In the past, it would have been nearly impossible for Mosammat Salma to obtain a loan at a reasonable interest rate.
The 35-year-old, who helps run her husband’s 5-acre banana, papaya, and rice farm in Sokhipur village in Tangail district, is among thousands of underbanked farmers and small-scale input retailers in Bangladesh for whom obtaining a regular bank loan is akin to an uphill battle.
Although the nation’s credit-dependent agricultural sector comprises nearly 15 percent of its gross domestic product, the industry’s sluggish turnover and fragmented agricultural retail ecosystem mean few banks are willing to offer loans to this group.
In addition, farmers need to provide collateral and meet other documentation requirements, which often prove challenging. As a result, some turn to non-governmental organizations, whose loans come with significantly higher interest. Others like Salma buy fewer farming inputs like fertilizer or lower quality seeds to save cost, resulting in poorer yields.
But this year, things are different. Salma has found a low-interest loan designed to improve farmers’ production potential and has seen her income skyrocket.
She is among the first group of farmers in Bangladesh to obtain this loan, which comes under a new farmer financing project by Syngenta, launched in collaboration with Bank Asia in 2021.
The loan program is the first in the market to offer collateral-free, fintech-based end-to-end financing programs at subsidized interest rates. Syngenta does not profit from the arrangement.
Salma first heard of the loan from a Syngenta field representative and obtained the money in January 2022 with a committee made of ten other farmers.
“The application process was very easy,” she says. “The only documentation required was my ID card, the farmer card, and a photograph. No collateral.”
A richer harvest
Rice is one of Bangladesh’s main crops, and prices of this staple crop have weathered the pandemic as demand remains stable throughout the year.
For the past decade, she would buy inputs such as fertilizer, pesticides, herbicides, and crop protection products from stores on credit to use while farming. After her harvest was ripe, she then quickly sold her crops to pay back the stores.
But with a new 50,000 taka (US$480) Syngenta loan covering her farming expenses, Salma did not have to rush to pay back her store credit this year.
As a result, she had time to wait for prices to rise before selling her produce at a more profitable price. Salma now makes much more than she would with her crops.
In all, she enjoyed a richer harvest and earned more for it.
An industry first
Like Salma, a large number of farmers have since obtained Syngenta loans using an Agri Card – a type of credit card – to the tune of US$600 each.
But Syngenta's financial support to the industry extends beyond farmer loans to strengthening and supporting the entire agriculture ecosystem: it has also arranged loan benefits for agricultural channel partners, providing them the flexibility of additional cash flow whenever needed.
Under Syngenta’s channel financing programs, retailers have since loaned an average of US$4,000, and stockists an average of over US$20,000.
The additional liquidity Syngenta’s loan program is pumping into the industry is expected to create a positive income cycle for stockists, retailers, and farmers.
Just take Salma, who earned enough this season to pay off her loan in May, a month early.
Emboldened by her success, she plans to take another loan and rent more land to expand her farm. She and her husband are also saving up to buy it over entirely: they currently own 1 of the 5 acres it sits on.
Salma hopes access to this loan means her upward income trend will continue, bringing her family closer to their dreams of farm ownership. “Though I’m a woman, I’m able to provide for my family in this way,” she says.
As one of the few women in her community to obtain this low-interest loan, she’s now encouraging her neighbors to apply as well: “That’s how I’m spreading the message.”