Agro-Bank, formerly Bank Pertanian, has become ‘too corporate’ in its identity and has distanced itself from the needs of small farmers.

Compounding the problem for the simple farmer has been the “failure” of Amanah Ikhtiar Malaysia (AIM), a micro-credit scheme modeled partly along the lines of the award-winning Grameen Bank of Bangladesh.

harris mohd salleh former sabah chief minister Former Sabah chief minister Harris Mohd Salleh delivered this double punch in a keynote address yesterday at the National Conference on Agricultural and Food Mechanism 2009 in Malacca.

“It’s so difficult for a simple farmer to get a loan from them,” said Harris in his paper entitled, ‘Permanent Solutions for the Agricultural and Rural Economy’.

“The banks (which are) supposed to cater for agricultural growth mostly entertain applications from plantations and big timers. Farmers are neither here nor there as far as the government is concerned,” he claimed.

“A farmer requiring a few thousand ringgit to grow chillies on his three acres, for example, will not get the loan. Bank requirements are just impossible for any simple farmer to meet.”

Malaysia is the only country that has many government agencies with overlapping and duplicated functions to promote the development of agriculture and mechanisation, he claimed.

sabah rural people development 240609 03 Harris pointed out that farmers need cash in order to advance the concept of mechanisation in agriculture.

He therefore called for the establishment of a Bank Tani (Farmers’ Bank), to modernise the agricultural sector and boost the rural economy.

This approach has worked in India, Bangladesh and the Philippines where the agricultural sector is developing and the rural economy on the point of taking off.

“Bank Tani should be modeled exactly along the lines of the Grameen Bank in India, Bangladesh and the Philippines. There is no need to look for a Malaysian model, as with AIM which is a colossal flop.”

Meet real needs

Elaborating on the proposal, he said Bank Tani must remain a low-cost financier and that it should be designed to meet the needs of small and marginal farmers, rural artisans and petty operators in rural areas.

It must be able to engage with simple people and not victimise them in an increasingly intricate financial and economic scenario.

For starters, Bank Tani can help the government disburse RM300 monthly in cash to each famer for nine months, as part of a stimulus package for the rural economy. This would cost the government about RM2 billion a month and “could come from the subsidy fund and/or the stimulus package”.

The government, he said, should abolish all subsidies - a rural vote-getter for the ruling Barisan Nasional - on food, cooking oil, petroleum products, education and medical fees. The money can then be channeled to the pay-outs for farmers.

sabah rural people development 240609 01 Harris explained that the cash would help farmers while they grapple with various issues, such as identifying suitable crops to grow or equipment to obtain, and to see them through the period when crops are maturing.

“With the monthly cash injection, the farmers will definitely start growing rice and other crops and make coconut oil from the trees around their houses,” said Harris.

“But food prices too must be adjusted to the real prices to act as an incentive for the farmers. This will also help reduce food imports.

“The present system of government stimulus spending on infrastructure will not benefit the majority of Malaysians. It will merely benefit a handful - contractors, importers of materials and foreign workers.”

Bank Tani could further help establish and supervise a system of agricultural contractors and processing centres in every district, taking care of such needs as technical capability and purchase of produce, he added.