Rescuing The Bondange

(Financial Initiative For Sustainable Human Economic Resource Regeneration)

An Initiative in the fishers’ chain level cooperative marketing:
It is important to note that all members of the fisher community and the palmyra tappers are part of the target group, though there could be significant differences in the economic status of individual families in the same community. However, they can all be considered as part of the target group, since all were affected strongly, irrespective of individual differences in economic status. PAD is also very clear that the project needs to focus on these two communities mainly, and therefore a possible other target group needs to be chosen based on poverty criteria.

A majority of the villages in the target area consist of fisher families. Most of the families do not own boats and nets, but are employed by the few people who own boats and nets. As the work is seasonal, usually 6 months a year, borrowing from the moneylender to tide over the lean season, and for boat / net repairs etc., has become a way of life. Thus, while there are some differences in income levels, most families are indebted to moneylenders/merchants. The few families which are better off are those of the agents of the moneylenders, who get a commission on the fish catch delivered to the moneylender. Even here the difference is marginal, whether in terms of overall income, living standards etc. Some people migrate during the off season, but not as many as among the palmyra tappers. Most people who migrate go to towns for casual labour. A few fishermen have ventured out to distant towns for marketing fish, or as agents for the moneylenders, and these few are more aware of larger marketing opportunities.

A major problem faced by these communities is the exploitation by moneylenders. Almost every family living in these villages has taken loans from moneylenders to meet their daily needs during off-season. There is no formal interest charged on the loans – the agreement is to sell all the catch to the moneylenders, and invariably the price agreed is considerably lower than the local market price, the difference being taken in lieu of interest. The equivalent rate of interest for these loans works out to a very high figure, ranging between 10% to 15% per month.

An important element is that the families themselves do not see the moneylenders as exploiters, but as essential supporters. As is the case with many seasonal products, the fish catch and the palmyra yield vary from year to year, and a sustainable cycle, in terms of being able to repay loans fully and take a fresh loan for cash flow, is 3-5 years. Other than the moneylenders, all finance systems, including the Livelihoods Groups, follow the principle of full repayment of the existing loan before the family becomes eligible for another loan. This means that at least once or twice in 3-4 years the family becomes a “defaulter”, and becomes a bad risk for further loans. This is the fundamental reason for the success of the moneylender, as he understands the multi-year cycle as a feature of the business, and takes the additional risk in giving further loans, charging a net higher rate of interest as the fee for higher risk. It is also important to realize that the moneylender here is more of a trader than just a moneylender, and earns his income from selling the products of the fisher folk and the Palmyra tappers. In this sense he also provides another important service – a regular market channel for the fisher and Palmyra tapper families – for them, whatever they produce is bought, albeit at lower prices. Again, the focus here is risk and uncertainty reduction rather than just the cost and finance. However, the high cost (in terms of price difference) means that often the families can never repay the moneylenders fully, and practically become slaves or bonded labor to the moneylenders for generations.

A significant point to mention is the success PAD has had with men’s groups. In most areas, men's groups for savings have floundered, broken up etc. Remarkably, the Livelihood Groups promoted by PAD have overcome most such difficulties, and are showing satisfactory growth.

This situation was not reached without significant difficulties for the staff. Initially some of the staff members were subject to rude treatment, and in some cases female staff members felt threatened at work. Over time, these issues were handled with the help of the senior management, and in the process norms for appropriate behavior were developed and practiced in most villages.

The groups now can be said to have become “mature”, i.e., most have functioning norms for meetings, savings, loans, discussion on social and other issues etc. In most groups, meetings being conducted, and accounts / minutes maintained, by the group members themselves. As stated, many groups have taken loans from banks, and repaying them in time. Many members have used these loans to repay traditional moneylenders. This has enabled them to auction their catch directly, earning higher incomes.

As a special case 57 new boats were distributed on a joint ownership basis to 342 fishing families. These families were organized as an informal cooperation since they had no stake with the merchants/moneylenders. They appointed one person per village to take care of auctioning and marketing the catches directly to the companies. Though the boats were given free of cost, the groups have decided to repay the cost of the boat and help other poor fishers in the community to free themselves from the clutches of the moneylenders and merchants. The Village Development Committees along with the beneficiaries worked out the mechanism without forgetting the role of the moneylenders and merchants. They are providing the safety nets to the poor fishers and palmyrah tappers. Thus, in the system they have incorporated the safety net component or the role of the moneylenders and merchants. A common saving was established to be accessed during the emergency period. The informal cooperation is not only catering to their own members but also the new deserving fishers. They have included 62 boats rescued from the clutches of the moneylenders/merchants after clearing their informal loans supported by the FISHERR, from the repayment and common savings and formal loan linkage with the bank. It worked out very well. The repayment norms are as follows:

• 15% towards the repayment

• 5% towards common savings for emergency purposes

• 5% towards the administration

This experiment has worked out very well, and PAD hopes to replicate the same in all villages, as far as possible.

According to Mr. Muthukumar of Vembar village ‘ Fisherr varuvathurkku Nangalam parambaraiya kadanaliyakthan irunthom. Ithuthan engalai kappatrritu. Fisherrkku munadi nan Rs. 3000 sambarithen anal ippoluthu nan Rs. 7000 mathathirukku sambarikiran.” - “Before forming FISHERR we are all under indebtness. FISHERR only saved us. Before FISHERR I was earning Rs. 3000 per month but now Rs. 7000 per month.”