Many PACS Programme partners have brought in greater food security and helped break this vicious debt cycle by creating village grain banks.

In Madhya Pradesh’s Betul district, Rural Environment and Community Health Awareness (RECHA) and its partner CSOs Pragati Gramin Vikas Sanstha, Gramin Vikas Sanstha and Sarwajanik Mahila Evam Bal Kalyan Samiti helped set up grain banks in 2001, after discussions and consultations with villagers. The project encompasses 30 villages, covering a little over 700 households, of which 618 households belong to the poorest section of the village.

Self-help groups of women, farmers and youth buy grain from farmers in the village, sell as much as is required to recover their cost, and put the rest into a grain and seed bank (anna kosh). The grain and seeds are then loaned to people who need them. There is also a gram kosh for cash contributions and loans.

Meeting a need

The grain bank fulfils a number of requirements:

• It provides immediate access to food during emergencies.
• It reduces or eliminates borrowing from moneylenders who lend at exorbitant rates of interest.
• It provides access to grain markets in case of a surplus.
• It reduces dependence on government-supplied grain.

For Koili Bai of Pipaldhana village in Betul district, it’s a huge relief in times of need to “just walk over” to the house of the chairperson of the grain bank committee and ask for some grain. Though the chairperson may have to consult with other committee members, in emergencies he is authorised to give grain to anyone asking for it. Says Koili Bai: “It takes me only a few minutes to come back home with a handful of grain for my family. This is very important for me.”

“The sahukars (moneylenders) and traders have stopped ripping us off in the name of interests and prices. Whether it is foodgrain or money, we are much better off now,” says 33-year-old Omkar Uike of Tadar village, Chicholi janpad panchayat, Betul district, where a grain bank started operating in December 2006. Ninety per cent of the 113 families in Tadar, most of them belonging to scheduled tribes, are linked to the grain bank. Eighty-eight of these families are on the BPL (below the poverty line) list.

Many moneylenders demand collateral, which often takes the form of human labour. Savitri of Pipaldhana had to give her son as collateral to the sahukar; the boy did the domestic chores or worked in the fields as ordered. This meant he couldn’t go to school or help out in his own home. “Now we can think about a better future for our children,” says Savitri.

The grain bank system also cuts down on the number of people who migrate in lean times in search of a livelihood. Says 24-year-old Shanta Bai of Pipaldhana village, where most people belong to the Gond tribe and migrate to the nearby town of Halda, 100 km away: “With the grain banks in our village, at least now there will be one shoulder that can bear the burden of the household and stay back, while the other person can migrate for work. We know that our family back home will at least not starve.”

How grain banks work

The basis of the grain bank scheme is that it should be locally controlled and managed, and built on a high level of community involvement. The plan for running grain banks evolved from village communities; each village community has developed its own unique, independent and self-reliant system of managing grain banks.

The pattern of loan varies widely: in some villages only members have access to the grain bank, in others the entire village can borrow. In some, members pay less interest than non-members, while in others payment is the same for all.

In almost all villages, the borrower has to return the grain in kind, with the interest also in kind, in many cases, in order to ensure that the corpus is intact.

It is mandatory that women make up 50% of every grain bank committee. Usually, the grain bank committee has five men and five women.

In Pipaldhana, each family in the village donates two pai (1 pai = 16 kg) of grain and Rs 2 per family every six months to the grain bank. Any surplus is sold in the open market.

Group members decide on a viable system for adding to or withdrawing grain in a grain bank scheme, with interest rate payments allowing a gradual accumulation of capital within the grain bank. Many grain banks are happy accepting payment in cash or kind, so long as they come in on time.

RECHA’s intervention took the form of maintaining registers for record-keeping, training management committee members, and establishing transparency measures. Systems to ensure returns were guaranteed by the participation of village committee members who played the role of conscience keepers.

It is important that villagers understand the scheme thoroughly. Says Pramod Naik of Pragati Gramin Vikas Sanstha: “Since the idea was floated by us in consultation and dialogue with the villagers, and because we also held extensive discussions with the women, the people focused on developing a do-able and simple system of managing the grain banks that was participatory and practical. The plan for running these grain banks evolved from village communities, and each village community has developed its own system.”

In Gochi village, block and district Betul, a small group of 20 women has now grown to 50 women and three men. It collects Rs 1-2 every month from members and one pai (8 kg) of foodgrain every six months (or 4 kg soyabean during the soya season).

Says Phoolwati Bai, secretary of the Gochi kosh: “At first, women did not understand the concept of a grain bank. They thought it was another savings scheme for which they anyway did not have money. Then we held a number of meetings with both men and women of the village and took out rallies.”

Tadar village has a 10-member samiti, and each member contributes two pais of grain to the grain bank twice a year, and Rs 5 per month for the gramkosh. The monetary contribution has stopped recently because people don’t have the money. There is an ongoing debate about whether the contribution should be decreased. The samiti members are confident, though, that they will be able to raise cash for the gram kosh by selling surplus grain in the market. Also, once the harvest is ready for sale, all the loans will be repaid and the anna kosh and gram kosh will be replenished.

To give an idea of the numbers, in 10 villages in block Bhimpur, district Betul, with a population of 6,402, the quantity of grain stored is 39.68 quintals, and the amount in cash is Rs 11,889.

 Distribution

In the initial stages, the quantity of grain stored is often less than the amount required by individual families for different contingencies. The community then meets to take a collective decision regarding distribution. Each individual family gets an equal share of grain. In the later stages, when the villages have built up surpluses, the latter can either be sold for cash, or distributed in the village itself to prevent it from getting spoilt.

The village can also decide to distribute foodgrain and money to families in an emergency. When a house in Pipaldhana caught fire and was burnt to the ground, the family lost everything including its stock of foodgrain. The village supported the family by loaning it grain and money to help in the rebuilding process. Says Shakuntala Bai of Pipaldhana: “Because we see it happening to others, we realise it could also happen to us. And what a boon the anna kosh is to all of us in times of need.”

 Tribal communities grow a wide range of millet. The most preferred is wheat and ragi (finger millet). However, not all families are able to produce wheat or ragi every year, due to compulsions of land, rain, crop rotation patterns, etc. For those who cannot supply wheat, ragi or soya, the community works out the market value for the other grain in relation to these, and the decided quantity is then deposited in the bank.

Traditional methods of storage were revived, such as elongated cubical or cylindrical mud or dung structures on a hollow platform of about one foot and towering to a height of five or six feet. The structures are cool and can store grain for months. The dung is known to act as a natural insecticide and pesticide. In the event of worm infestations, the whole lot is taken out, dried in the sun and re-stored.

Each village decides who should be included and who should be excluded from the grain bank. If the village is small, with less than 50 families, then all the different communities share the same grain bank. A large village with different communities could have grain banks maintained separately by each community.

 Systems of transparency and accountability are built in by ensuring that there is a collective decision on the use of the grain. Selection of the grain bank committee, as also the person/s in whose house the grain will be stored, is done through the participation of the entire village. Effective control is exercised by women’s membership in the community; women are much keener than men in ensuring democratic sharing, and in checking default.

Interest rates

Interest rates are decided by the community for both grain and money borrowed, and are much lower than the interest normally charged by moneylenders. Phool Chand of Pipaldhana village says he will give back 10 kg of wheat for the 8 kg he borrowed, and also pay Rs 2 as interest for every Rs 100 he borrowed. The moneylender would have demanded 12 kg of wheat for 8 kg borrowed, and Rs 20 as interest for every Rs 100. “I also get the wheat when I need it, and not days after my family has starved,” he says.

After three or four years the grain banks should be able to build up a surplus. When that happens, interest rates could be slashed as grain stored for too long in the bank will deteriorate in quality. Interest is usually waived or brought down when the village has not had a very good harvest, again by consensus.

Some difficulties

While the rate of interest helps the banks grow fast in terms of membership, it creates a different set of problems. People are sometimes unable to return the money they borrow and, instead, opt to repay it in terms of foodgrain. This leaves the grain bank with too much foodgrain and very little cash liquidity. Money is, after all, equally important, for it is money in times of emergencies like deliveries and illness that helps save lives.

There are, however, only a few defaulters. Says Umen of Pipaldhana: “All those who borrow from the grain bank return the grain or money of their own accord. We have never had to go from house to house asking members to return money or foodgrain. Everyone knows their contribution could help someone like them in distress, so no one takes returning their share lightly.”

The defaulters are, not surprisingly, from amongst the poorest families in the village who are just not in a position to return borrowed foodgrain, either because they do not have any grain to spare or because they have had a bad harvest.

The community decides on each individual case. Often, it is decided to make a special concession for such families and allow them to just return the capital and waive the interest. In other instances, they are allowed to return the amount the next season, and no additional interest is charged. Sometimes they are allowed to return foodgrain in lieu of the money they have borrowed.

Shulanta Bai borrowed 8 kg of wheat for her family “because we suddenly ran out of wheat”. She had also borrowed Rs 900 for a marriage in the family. “Though I have yet to return the money and the wheat, at least I know I will not be insulted and harassed. And since both the money and the foodgrain will go to my village, I will make sure that I return every pai (penny) I took”.

Munni Bai of Pipaldhana is part of the 10-member Maa Durga self-help group. She borrowed Rs 500 for agriculture-related expenses, and 16 kg of rice for her family. “I have not returned the entire amount, or the grain, but I am confident I will be able to do so this season,” she says. “As the interest is low, I can at least feed my family properly. Earlier, because of the high interest rates of the moneylender, we ate less.”

Looking ahead

Several villages are gradually developing a surplus. A collective decision needs to be taken then as to what is to be done with the surplus: it could be lent to other villages that have not been able to develop a surplus, or part of the grain could be converted into cash. Or it could be stored for seed purposes as the need for seeds at the right time is next only to the need for food.

The women have other schemes in mind. Phullo Bai Sachiv of Gohchi anna kosh says: “We are thinking of opening a shop in the village to sell the surplus grain. There is no source of water in the village, thus little foodgrain is actually produced in the village. So we will sell to our own people on a no-profit-no-loss basis.”

In the villages of Panchi, Takra and Kanari, in panchayat Patakheda, Chicholi janpad panchayat, people are talking of including non-forest timber produce like mahua in the operations of the grain banks.

 (This story is based on inputs provided by Write Solutions, Bhopal)