Government agricultural authorities increase farming loans

IMNA
May 25, 2010

The Burmese agricultural authority known as the Myanmar Agriculture Development Bank, has increased the amounts of direct government loans that rice farmers may ask for during the 2010 rainy season rice cultivation period.

IMNA's field reporter learned that while the Bank offered Mon State rice farmers loans of 10,000 kyat per acre of farmland in the year 2009, this year farmers have been permitted to ask for as much as 20,000 kyat per acre. The loan policy and loan increases have been implemented in each of Burma's 7 states.

“They increased loans for this year. For [us] farmers who want the loans, we have to make the list at the VPDC office [give personal information and farm acreage], after the Myanmar Agriculture Development Bank sends the money, we can take it [the loans] from the village headman,” explained a Mudon Township farmer who told IMNA that he had requested loans.

Relying on loans to fund rainy season cultivation is a long standing practice among farmers, as rainy season planting requires large amounts of expensive fertilizer; however, only in June 2009 did the Burmese government begin offering direct loans to farmers in Mon state, rather than forcing cultivators to travel to large cities to apply for grants.

IMNA's July 8th 2009 coverage of the change described how Village Peace and Development Council (VPDC) headmen are now in charge of requesting loan money directly from the Bank's regional branches. Farmers apply for loans at their local village headmen's homes.

According to reports, the Myanmar Agriculture Development Bank began extending funds to each of its branches in every township of Mon State at the beginning of this month.

IMNA's interviewee in Mudon Township claimed that in 2009, he had been among the ranks of farmers who opted not to take out the loans, but that last year's poor harvests had forced him to ask for the funds Sources around Mon state report that demand for the loans has increased dramatically, largely due to 2009's poor rice harvests. Widespread flooding and pest infestations resulted in massive damages to many Mon State farmer's rice crops, and most have yet to recover from the economic blow.

“This year many more farmers asked to get loans than last year, because last harvest time the farmers had less [rice] paddy production. Many farmers need [loans] for the expenses of this year's cultivation. Less farmers do not ask [for loans], just the farmers who have enough money,” he reported

A village headman in Mudon Township further explained, “I already borrowed about 1.8 million kyat for loans in my village, some farmers still want to get the loans, so I will ask [the Bank's Mudon Township branch] to get more”.

IMNA's field reporter reported that all Mon State rice farmers are expected to pay a monthly interest tax of 2.7 kyat for every 100 kyat borrowed; farmers are expected to commence repaying their loans after the 2010 rainy season rice crop has been collected.

The specific reason for the loan increases is unknown. Some sources speculated that the move is a an attempt by the Burmese government to curry favor before the 2010 elections; others insisted that loan amounts have been increased to compensate for the catastrophic financial losses of the 2010 rainy season.

“We don’t know exactly why the government has increased the [amounts] of the loans, but I think it’s the government's policy to organize the people [before the 2010 elections]. Other's think that it's [the loan increase] because last harvest time many farmer had less paddy production, so many has been difficult this year for them to cultivate rice,” said a second farmer from Mudon Town.