Primary Agricultural Credit Societies (PACS)

Context: Union Home Minister and Minister of Cooperation will inaugurate a day-long mega conclave “Strengthening PACS through FPOs” in New Delhi on July 14, 2023. More on News:
  • The mega conclave is being organised by the National Cooperative Development Corporation (NCDC) in collaboration with the Union Ministry of Cooperation.
  • The conclave is aimed at discussing ways to strengthen Primary Agricultural Credit Societies (PACS) through Farmer Producer Organisations (FPOs).
About Primary Agricultural Credit Societies (PACS):
  • PACS are village-level cooperative credit societies.
  •  They serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
  • The PACS have around 13 crore farmers who are primarily engaged in short-term credit and distribution of seeds, fertilisers, etc.
Functioning of PACS:
  • Credit from the SCBs is transferred to the District Central Cooperative Banks, or DCCBs, that operate at the district level.
  • The DCCBs work with PACS, which deal directly with farmers.
  • Since these are cooperative bodies, individual farmers are members of the PACS, and office-bearers are elected from within them.
  • Political Influence: Political compulsions often trump financial discipline, and the recovery of loans is hit.
  • Limited Spread in North-East: Though geographically active PACS cover about 90% of 5.8 villages, there are parts of the country, especially in the north-east, where this coverage is very low.
  • Inadequate Resources: The resources of the PACS are much too inadequate in relation to the short-and medium-term credit needs of the rural economy.
  • Last Mile Connectivity: They offer last mile connectivity to farmers in disbursing credit.
  • Hassle Free Loans: PACS have the capacity to extend credit with minimal paperwork within a short time.
Additional Information: About Farmers Producer Organisation (FPO)
  • It is one type of Producer Organisation where the members are farmers.
  • Small Farmers’ Agribusiness Consortium (SFAC) is providing support for promotion of FPOs.
  • Objective: To form the FPOs is to enhance production, productivity and profitability of agriculturists, especially small farmers in the country.
  • Functions:
    • The FPO will provide loans for crops, livestock, machines, purchase of tractors, pump sets, construction of wells, laying of pipelines, sheds etc
    • FPOs will liaison the linkages with financial institutions, producers, processors, traders and consumers.
 News Source: PIB

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