ALC India, a Rang De field partner, is a management consulting organisation that aims to promote sustainable livelihoods in Telangana. They believe that it is not poverty but a lack of opportunity that most Indians suffer from. Hence, ALC seek to give people opportunities by providing them skill development for all kinds of skills, particularly in rural areas. In March this year, we visited ALC’s Farmer Producer Companies in Mehbubnagar, Telangana.
As soon as we reached Kondangal, we met a group of women who had assembled from neighbouring villages. They were all a part of Farmer Affinity Groups (FAGs) which are based on the Self Help Group model. The women we met with initially were from the Hasnabad farmer producer company who have recently won an award at the recent Economic Times Krishi Vikas Summit.
This company contains over 900 women and is made up of different FAGs each of which has 10–15 women each. To become a part of the producer company, women have to give their share of capital which is around Rs 500. It is treated as the company’s share capital and is used to procure fertilisers, pesticides etc. If they have enough capital, they would also set up a dal mill or rent a warehouse in the village.
These women have a lot of plans for their producer companies but right now lack the capital to implement them. They need to borrow and are looking for credit sources and Rang De is one of their main sources of credit (currently, we are seeking to raise Rs 982,000 for them on the Rang De platform).
They told us that they find Rang De loans convenient and accessible. They have borrowed from banks before but call Rang De loans as ‘doorstep loans’ where ALC field officers visit them, help them apply for loans and give them the money. They do not need to stand in queues in banks and return dejected when their loan appeals are turned down.
Women who borrow zero interest loans from banks in Andhra Pradesh often borrow them in the name of their husband, son, father or father-in-law because the collateral usually is in a man’s name.
These women rarely have property in their name and cannot borrow directly from banks.
The ALC field officers that help these women have worked in this area for years. They have a personal relationship with the women, know the geography, problems and their needs. The women feel comfortable with the field staff in general and prefer borrowing from Rang De even when they have access to bank loans.
We visited their houses and had informal discussions where they opened up and told us how they suffered from the microcredit crisis. Many of these women had borrowed from Micro Financial Institutions (MFI) in their area only to face extortion in their hands.
These MFIs operated on a weekly basis and would come and sit in the women’s houses forcing them to pay up. To pay off these loans, the women borrowed from moneylenders who charge exorbitant annual interest rates of 30% or more.
One of the women even told us how over half of the population of her village had moved to cities like Hyderabad, Mumbai, Pune, a typical example of distress migration. Even though a lot of them are involved in MNREGA work and have 100 days of guaranteed employment, there just aren’t enough jobs for all of them. Most of the men folk go out to get work and the women say that they might come back this year or stay on for a couple more years.
Nearly half of the producer company comprises of small farmers with one or two acres of land.
In Mehbubnagar, the land is so dry that even farmers who have five acres of land are considered as small farmers since produce on dry land is really low compared to wet lands.
They had a low yield last year and most of the women had two or three bags of red gram that was mainly used for household consumption. When we suggested animal husbandry as an alternative source of income, they said it was not possible since they’d require huge quantities of water to maintain the cows and buffaloes. The animals need to drink a lot of water to produce a lot of milk and that was not viable at all.
Buffaloes need green fodder to produce milk which was extremely impossible in a land where there was hardly any greenery.
Goat rearing could be a possible alternative as these animals don’t require as much water but there is resistance to change among the women. Some were even hesitant when we suggested that they move away from agriculture. They preferred to borrow money for their daily needs than switch their occupation.
Rang De currently supports three Farmer Producer Companies in Mehbubnagar, Telangana. In the last one year, Rang De has given loans to over 600 small and marginal women farmers to procure agricultural input.
Rang De team members Rachana, Rahul and Pramod visited Mehbubnagar, Telangana in March 2016. We regularly conduct field trips to study the effectiveness of Rang De loans.
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