Bayer CropScience’s Indian seed company Proagro Seed Co. Pvt. Ltd. has signed a Memorandum of Understanding with the State Bank of India, one of India’s major banks, to provide seed growers, including cotton seed growers, with access to low-interest-rate credit. This microcredit program helps the seed growers to finance inputs until they can sell the seed to the company.

The cooperation, with the State Bank of India, is one part of Proagro’s comprehensive initiative to eradicate child labor. Growers are able to improve their productivity and profitability which is an incentive to refrain from employing children. The interest rate of the credits granted by the State Bank of India, is about half of the interest rate which is usually paid in the market to private money lenders. In addition to reducing cost of borrowing, the scheme will ensure timely availability of credit so that growers can buy and use the necessary farm inputs without any delay. Though the scheme is primarily aimed at contributing to the eradication of child labor in cotton seed production, it is being extended to all growers who are engaged in the production of corn, rice, sunflower, grain sorghum and pearl millet for Proagro.

Clive Pegg, Managing Director of Proagro, told the Indian newspaper Business Standard which reported extensively on the cooperation with the State Bank of India: "Child labor in cotton seed production is a deep-rooted, socio-economic problem that has developed in the last three decades in this industry. The financial distress of many rural families has contributed a great deal in intensifying this problem. This microcredit program will provide timely and organized financial support and significantly reduce borrowing costs. We believe that this scheme will improve cotton seed growers' profitability and further enable them to discontinue the use of child labor,"

A clear “No Child Labor” strategy

Proagro pursues a clear “no child labor” strategy. As part of the action program to combat child labor, in cotton seed production, the company has concentrated its seed production in the state of Andhra Pradesh to a few selected villages. This has been done to facilitate the monitoring of cotton seed farms by joint inspection teams comprising company staff and NGO members, and ensure grower compliance to the ‘no child labor’ policy.

Proagro has also signed a Memorandum of Understanding with the renowned Naandi Foundation which has a great deal of experience in educational projects. The initiative with Naandi Foundation, named as ‘Revitalizing Education’, is aimed at integrating the child laborers, from cotton seed farms, to the formal mainstream educational system. Naandi has already set up Creative Learning Centers (CLCs), where children, who have had only incomplete education or none at all, can receive suitable preparation for attending school. By December 2005, already 700 children had been enrolled in these centers.

Already 300 children receive preparation for attending school

Another important part of the campaign is a system of incentives and sanctions intended to encourage the growers to implement Proagro’s policy and refrain from employing children. This measure was developed when it became clear that the ban on child labor, specified in the contracts between Proagro and seed growers, was not observed by all farmers. In the new program, for example, growers qualify for a five percent bonus on the purchase price for seeds if monitoring provides evidence that no children have been involved in seed production. If growers violate the ‘no child labor’ rule, they no longer qualify for the bonus and the purchase price is lowered by ten percent. In the event of particularly serious infringements, contracts can be terminated and seed may be rejected. Regular check-up visits to Proagro’s fields, over the past six months, revealed a continual decline in the number of children among the field workers.

This very encouraging trend shows that Proagro’s measures are effective. Proagro plans to systematically continue with its action program and intensify its collaborations with co-operation partners.