Farmers will have better access to funding under a new Yoma Bank scheme, and can use it to buy much-needed agricultural machinery. The bank announced the launch of its Agribusiness Finance Program (AFP) in Yangon on December 15.
The new program cuts the down payment on a hire purchase agreement from 30 percent to 10pc, and extends the repayment period from one year to three years.
The Livelihoods and Food Security Trust Fund has contributed US$11 million to the financing scheme for farm machinery purchases operated by Yoma Bank. Since the partnership began in January, 2687 lease contracts for farm machinery valued at more than $50 million have been taken up by farmers and rural entrepreneurs, the bank said.
LIFT fund director Andrew Kirkwood said, “The program has already provided $39 million in financing to farmers and small businesses across 10 states and regions.”
Serge Pun, executive chair of Yoma Bank, told participants at the launch of the scheme, “The lack of clear land ownership makes it more difficult to use land as collateral. Myanmar Agricultural Development Bank (MADB) and cooperative small loans are the best most farmers can get. But a lot more financing is needed, and the amount commercial banks can offer to farmers is very limited.”
Mr Pun said the program would help boost production and mitigate farmers’ risks.
“Agriculture is the least profitable of all the businesses I am in, it’s very easy to lose money in agriculture, and the losses can be painful. That said, agriculture is still the pillar of our society,” he said. U Adam Maung, head of Unsecured Lending in the AFP scheme, said the program and its benefits to lenders would have to be publicised.
Mr Kirkwood said the 30pc increase in income between 2013 and 2016 made it more expensive for farmers to hire daily workers, thus increasing the need for farm machinery and equipment.
“Myanma Agricultural Development Bank is the largest source of credit for farming, but their loans are available only for one season, and only to a maximum of K100,000.Farmers can’t use MADB credit to buy machinery,” he said, adding that it was the responsibility of the finance ministry’s regulatory department to oversee microfinance organisations and ensure that duplicate loan risks did not arise.
Source: Myanmar Times
