Applications for agricultural loans are on hold due to budget issues after being distributed for three years in Kurdistan. The loans ceased in January 2012, and farmers are concerned about the negative impact on their work and on the industry in general.
Salih Mohammed Amin Nabi, a farmer from the Gazna Village northwest of Erbil, says that with the loan he received from the government he raised the productivity at his farms by 90 percent.
"I dug a well for my farm, planted fruit trees, constructed a pool and did many other things," said Nabi in an interview with The Kurdish Globe. "I also know dozens of other people who have received loans and benefited from them substantially."
Mohammed Rahman, a farmer, says, "I decided to apply for a loan to develop my farm like those other farmers who have already done that with loans borrowed from government." He applied for the loan four months ago but has yet to receive an answer.
Adil Mawlood Mama, director of Erbil's Agricultural Bank, says that applications received during 2012 will not be processed yet, while previous applications will be awarded. "In fact, farmers should have access to finance and loans at all times," argued Mama. "This is especially important now as the time is suitable for numerous farming and agricultural activities such as planting trees and building greenhouses."
Agricultural loans are given for projects such as digging water wells for irrigation, purchasing machinery, buying pesticides and fertilizers, poultry, forestry, greenhouses, livestock, fish farms, bee heaves, electricity grids and storage facilities.
The government also wants to increase the amount of loans from 100 million IQD (approximately US$83,000) to 150 million IQD. And the loan for storage facilities will increase to 500 million IQD. Loan amounts offered by the government are designed to fund up to 70 percent of the initial cost of projects. All changes await budget approval.
The reason this year's loan applications are not being processed is because the region's budget for the year has not yet been approved. Every year the budget law allocates an amount for agricultural funds, but this fund is practically allocated when the budget is approved and the Ministry of Finance transfers the funds to the agricultural banks.
Rashid Tahid, Deputy Minister of Finance, says that the budget will probably be approved within one month, and then all applications will be processed according to regulations and farmers will get their loans.
Peshawa Tofiq, a member of the agriculture and irrigation committee in Kurdistan Parliament, believes that delays in approving a budget is a serious issue and directly harms the economic activities in the region and especially the lives and work of those applying for housing, marriage, industrial and agricultural loans.
"Although the government has established the agricultural fund to support farmers and the agriculture sector, it should also seek a mechanism to ensure that applicants get their loans whenever they apply," explained MP Tofiq in an interview with the Globe.
There are five branches of public agricultural banks in Kurdistan, including Erbil, Shaqlawa, Suleimaniya, Duhok and Garmian branches. According to Mama, at the Erbil branch a total of 44,300,840,000 IQD in loans has been approved, out of which 41,738,176,000 IQD has been disbursed since September 27, 2009.
"During the same period, a total of 9,583,663,250 IQD of those loans was serviced by borrowers," added Mama. "Also, three poultry groups benefited from the fund and borrowed a total of 33,229,098,000 IQD."