Agri credit disbursement by banks has grown by around 20 per cent in the first five months of the current fiscal year compared to the corresponding period of FY23.
Welcoming the sharp rise in farm credit, central bank officials say this provides a much-needed boost to the country’s ongoing efforts to ensure food security.
The influx of funds comes at a critical time, as the UN’s Food and Agriculture Organization (FAO) warns that food crises will remain a dominant global concern in 2024.
The specialised agency of the United Nations attributes this to the interplay of extreme weather events caused by the climate crisis, new and intensifying conflicts and economic instability in 2024.
The government set a target of disbursing Tk 350 billion in loans to farmers in FY24, while scheduled banks collectively disbursed Tk 152.80 billion in the July-November period, according to Bangladesh Bank sources.
According to the latest BB data, banks have so far disbursed around 44 per cent of the annual target.
The cumulative disbursement of agricultural credit during July-November 2024 remains 19.58 per cent higher than the actual disbursement of Tk 127.78 billion for the same period in FY23.
Meanwhile, the total recovery of agro-credit reached Tk 144.18 billion during the July-November period, marking a 12.02 per cent increase compared to the same period last year.
The outstanding balance (including interest) of agricultural credit stood at Tk 545.90 billion at the end of November 2023. This represents an 8.73 per cent increase from the Tk 502.07 billion outstanding balance at the end of November 2022.
During the July-November period, the crop sub-sector received the largest share of total agri credit disbursement at 45 per cent. This was followed by livestock and poultry (25 per cent), fisheries (14 per cent), poverty alleviation (6.0 per cent) and others (10 per cent).
When contacted, a Bangladesh Bank (BB) official said that the regulator has recently instructed banks to prioritise agriculture in support of the country’s food security amid global trade and economic tensions.
“This increase in credit disbursement reflects these initiatives,” he said to The Financial Express. “Our goal is to create an environment where no farmer faces difficulties due to a lack of formal credit.”
Dr M Asaduzzaman, former research director at the Bangladesh Institute of Development Studies (BIDS), highlighted the rising production costs faced by farmers, particularly Aman rice growers, due to skyrocketing fuel prices. He also pointed out the additional costs incurred by farmers who use irrigation for jute retting.
“While the availability of credit allows farmers to bear these additional costs, it is important to ensure fair crop prices to facilitate loan repayment,” Dr Asaduzzaman noted.
