USAID-funded farmer credit helps cooperative members earn more income
18 JANUARY 2012 | BAMYAN, AFGHANISTAN
Despite a drought, farmers enjoyed better-than-expected yields due to the high-quality seeds and fertilizers made possible by timely distribution of low-interest Agricultural Development Fund loans.
The Bamyan Provincial Reconstruction Team, in close cooperation with USAID, implemented a successful a pilot program in the province that offered loans to potato farmers in 2011, enabling them to boost productivity and raise farm earnings.
Seven potato cooperatives in Bamyan borrowed some $270,000 from the Ministry of Agriculture’s Agricultural Development Fund to enable 380 farmers to purchase of crop-related supplies.
The Agricultural Development Fund functions in partnership with USAID. The fund acts as a wholesale lender, channeling credit through financial and non-financial institutions, such as farmer cooperatives and associations. A credit management unit in Bamyan promotes micro-credit to all farmers. The financial intermediaries, like the one in Bamyan, lend to commercial farmers and agribusinesses engaged in distributing agricultural inputs, producers of high-value crops, processors, and exporters of agricultural products.
The Bamyan cooperatives charged farmers only seven percent interest on the loans, instead of the 60 percent demanded by the usual lenders at the local Bamyan bazaar.
Farmers brought in larger yields by using timely purchase of better quality seeds and fertilizers. The total market value of the potatoes harvested by Bamyan cooperatives involved in the pilot project is estimated at $4.2 million.
Despite widespread drought in the province, the USAID project staff predicts that cooperatives and their borrowing members will repay the loans on time or ahead of schedule. The Directorate of Agriculture, Irrigation, and Livestock and the head of its cooperatives office in Bamyan are leading the repayment process.
In September, as the Bamyan farmers reaped their potato harvest, they began paying back the loans.
Last updated: January 12, 2015