Farmers Group amasses a $7,000 revolving fund

Over the last two years the Farmers Group from Ohn Pin Su village in Bogalay Township has amassed a revolving fund of $7,000, which it lends to its 20 members (most of whom are women) ahead of planting season at a monthly interest rate of 3%. This is less than half the rate some lenders in nearby Dedaye town charge farmers. “Money lenders charge 5-8% interest a month,” explains U Thein Myint, the group’s chairman. “Besides saving interest costs, the money from the fund stays with the farmers,” he said.

Group accountant Daw Khin Thida Myint calculates that the fund will rise to $8,600 next year and said the group plans to allocate $6,000 of this to help build a school. “Loans from the fund are less stressful because the interest rate is lower,” she explained. Loans range in size from $140 to $250, depending on the size of the borrower’s land, members explained. “Farmers with more than 10 acres of land are eligible for the largest loans,” member Khin Maung Myint said.

They use loans from the fund to buy fertilizer and seeds and pay for workers. Still, the loans are insufficient to cover all their costs. Farmers estimate that one crop costs about $200 an acre to plant and that they can sell a crop for about $350 an acre if bad weather or insects don’t damage it.

The chronic lack of credit from banks in rural Myanmar continues to keep farmers trapped in high-interest debt, forcing them to focus on short-term earnings and hindering them from investing in their farms. Interest payments from outside money lenders can consume more than 50% of the farmers earnings. Farmers therefore welcome Savings Groups as an important step towards breaking the debt cycle.