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Banks, insurance cos evince interest in contract farming
Sudha Swaminathan - Coimbatore

With the introduction of contract farming in cotton, few banks and insurance companies have shown interest in joining hands with farmers. They are currently in the process of drafting special packages for the farmers under contract farming.

After a series of deliberation with Appachi Cotton Company of Pollachi, the co-ordinating agency, which has recently launched contract farming, ICICI, Canara Bank and United India Insurance Company have come forward to support the farmers.

Speaking to Express Textile, Mr P Hegde, chief manager, agri-business division, ICICI, said that farmers will be assisted under the structured lending program. “Nearly 70 per cent of the total assistance will be in kind (farm inputs) and 30 per cent in cash, added Mr Hegde.

ICICI is planning to tie-up directly with farm input providers viz the seed, fertiliser and pesticide companies, which will supply the inputs to the farmers. “More than individual farmers, we would prefer them to come in groups”, added Mr Hegde. ICICI is already financing farmers growing food crops in the northern states.

Similarly, Canara Bank is also working to provide attractive rate of interest, with flexibility in security and legibility norms. An official from the banks stated that farmers under the programme will be treated promptly with priority.

The United India Insurance Company will provide crop insurance to cotton farmers. Under the cotton crop insurance scheme, risk of loss is covered to the extend of Rs 9,500 per acre. Farmers will have to remit 3 per cent of the cost of cultivation to cover risk against natural calamities and 2 per cent for specified crop diseases and pests. In case of loss to more than 10 per cent of the crop under the area covered, 80 per cent of the cost of the cultivation can be claimed.

Even as the premium is higher compared to sugarcane, over the years the premium may come down. “It is a pilot programme and we will reduce the premium based on the results,” said a senior official from the company. A proposal is likely to be sent to TMC to assist farmers with 50 per cent of the premium under the crop insurance.