31.9 C
Tunisia
Sunday 20 June 2021
HomeFeatured NewsTunisia: possible outcome for farm debt?

Tunisia: possible outcome for farm debt?

Whether they are from developed, emerging or poor countries, farmers are exposed, but to varying degrees, to problems caused by debt. Though different they may be, therapies applied are limited to a few formulas that are available either in total or partial obliteration of the farm debt or rescheduling which does not seem to provide a radical solution to the problem. Moreover, rarely have we seen a bank, let it be public, drag its debtors to court, let alone put their land in receivership.

Indeed, farming has this peculiarity that it is prone to major hazards: climate in its most disastrous variation, namely drought, and overproduction, not to mention epizootic plagues. Yet, the fact is and remains that a farmer is basically just able to earn enough income from his business to pay the costs he owes. The core problem is that farm debt can be mastered only if farmers’ income allows paying the costs of implements for which a loan was contracted. Implements include the cost of seeds, fertilizers, pesticides, fuel and electricity, the cost of capital (tractors, pumps), labor and the cost of debt. Farmers are not able to cover these costs, in particular that of the debt.

Should credits be discredited? Nobody would have the temerity to venture it, especially since farming has never been exempted from credit whatsoever to invest in the long term through new and innovative activity, or mostly to finance a campaign.

In Tunisia and according to official figures, the total farm debt amounts to 1,760 million dinars granted by banks (without taking into account mutual associations), to 120,000 farmers, representing 23% of the total number of farmers; 757 million dinars of this debt have reached maturity.

Speaking recently before the Chamber of Deputies, the Agriculture Minister said these debts account for 5.6% of the total debt of all economic sectors, noting that debts incurred by farmers from the BNA amounted to 1000 million dinars, 729 million dinars have come to maturity (96% of total debt) shared out as follows: 274 million dinars of senior debt, 290 million dinars in interest and 165 million dinars in litigation.

As we can see, large sums are at stake, and the Ministry of Agriculture seems to show special interest for this issue. Indeed, it started developing a study on credit and indebtedness of farmers last year, in collaboration with the World Bank, the French Development Agency (AFD) and the FAO. The Agriculture Minister assured that the study will be fully prepared in early 2011, and its results will be presented at a Cabinet meeting, marking, accordingly, the beginning of a process leading to the establishment of practical measures to settle the problem of agricultural indebtedness.

Without prejudging the conclusions of this study, we may raise the question of guarantees that should surround the granting of agricultural credit. We have learnt, in this regard, that a bill is currently at the Chamber of Deputies’ Bureau. It provides for establishing compulsory insurance for all farm credit, knowing that so far, this insurance is not mandatory and hence is not required by the credit institution applied for.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -

MOST POPULAR

HOT NEWS