Organic Farming NABARD Subsidy, Loan, Schemes

Organic Farming NABARD Subsidy and, Loans, Schemes

Today, let us discuss Organic Farming NABARD Subsidy, Bank Loan Schemes.

Organic farming is a form of agricultural system which involves the production of both crops and livestock without the use of pesticides or fertilizers. This method has been designed to save the ecosystem, increase the fertility of the soil, and prevent damage to the health of the people. This method of farming completely avoids the use of chemical fertilizers and depends upon the crop rotation, manures produced from animal and crop wastes, biofertilizers, etc. Organic farming will increase the productivity of the farm and repairs the soil from the damage caused due to the use of fertilizers.

Principles of Organic farming:

  • Organic farming strives for the protection of the environment by reducing soil erosion and pollution and by increasing the productivity and the health of the crops as well as mankind.
  • It helps in the maintenance of the fertility of the soil for a long time, which thereby increases the biological activities of the soil.
  • It would help in the maintenance of diversity among the biological aspects within the farm.
  • Organic farming includes the recycling of the resources to the maximum.
  • It provides ultimate care to the crop which thereby increases the health of the crops and also the needs of the livestock would be met.
  • Organic products can be prepared with proper processing and handling in order to maintain integrity among different products in all stages of the production
  • Organic farming completely depends on the renewable sources in the agricultural systems which are set up locally.
Principles of Organic Farming.
Principles of Organic Farming.

Advantages of Organic farming:

  • The cost of production for the farmers will be greatly reduced as there would be no use of chemical fertilizers and pesticides which are expensive.
  • The fertility of the soil increases.
  • The organic farm will save energy in the long run which would eventually help the environment.
  • Global warming will be reduced with the increased organic farming across the globe.
  • There would be very less residual content in food.
  • The livestock can also be a part of organic farming, which makes the farm use all the natural fertilizers in the form of cow dung, wastes produced by livestock, etc. This will help in the promotion of biodiversity.
  • Groundwater pollution will be reduced.

Read this: Organic Dairy Farming.

Disadvantages of organic farming:

  • The food which is grown by using organic farming is very costly when compared to the food produced by conventional methods. The cost would be 50% more than the conventional ones.
  • There would be a requirement of more number of workers in organic farming which increases the cost of production in the form of labour.
  • As the organic crops are produced in fewer amounts, the marketing will be inefficient.
  • The food may have illness frequently.
  • The food which is produced by organic farming is only upt0 3% of the world population and hence people should starve if they completely depend on the food which is produced organically.
Organic Strawberry Cultivation.
Organic Strawberry Cultivation.

Capital investment subsidy scheme:

As there is a lot of pollution caused to the environment by the increased use of chemical fertilizers, there is a lot of damage occurring in soil and even to the health of the people. Hence, the need of the crops which are produced organically has increased. The awareness of organic farming and the benefits of organic farming to the world made mankind interested in following it. Organic farming is a type of agriculture, which needs inputs which are organic and if the making or production of biofertilizers increases, there would be a lot of changes seen.

There is a subsidy scheme for capital investment which is used for units which involve the commercial production of organic crops or inputs. This is being implemented by the Department of Agriculture and Cooperation by The National Centre of organic farming. NCOF is associated with NABARD to implement it.

Read this: Kadaknath Farming Guide.

The main objectives of this scheme are:

  • The promotion of organic farming in the nation by increasing the availability of inputs which are organic so that the production of crops increases.
  • Improvement of the productivity of crops by keeping in mind the health of the soil and the environmental conditions.
  • Reduction of the usage of chemical fertilizers by improving the quality if bio-fertilizers and making them available in wide range.
  • Conversion of wastes which are organic into nutrient resources for plants.
  • Prevention of environmental pollution by using and converting organic waste properly.

Entities which are eligible for the Subsidy

  • Expansion or renovation of the new units or existing units which are already present in the production of the bio-fertilizers has eligibility for this subsidy.
  • Anyone who is in the production of bio-fertilizers or pesticides are eligible for the subsidy. That is, an individual, industry related to fertilizers, corporations, NGOs, Farmers group etc.
  • Even the Municipalities, NGOs can be able to avail the subsidy if they are the units which produce the waste compost from fruits or vegetables.

Location and cost of the project:

  • There are no terms and conditions for the location of the project under this scheme. The farmer or the owner can set up the farm at any location which is feasible to him and also advantageous commercially.
  • The cost which is estimated for the establishment of a production unit for the production of biofertilizers or pesticides which has the capacity of 250 tonnes per year is about 200 lakhs.
  • The cost which is estimated for the establishment of a production unit which produces 150 tonnes of waste compost from fruits and vegetables will be 300 lakhs.
  • The estimated costs are just the indications but the actual costs will be completely dependent on the capacity of the farm, location of the farm, the equipment and their total cost etc.

Read this: Organic Poultry Farming.

The component and release of subsidy:

  • This scheme will be providing the subsidy which is linked with the credit. The units which produce biofertilizers and biopesticides will get a capital subsidy of about 25% of the total cost of the project. This would generally be up to 45 lakhs to the maximum for each unit.
  • The units which produce the composts from fruits and vegetables will be getting a capital subsidy of up to 35% of the total cost of the project. This would be to a maximum of 65 lakhs for each production unit.
  • The cost of the project will include the cost of the land which is purchased, regulation works, machinery purchase etc.
  • The cost of the land should only be up to 5% to 10% of the total cost of the project.
  • The cost of the buildings should not be more than 45% of the complete cost of the project.
  • The land cost which is a part of the total cost of the project can be included in the calculation of the margin amount needed to be met by the establishment.
  • The land cost will be calculated in the cost of the project when the land is bought up by the establishment.
  • The land which is used for the project will only be considered for the availing of the subsidy.
  • NABARD takes the responsibility of releasing the subsidy to the financial units like Regional rural banks, commercial banks, etc. These should be eligible for the refinance in order to get the subsidy released from NABARD.
  • The release of subsidy from NABARD will be taking place in two instalments. Half of the amount will be given to the bank when the profile of the project is submitted and the transfer of the loan is done. The other half amount will be released after conducting the inspection and as per the feedback is given by the official who has done the inspection.
  • Then the subsidy released will be kept with the bank in a reserve fund account of the subsidy so that it can be adjusted with the amount of loan at the time of repayment.

Repayment tenure:

  • The time period for the completion of the project will be up to 1 year and 3 months. If the project is not completed by then, there would be an extension for up to 3 months if the farmer or the owner justifies the cause of the delay.
  • Even after the grace period, if the project is not completed, then the subsidy benefits will be taken back and the subsidy amount which has been given an advance should be refunded.
  • The repayment time would be up to 12 years for the production units which produce bio-fertilizers, bio-pesticides, fruit, and vegetable composts. The grace period for the same would be up to 3 years. The interest rate will be as per the norms of the banks.

Bank loans for Organic farming:

State bank of India:

Purpose of loan:

  • To help the farmer move from conventional farming to the organic one by getting approval from the agencies which give organic certifications.
  • To credit the investment required for the design of the farm and manage it for two years.
  • The assessment of the financial limit will be done for the production and the organic inputs will be induced.
  • The expenses for training the farmer with organic things will be taken care.


  • The farmers which have a minimum of 5 acres of land which is irrigated and 8 acres of land which is rainfed are eligible for the loan.
  • The farmers which have registered themselves for certification in organic farming will also be considered as eligible candidates for the loan and they would be eligible after the registration. gets complete.

Loan details:

  • The loan amount will be for a minimum of 3 years.
  • The loan amount of about 1 lakh will be sanctioned by the bank to the farmers which have a minimum of 5 acres of land which is irrigated and 8 acres of land which is rain-fed.
  • The amount of 1 lakh will include Rs. 40,000/- for the organic inputs and then the remaining Rs.60, 000/- will be for the purpose of training.
  • The subsidy will contribute 20% of the loan and the remaining 80% will be sanctioned by the bank. Once the subsidy is approved, the bank will cut the subsidy amount from the loan which has to be repaid.
  • The loan can be repaid in 9 years with an extension of 3 years if the farmer is unable to pay. In those 3 years, the amount should be paid for every six months.

In case if you are interested in this: How To Grow Organic Lettuce.



  1. Hello mr Raddy, I am interested in these schemes of biofert production, kindly guide me in setting up unit and subsidy related info

  2. Hello is it compulsory to 5 acres of land for sanctioning loans…and what will be the procedure to start a organic farming and if land is already owned so what will be the procedure

  3. Can a non farmer start this organic farming..
    If yes… then how ?
    What is the capital investment required..
    How much subsidy govt provides?
    Can you plz help me.

  4. dear sir i am interested for organic plants farming like Tulsi/ Alovera in 2/3 hectors of land. i need your guidance to set up the unit and also subsidy related information.


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