A Look Into The Lives of Farmers That Benefited From Micro-Loans

September 28, 2016
By Rang De Team
The farmers that receive Rang De loans usually have incomes of less than Rs 5k per month and are categorised as marginal farmers with small holdings of less than 2.5 acres

In this blog post, we hope to give you a snapshot of the lives of farmers and the challenges they face and how a Rang De loan helps them.

The farmers that you have helped us support spend their entire day with mother nature. They buy their inputs at retail price and sell their final products at wholesale.

They lack stability in their lives as their income depends extensively on seasons. The lack of water for a crop can do a lot of damage to a farmer’s harvest while flood-like conditions which have become increasingly common can spoil all of their efforts.

While we have found that some can dig an open well or a bore well and irrigate their crops, it is very expensive for the marginal farmer, the main category that Rang De provides microcredit for.

Farmers need to buy various fertilisers and pesticides to protect their crops but very few of the men and women we have met over the years can afford these fertilisers through just their savings. Many of them have had to sacrifice food for their families so they can protect their crops.

Should they take loans from other institutions, the arrangement has been equally unfair. Collection agents prey on farmers’ unfortunate situations and take a certain quantity of the harvest and the value of the produce is usually never calculated but it definitely takes a hit on their income.

The farmers that we give out loans to do not entirely rely on their small piece of land for their income.

They usually rear a cow or a buffalo, a goat, a sheep or a chicken. Many of them also work as agricultural labourers or manual labourers.

This gives them a better chance at earning a better income but at great cost to their health.

When farmers get their harvest, they have told us that they go through many hardships to sell them in the market. Their vegetables get graded and are given a price which is lower than what they should get. Some farmers use chemicals to make their harvest look healthy but a majority of farmers cannot resort to such measures.

The rates at which their produce are sold is a small proportion of the final price as they lack the logistics required to reach the end consumer. Only a small proportion of their produce is sold to consumers in their village.

Farmers and their average incomes

The average income of a all of the farmers who we have disbursed loans to fall under 5k. They grow cash crops, various vegetables, paddy and gram.

In many cases, they often work as agricultural labourers in bigger farms as well

In Tamil Nadu, we work with Adivasi farmers who have always been excluded from formal financial systems and are marginal farmers who have less than 2.5 acres of land and can rarely apply for loans from banks.

In Telangana, we work closely with ALC (Access Livelihoods Consulting) to support women producer companies. We have been informed of drastic times when farmers have had to throw what they have grown instead of going to the market to sell them when the market is down and they could not prevent rotting.

Some of our partners like Dharani in Andhra Pradesh offer storage facilities so that the farmers have a choice to store their vegetables until they get a good price.

How does a Rang De loan help them?

Given that the odds are stacked against them, it is clear that they need a favourable financial arrangement. The loans that you help contribute towards have made it easier for them to purchase their inputs and increase their margins.

They can also think about growing their produce as the increased savings they have allows them to invest in the growth of their business. Maybe they get a chance to hire more labourers or else buy equipment or perhaps they even travel farther and reach a bigger market.

Rang De loans are disbursed to farmers in Andhra Pradesh, Assam, Bihar, Karnataka, Maharashtra, Manipur, Tamil Nadu and Telangana

These farmers work from dusk till dawn seven days a week. They rarely have tractors or other mechanised equipment and often need to employ others cutting down on whatever little income they already get.

The loans also increase their bargaining power. For small farmers, if they can increase their produce and sell a larger amount, buyers are more keen to work with them. In the past, small farmers were almost always ignored at the expense of larger farmers.

A Rang De loan also gets them in touch with an Impact partner that can offer them valuable mentorship, training and even help with storage of their goods so that it can be sold at fair rates. Our Impact partners, many of whom are NGOs themselves, do not carry out under-weighing and other illicit practices as they have been formed to promote the development of agriculturists.

With the help of this small loan, they also learn basic concepts in financial literacy — keeping track of accounts, planning for the future, repaying on a regular basis. It builds their capacity so that they can go to formal sources of credit with more confidence in the future.

Saraswati, a farmer from Tamil Nadu has been able to provide her daughter with quality education from our contributions

If we associate entrepreneurs with risk then farmers are the biggest risk takers in our country and are the ones most in need for the hedging of that risk.

You can help us do just that so that a day might come when these farmers do not face difficulties in acquiring something as simple as a bowl of rice.

They grow the food we eat on our table. We should help them grow their incomes.

Do make a social investment on even a single farmer for as low as Rs 100 so that we can work towards improving their lives together.

Your contributions have helped us provide affordable and low-cost loans to 5,238 farmers over the years who are now able to earn a decent income.

After 11 years of operations, Rang De is now taking a massive leap forward with a brand new peer-to-peer lending platform rangde.in. Check it out.