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Development and Promotional Functions

Farmer's Club Programme Farmer's Club Programme Overview

Agriculture is the backbone of the Indian Economy as nearly 60% of the populationof the country depends on agriculture and it contributes 18% to the GDP. Tenth FiveYear Plan and National Agriculture Policy documents envisage a growth level of 4%in Agriculture as against the average growth of less than 2% in the last 50 years.The last decade commencing from 1990s was marked by post-Green Revolutionfatigue and plateauing yield levels in many parts of the country. For sustained 4%growth in agriculture there is need to improve productivity and cut down on costs byimproving efficiency.

There is, therefore, an urgent need to provide package of initiatives for transfer oftechnology, improving input use efficiency, promoting investments in agricultureboth in private and in public sectors and creating a favourable and enablingeconomic environment. The emerging needs in agriculture sector now are adoptionof location specific skill and knowledge based technologies, promote greater valueaddition to agriculture produce, forge new partnerships between public institutions,technology users and the corporate sector, harness IT more effectively to realisefinancial sustainability and compete in the international market.

For transmitting the latest agriculture techniques to the Farmers’ field, orientingthem to establish better relationship with banks, adoption of latest post-harvesthandling technology, value addition, etc. and enjoy the benefits of collectivebargaining power both for procuring inputs and select their produce the Farmers’Club Programme is an appropriate and most suitable strategy initiated by NABARDin late 1982.

Mission

Development in rural areas through credit, technology transfer, awareness andcapacity building.

What is Farmers' Club Programme

National Bank for Agriculture and Rural Development (NABARD) encourages banksto promote Farmers' Clubs in rural areas under the Farmers’ Club Programme,earlier known as “Vikas Volunteer Vahini (VVV) Programme”. The Programme waslaunched by NABARD in November 1982 to propagate the five principles of“Development through Credit”.

The five principles are:

Credit must be used in accordance with the most suitable methods ofscience and technology.The terms and conditions of credit must be fully respected.Work must be done with skill so as to increase production and productivity.A part of the additional income created by credit must be saved.Loan installments must be repaid in time and regularly so as to recyclecredit.

Reserve Bank ofIndia

Departments

Indian Bank'sAssociation

Model BankableProjects

Special Schemes/ Projects of theDepartment

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The “VVV Programme” was rechristened as “Farmers’ Club Programme” in 2005by revisiting its earlier mission.

What are Farmers' Clubs

Farmers’ Clubs are grassroot level informal forums of farmers. Such Clubs areorganised by rural branches of banks with the support and financial assistance ofNABARD for the mutual benefit of the banks concerned and the village farmingcommunity/rural people. With the enhancement of the programme, other agencieslike NGO, VAs, KVKs, SAUs etc. are also now included as agencies included in theformation and promotions of FCs.

Functions:The broad functions of the Farmers’ Clubs as envisaged are as follows :

Coordinate with banks to ensure credit flow among its members and forgebetter bank borrower relationship,Organise minimum one meeting per month and depending upon the need,there would be 2-3 meetings per month. Non-members can also be invitedto attend the meetings,Interface with subject matter specialists in the various fields of agricultureand allied activities etc., extension personnel of Agriculture Universities,Development Departments and other related agencies for technical knowhow upgradation. For guest lectures, even experienced farmers who are nonmembers from the village/ neighbouring villages could be invited,Liaison with Corporate input suppliers to purchase bulk inputs on behalf ofmembers,Organise/facilitate joint activities like value addition, processing, collectivepurchase of inputs and farm produce marketing, etc.; for the benefit ofmembers. They can also sponsor / organise SHGs,Undertake socio-economic developmental activities like community works,education, health, environment and natural resource management etc.Market rural produce and products

New & Emerging Role of Farmers’ Clubs:

The broad objective of setting up Farmers’ Clubs would be to achieve prosperity forthe farmers with overall agricultural development in its area of operation byfacilitating credit counselling, technology counselling and market counselling. Overthe years, the vision of Farmers’ Clubs has undergone a change and the roleexpected to be played by Farmers Clubs have been enlarged to enable them tofacilitate transfer of technology, propagation of seed village concept, strengthenagricultural extension services, undertake collective purchase and distribution ofinputs, production and marketing, capacity building of members, to act as BusinessFacilitators (BFs)/Business Correspondents (BCs) for banks, formation of Self HelpGroups (SHGs), Joint Liability Groups (JLGs), Producers Groups/Companies,Federations of Farmers’ Clubs, undertake community related works, and assumethe role of a leader.

NABARD’s support to FCs:

NABARD’s policy support for Farmers’ Club Programme lays stress on linkingtechnologies with farmers’ club members and also facilitating market accessthrough the following mechanism:

Capacity building of members of Farmers’ Clubs including leadershiptraining.Linkage with technology/marketsSelf Help Groups (SHGs)/Joint Liability Groups (JLGs) formationForming Federations of Farmers’ Clubs/Producers’ Groups/Companies

NABARD’s support o Farmers’ Training & Rural Development Centres (FTRDCs):NABARD supports recurring expenses of Farmers’ Training and RuralDevelopment Centres (FTRDCs) set up by institutional agencies. NABARD has setup a Farmers’ Technology Transfer Fund (FTTF) to be used to facilitate transfer oftechnologies and market linkages especially through Farmers’ Clubs besidesneed based support for formation of Producers’ Groups/ Companies, Federationsof farmers’ Clubs etc.

Importance attached to FC Programme by Govt. of India:

All Regional Rural Banks have been directed by Union Finance Minister to have atleast one Farmers’ Clubs per branch. In view of the importance attached to theprogramme by NABARD & GOI and also in the context of business advantages thataccrue to institutional agencies, banks may adopt the Farmers’ Club programme

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as their business strategy.

Benefits of Farmers' Club to Bank Branch

The formation of Farmers’ Club lead to better Banker-Borrower relationship in thearea. An Evaluation study of Farmers’ Club Programme (FCP) carried out by IIM,Lucknow has brought out the following advantages of FCs to bank branches:

Increase in deposits.Increase in the credit flow and diversification of lending.Generation of new business avenues.Increase in the recoveries and decline in the non-performing assets.Reduction in the transaction costs of financial institutions/ Banks.Socio economic development of the village.A win-win situation both for the banker and borrower.Besides these benefits to the banks, the Farmers’ Club has also beeninstrumental in certain social welfare measures like free eye check-upcamp, Animal Health Care Camp, Mass vaccination camp, communityworks like road, check-dams, afforestation, etc.Enhancement in bargaining power for bulk purchase of inputs andmarketing of their produce.

Who can form Farmers' Clubs All Institutional Agencies (Commercial Banks, Cooperative Banks and RegionalRural Banks) and all grassroot level organisations (NGOs, PRIs, State AgriculturalUniversities, KVKs, ATMA, Post Offices etc.) are eligible to form Farmers’ Clubs

Set Up

Farmers’ Club is an informal forum in the villages. It can be promoted in a village/cluster of villages, generally in the Operational Area of a Bank. While Farmers’ Clubshould have minimum of 10 members, no upper limit in the membership isenvisaged. Every Club would have three office bearers - One 'ChiefCoordinator/Volunteer/ President, the other 'Associate Coordinator/Volunteer/VicePresident. The office bearers would be elected by Club Members on a democraticbasis for a term to be decided by the Club. The office bearers should be residentsof the area of the operation of the club. No NGO/FC promoting agencyrepresentative can be office bearer of the club. Functions of the Office bearers:

The main functions of the office bearers would be to convene meetings, to arrangemeetings with experts, maintenance of Books of Accounts, coordination with Bank,Line Departments of the State Governments, maintaining proper liaison with allconcerned.

Membership

All villagers except willful defaulters can become members of the club. The clubmust make endeavour to raise their own resources by way of contribution frommembers, undertaking certain business services such as bulk procurement ofinputs and collective marketing of agricultural produce, functioning as BusinessFacilitators (BFs), agents for insurance and other services etc.

Steps in the formation of Farmers’ Clubs

Bank branch can promote the clubs directly or engage Farmers’ Clubpromoting agencies like Krishi Vigyan Kendras (KVKs), AgricultureUniversities, NGOs, Corporates, etc.All grassroot level organisations (NGOs, PRIs, State AgriculturalUniversities, KVKs, ATMA, Post Offices etc.) are eligible to form Farmers’ClubsSelect a village/ cluster of villages suitable for launching Clubs in theoperational area of the bank branch.Identify a few progressive farmers and borrowers with good track record ofproper loan utilisation, aptitude and capacity for team work. (Success of theClub hinges on the right choice of members).Encourage the members to select a Chief Coordinator/Volunteer/Presidentand an Associate Coordinator/Volunteer/Vice President and a Cashier. Thiswill ensure collective leadership and continuance of the Club.Provide orientation training to them with the help of NABARD (RegionalOffice / DDM or trained officers from the bank) before launching.Encourage members to convene monthly meeting regularly, guide them tohave meaningful discussion and take necessary follow up action.Motivate members them to identify credit and non-credit needs (training,

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socio-economic, village infrastructure, etc.), prepare a plan of action andaccordingly arrange for expert talks, counselling, need-based activities, etc.with the help of Government Departments and other agencies concerned.Ensure that the members maintain Membership Register, Meeting Register,Minutes Book and Books of accounts .Evolve a performance parameter and measure the Clubs’ contributionannually.Use Club as a tool in aid of branch not only in the matter of credit andrecovery but also in facilitating promotion of SHGs, micro credit, FinancialInclusion and convergence of services.

Consent Letter:

NABARD provides financial support to FCs for an initial period of 3 years.Sponsoring Banks/Agencies are expected to give a consent letter for supporting theclubs for a period of two years beyond the initial period of 3 years of NABARDassistance.

No. of Clubs to be promoted by a Single Agency:

There is no restriction on the number of clubs to be formed a single agency.

Rating of Farmers; Clubs

To facilitate the graduation of farmers’ Clubs into Federations of Farmers’ Clubs orProducers’ Groups/Companies, it would be desirable for the sponsoring agenciesto rate the Farmers’ Clubs as per prescribed parameters. However, the rating of theclubs is not linked to any releases to be made out of the assistance under the newpolicy.

Awards to Best Working Clubs:

Awards would be given to be provided to best working clubs at the district, state andnational levels, based on the rating norms.

Capacity Building for Adoption of Technology (CAT):

NABARD’s Capacity Building for Adoption of Technology (CAT) programme may beused for the benefit of farmers’ club members for training and exposure visits withinand outside the State.

Release of assistance:

Release of assistance will be in 2 instalments viz. 50% by way of release inadvance and the remaining 50% by way of reimbursement.

Incentives to sponsor agencies:

Incentive is provided to agencies (other than banks) for the formation and nurturingof FCs.

Financial Support from NABARD

NABARD assistance to all agencies will uniformly be @Rs.10,000/- per club perannum for a period of 3 years irrespective of whether they are institutional or otheragencies and also the region concerned. The assistance will be towards meetingthe following minimum and mandatory expenses:

S. No. Particulars Amount (Rs.)

1. Formation & Maintenance Expenses 2,000.00

2. Base Level Orientation Training Programme(BLOTP)

5,000.00

3. Meet with Experts (2 Programmes in a year) 3,000.00

Total 10,000.00

NGOs/KVKs will be provided with an incentive of Rs.2,000/- per club out of the totalassistance of Rs.10,000/- per club per annum.NGOs/KVKs who are operating in hilly/remote/naxal affected areas, will be providedwith additional incentive of Rs.3,000/- per club for a period of 3 years over andabove Rs.10,000/- referred to above.

Revival Package of Assistance for Dormant Clubs:

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In order to revive the dormant/defunct FCs, NABARD has introduced a revivalpackage. The assistance may be used towards meeting the revival cost includingarranging exposure visits for members of such dormant clubs as well asconcerned branch managers. Package of assistance may be extended toNGOs/VAs for revival of clubs promoted by banks.

Sustainability of Farmers’ Clubs:

Regular source of income and consistency in their activities is the key tosustainability of FCs. Sustainability of Farmers’ Clubs may be ensured throughcreation of a corpus at the club level through measures such as:

Token membership fees (to be decided by members)Monthly savings (to be decided by the Club members)Service charge for SHG/JLG loans recommended to banks @0.5% and 1%.(This is suggestive and the club members can decide themselves.)Commission/incentive for selling insurance products (as per negotiationswith individual insurance companies).Commission for acting as Business Facilitators/Business Correspondents(to be negotiated with individual banks).Any other charges for services provided to other agencies like Government,Corporate Bodies etc.).

Such steps are expected to make the Farmers’ Clubs self sustaining over a periodof 3-5 years, when the funding support from institutional agencies is withdrawn.

Status of Farmers’ Clubs :

During 2009-10, 16,590 Farmers’ Clubs have been formed taking the cumulativenumber of farmers’ Clubs to 54,805 as on 31st March 2010.

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