Greenhouse projects in Gujarat come a cropper

By: and |
Published: June 16, 2015 12:07:02 AM

For a majority of farmers who took up the projects, crops failed persistently due to unfavourable environmental conditions. According to a senior BKS office- bearer, almost 90% crops have failed in north Gujarat

At a time when farmers across the country are grappling with the double whammy of crop damage due to unseasonal rain and the looming prospect of a lacklustre monsoon season, there’s still more bad news emerging from Gujarat.

Greenhouse projects in the state are coming a cropper leading to an alarming rise in non-performing assets (NPAs) of banks, which are pegged at over Rs 3,000 crore.

Failure of crops, misutilisation of funds and diversion of subsidy by the farmers are leading to an increase in failed greenhouse projects in the state. So much so that many banks are now refusing to sanction any further loans for greenhouse projects.

“Until May 2015 we have financed around 113 loans worth Rs 30 crore. Fifty per cent of these loans have not been recovered due to various reasons. The government will have to do something sooner than later as this cannot continue. Many banks are no longer willing to finance loans for greenhouse projects,” said RK Makwana, senior manager,  Rural Development Department (RDD), Dena Bank.

Banking sector sources also said the zonal branches of public sector banks like Dena Bank in Mehsana, Surat, Baroda and Dahod, as well as State Bank of India and Bank of Baroda, are exercising enough caution while sanctioning loans for greenhouse project while private banks are seeking collateral as additional security against these loans, leaving  farmers at their mercy.

Joint director of horticulture in Gujarat CM Patel, however, held farmers largely responsible for their predicament.

“Since the investment in greenhouse projects is so high, crop failure is not affordable. The farmers are making a big investment and need to realise that this is a market-driven technology.  Only then they will get right prices for their crops. Also NPAs of banks who have exposure in these projects are rising because farmers are showing inflated project costs and this unnecessary loan is financing unnecessary activities.”

However, according to the State-Level Bankers’ Committee (SLBC), direct release of the subsidy to the personal accounts has been one of the reasons for allowing account to become NPA by promoter/borrower. “The subsidy given by the state government under National Horticulture Mission (NHM) is not linked to the loan and has been directly released to the borrowers’ personal savings account and was not released to the financing bank resulting in diversion of the subsidy fund,” says a senior SLBC functionary. According to SLBC, banks had financed the greenhouse projects based on the permission given by NHM offices set up at district-level, assuming that NHM had done all the research work regarding climatic conditions and technical feasibility of the projects.

For a majority of farmers who took up the projects, the crops cultivated failed persistently due to unfavorable environmental conditions.  So bleak is the situation that the matter has been taken up by the Bharatiya Kisan Sangh, an RSS affiliate, with the Gujarat government. According to  a senior BKS office bearer, almost 90% crops cultivated under the greenhouses have failed in the northern parts of Gujarat.

As per a survey conducted by BKS,  out of 1,000-odd farmers who opted for this technique, 90% met with crop failure. Blaming the Gujarat government for hasty implementation of the scheme without conducting tests and trials, BKS office bearer Bhavin Patel said at a press conference recently, “Many farmers are ruing their decision of adopting the technique over traditional methods.” Under the greenhouse farming technique, farms are covered with plastic sheets under a tent to protect crop from unfavourable weather conditions.

“The Gujarat government gives 65% subsidy to farmers to adopt greenhouse method. But during the meeting, it was revealed that this technique is not suitable in areas like North Gujarat which experience severe hot climatic conditions. Majority of farmers complained of crop failure this season (summer),” Patel said.

“The government claimed that farmers can cultivate off-season crops through greenhouses, but it never happened. In addition, there is no mechanism in place to sell vegetables like capsicum grown through greenhouse. Thus, farmers have to transport it to other states at their own expense,” he said.

“Last summer’s extreme heat had damaged crops grown under greenhouses. Many of them are in debt of around Rs 20-25 lakh, which were taken as loans. We will demand full waiver of loans and interests taken for greenhouse farming,” Patel said.

To make matters worse, farmers cannot afford to buy new seedlings after a failed production as crops such as cucumber are worth Rs 15 per seed. The maintenance cost are exceedingly high and once the assigned agronomist finishes his job, the farmers are on their own. Since they are not aware about greenhouse techniques, they are not able to control the production. The supply of these crops from other states has meanwhile increased over the period and demand is low, making it unviable for farmers to grow these exotic crops.

Due to crop failure in greenhouses, many farmers are now conducting traditional farming in the greenhouses. Chirag Shashtri, a greenhouse promoter, said, “The maintenance costs being very high, farmers lose most of the money. We took a loan of Rs 27 lakh.  A disease ruined half the production. We had to sell the crops at a very low rate.”

Shaival Desai, a young entrepreneur who has rented greenhouses in Thol and Sanand, says, “I rent the greenhouses because buying them is not a good investment. I have six agronomists and they all have different opinions so at the end of the day I have to do what I think is best for the production.”

The Gujarat government has been giving a special impetus to greehouse projects specially since 2010 when PM Modi was still Gujarat CM. While the central government already offers a 25% subsidy for greenhouse development, the Gujarat government is also providing a 50% subsidy for greenhouse structure. Moreover,  cultivators can also avail a 6% interest subsidy and 25% subsidy on power, for 5 years each. In terms of project cost, it takes an average Rs 26 lakh per greenhouse per acre, while cultivators were expected to earn an average profit of Rs 5-6 lakh per greenhouse. Currently, India contributes only 1% to the total $ 7,400 million fresh floriculture trade globally.

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