strictly follow all the rules and guidelines of BB due to several logical reasons especially for maintaining the security and the interest of the banks, the report said.
Consequently, a vast population in rural areas of Bangladesh, particularly poor and marginal farmers, are deprived of the benefits, hampering inclusive growth and development of the country as a whole, it added.
The study said smallholder farmers are mostly involved in crop farming, but loan disbursement was unsatisfactory.
The target of the banks was to provide 51 per cent of total farm credit to crop sector but achievement was only 48 per cent in 2019-20 financial year, it said.
The study also found that many farmers were reluctant to repay loans to the state-owned banks.
Prof Hafeez said farmers mainly fail to repay loans due to low prices of their crops or natural disasters that damage their produce.
Farmers, who get loans, should be included in the government's food procurement drive to empower them economically, he said.
Apart from the government food purchase, market linkage between farmers and super shops as well as exporters should be developed, he said.
ICCO Cooperation country representative Shakeb Nabi stressed the need for a 'blended financial system' for farmers where both loan and grant would be given to them to build a well-developed value chain.
Deputy Managing Director of Agrani Bank Md Walilullah, Deputy Managing Director of Sonali Bank Afzal Karim, Director of Microcredit Regulatory Authority Mohammad Yakub Hossain, Head of SME Unit and MSME, Dhaka Bank Ltd., Md Mohibulla Khan, Assistant Senior Vice President of Bank Asia Shahnaz Akter Shahin also spoke.