Empowering Apple Growers
JK Bank’s revised Apple Advance Scheme is more relevant, need based and hassle free even to a common grower for development of orchards, production, and marketing of fruit crop without financial intervention from private money lenders, outside arthias and commission agents. 
Apple is an important principal crop of J&K state. The state contributes around 60% of national production. But this production level of the Apple is not to the desired level. Its productivity is low and hovers around 10 tons per hectare against a potential production of at least around 25 tons per hectare. One of the reasons adversely affecting the production of Apple is lack of proper finance at proper time. This has created disinterest among growers, as the returns are not matching the kind of time and labour they put in the production of various varieties of the fruit. 
We have seen that the private financers predominantly control the produce, as they have been lendinggrowers at exorbitant interest rates. They even enter into futures contract with the growers to buy the entire produce at the rates, which are lower than the market scenario. This practice has drastically eroded the margins of the apple growers and simultaneously lowered their enthusiasm. 
While realizing the financial difficulties of the growers, J&K Bank had devised a scheme to finance the fruit growers. But the response of the growers to this formal channel of financing was not to the desired level. To bring enthusiasm among the growers and also as a significant step towards actualization of the Bank’s strategy of increased investment in the economic development of J&K State, the J&K Bank modified the scheme and re-introduced it last week under the name of “Apple Advance Scheme”. 
The Bank has been extending credit to the fruit growers and traders of the state (Apple Growers) for the last so many years and revised Apple Advance Scheme has been tailored to make it more relevant, need based and hassle free even to a common grower for development of orchards, production, and marketing of fruit crop in a free and fair manner without financial intervention/ support from non-institutional agencies like money lenders, outside arthias and commission agents.  
Even as non-institutional lenders like private moneylenders have been liberal to extend hassle free credit to the growers or local traders, they have not only been charging interest in the range of 25-35% per annum but also restricting their operational freedom in the sale of the produce in open market.  
The revised Apple Advance Scheme of the bank aims at providing adequate and timely credit for comprehensive credit requirements of the grower farmer under single window, with flexible and simplified procedure, adopting whole farm approach, including the production credit needs and a reasonable component for consumption/ subsistence needs.  Earlier the scheme was not having any credit support to the grower for his day to day financial/ subsistence needs and the grower was always dependent on and at the mercy of local traders/money lenders for advance payments against the fruit crop for his day to day financial requirements. 
So, all Fruit Growers/Orchardists owning orchards with fruit bearing trees are eligible to avail finance under the scheme. Besides, all local traders/arthias/commission & forwarding agents having a market standing of at least one year too can take benefit of the scheme.  
Now the scale of finance would be assessed on entire fruit bearing orchard landholding (owned) by the grower any of his family members for a period of three years. For loans up to Rs.1.00 lakh, no revenue records will be insisted on. However, the grower shall have to furnish an affidavit duly attested by a judicial magistrate, as a declaration of his orchard land holding.  
The loan limit will be to the extent of 90% of the total financial requirements assessed per acre of orchard land. The 10% margin is to be contributed by the grower in the shape of costs incurred on fertilizer/ pesticide/ fungicide application and post harvest maintenance of the orchards. 
For loans up to Rs.1.00 lakh, no collateral security is required. The ceiling for loans to growers against 3rd party guarantee is enhanced from existing Rs.2.00 lacs to Rs.5.00 lacs. Credit limits beyond Rs.5.00 lakh will be granted against mortgage of immovable property/ agri land with a minimum value of 125% of the credit limit. 
The interest in loan accounts of growers is to be charged at half yearly rests in September and March.
The scale of finance Local Traders/ Arthias will be assessed on the basis of number of fruit boxes marketed/ forwarded during the previous year with a reasonable increase of 25% (maximum) on average growth during the last three years. However the fresh borrower under the scheme should be having minimum market standing of one year. 
The average per box market price may be fixed at par with the total per box cost assessed for the grower, on which 25% margin will be stipulated. The per box cost will be reviewed annually in December and notified to the operating levels for adoption during the next crop season. 
The traders/ arthias shall be required to route the minimum credit turnover of 200% of the limit sanctioned and the account should be standard without any arrears/overdues of interest/principal,  to facilitate renewal of the facility.
Meanwhile, the fruit growers need to adopt formal channel of financing and do away with the informal channels where they have to bear exorbitant interest rates. The revised Apple Advance Scheme of the bank has been tailored as per the actual requirements of the producers and provides an opportunity for them to enhance their returns. Not only this, the growers while having access to the required finances at proper time, can raise the production to the optimum level. At the same, the bankers at the operational level have to extend the relaxations vested in the scheme to the growers so that the Apple production in the State is fully brought under the ambit of formal financing.

(The views are of the author & not the institution he works for. Feedback:sajjadbazaz@greaterkashmir.com)

Under the scheme finance will be available for following components:-
Production/Input Cost
*       fertilizers
*       fungicides/pesticides/insecticides etc.
*       fertilizers/fungicides/pesticides/insecticides application
*       Watch & Ward
*       Post Harvest maintenance
 
Marketing Costs

*       For Boxes
*        For Packing Material
*         For Picking, Packing & Grading
*        For Transportation
*        For Cold Storage of produce (optional)
*        Scale of Finance*
Growers (Per Acre of orchard)                                           Rs.2.73lac
Local Trader/Arthias (per box of 20 Kgs)                      Rs.242/-
Commission/Forwarding Agent (per box of 20 Kgs)    Rs.126/-
*Provision for additional finance is available for cold storage of produce at Rs.20/- per     box subject to a maximum limit of Rs.10.00 lac per borrower against pledge of cold storage receipts duly endorsed in favour of the bank.

Lastupdate on : Sun, 30 Jan 2011 21:30:00 Makkah time
Lastupdate on : Sun, 30 Jan 2011 18:30:00 GMT
Lastupdate on : Mon, 31 Jan 2011 00:00:00 IST