Low-cost loans should be available for farmers so that they can buy modern machinery to accelerate agriculture mechanisation, thus boosting output, said a former governor of the central bank.

Atiur Rahman said agriculture mechanisation can eradicate poverty, ensure food sufficiency and help increase export income.

He spoke while delivering the keynote speech at a seminar titled “Agri mechanisation: the role of private sector and access to finance” organised by Metal Group at the Krishibid Institution Bangladesh in the capital yesterday, according to a statement.

Production of food grains has increased almost four times than it was in 1972. More than 38 million tonnes of food grains are produced every year.

Studies have shown that if agricultural growth is at an annual rate of 4 percent to 4.5 percent, it will be possible to earn from the sector through exports.

If GDP growth in the agriculture sector rises 1 percent per person, the overall poverty will decrease 0.39 percent, said the statement.

The government is implementing a project that provides subsidies to farmers for buying agriculture machinery. The government is also giving fiscal incentives to ensure better participation of the private sector in agriculture mechanisation.

The latest Agriculture and Rural Credit Policy and Programme of the BB has especially encouraged providing loans for agriculture machinery, said Rahman. 

He urged banks and financial institutions to provide special loans to farmers so that they can buy necessary farm machinery.

Rahman said if the bank rate can be reduced from 5 percent to 4 percent for agri-machinery, commercial banks will have additional incentives to give more loans at a lower interest rate through the refinancing programme. 

The 'Agricultural and Rural Credit Policy and Programme' directs banks and financial institutions to disburse 10 percent of the total loan to fish culture.

If a similar directive could be given to promote farm machinery, it would have tremendous positive impact on agriculture mechanisation, said the former governor. 

He recommended initiating low-interest loans for agri-machinery similar to those given to spice cultivators and cattle rearing households.

Metal Group has been working in the agriculture mechanisation sector of Bangladesh since 1993. It was the first organisation to provide loans to farmers for buying agri-machinery, said Sadid Jamil, managing director of Metal Group.

“If banks and financial institutions also start providing loans to farmers, agri-mechanisation will accelerate. As a result, production of food grains will increase and poverty will be lessened.”

Helal Ahmed Chowdhury, supernumerary professor of the Bangladesh Institute of Bank Management; Prof Abdus Sattar Mandal, a former vice-chancellor of Bangladesh Agricultural University; Hideaki Kojima, managing director of MUFG Bank Ltd, a Japanese lender; Prof Hannana Begum, a former director of the BB, and AMM Farhad, chief executive officer of Metal Group, were also present.