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.

Concern:

• 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.

Significance:

• 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