The Hindu : Tamil Nadu News : Tapioca farmers in clutches of money lenders

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Sunday, Mar 23, 2008
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Tamil Nadu

Tamil Nadu

Tapioca farmers in clutches of money lenders

Karthik Madhavan

District administration and NGO begin help

— PHOTO: M. GOVARTHAN

Efforts on: Though tapioca farmers have formed an association, many are still under money lenders’ control.

KADAMBUR HILLS: Farmer A. Subramani of Thinnayoor hamlet, near here, borrowed Rs. 15,000 from a money lender. He got the loan six years ago at 36 per cent interest by pledging four of his eight acres.

Today, Mr. Subramani is deep in debt with an outstanding of about Rs. 3 lakh and also on the verge of losing the land.

The money lender has threatened to take away the four acres. However, the farmer is no defaulter. In the six years he has been in debt, he had repaid the loan over and over by selling all his produce to the money lender. Mr. Subramani says the lender wanted it that way.

His guess is that he must have repaid at least Rs. 2 lakh in produce for, he does not know the actual value of the produce, nor how the Rs. 15,000 reached Rs. 3 lakh.

Same is true of his fellow villager V. Lakshmi. Her husband pledged all his 4.8 acres to get a Rs. 14,000 loan. That was four years ago. Today, the farmer has an outstanding of Rs. 27,000.

They too do not understand the loan economics.

The farmers are just two of the 4,500 in the hills who suffer money lenders.

S. C. Natarajan, head of NGO Sudar, says almost 90 per cent farmers in the hills are in the money lenders’ clutches. The farmers own about 13,500 acres, producing mostly tapioca. The problem does not end here, though.

Undervaluation

The money lenders who buy tapioca do so by undervaluation, says K. Sadayappan, a farmer from Modikkadavu hamlet.

“The money lenders test and weigh the tubers only at factories in Namakkal and Salem, leaving us in dark about the actual price. We just accept whatever they offer.”

He adds that the financiers do not pay the farmers but make adjustments against outstanding amount.

Mr. Natarajan says the lenders dupe the farmers by offering poor price and also demanding inexplicable outstanding amounts.

The problem peaked in 2007 when the financiers formed a cartel to offer just Rs. 1,500 a quintal of tapioca. In 2006 the lenders offered Rs. 3,000. With no other avenue, the farmers just surrendered to the lenders’ diktat.

Mr. Natarajan says there are scores of money lenders who, having lent around Rs. 60 lakh, control 90 per cent of the 4,500 farmers.

This year, things look a little better. The NGO, Sudar, approached Erode Collector T. Udhayachandran, who has set in motion a process, wherein farmers sell directly to sago factories in Namakkal and Salem.

Machines installed

The arrangement is something like this. The tapioca farmers have formed an association, which facilitates the sale.

The association tests quality and weighs tapioca right in front of the farmers. Two machines have been installed for the purpose.

Mr. Natarajan says as a result of the Collector’s intervention, the price has once again shot up to Rs. 3,000 a quintal.

However, a lot more needs to be done, as the arrangement has benefited only fewer farmers. With majority of the farmers still under money lenders’ control, they are hesitant to sell through the association, the NGO organiser says.

Mr. Udhachandran says the district administration plans to arrange institutional credit to the farmers in the next sowing season, by pumping in funds to the dormant primary agriculture cooperative bank in the hills.

Action against money lenders has also been taken with the arrest of a money lender on Friday.

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