Question :
Agriculture marketing companies grant zero-interest loans to farmers on the condition of marketing their produce. However, they charge up to 5% of the farmer`s profit. What is the ruling of Sharia on this?
The Answer :
All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.
When the agriculture marketing companies stipulate marketing the produce of the farmers in return for granting loans to the latter, this undoubtedly yields benefit to these companies (Lender). However, it is established in Sharia that it isn`t permissible for the lender to receive any material benefit from the loan it grants to the borrower. In fact, Muslims jurists have adopted the Sharia maxim, which states: "Any loan which results in a benefit is considered a form of usury." Al-Imam al-Ramli said: "Amongst the forms of usury is that of the loan where a benefit is stipulated for the lender." {Nehayat Al-Mohtaj, Vol.3:424}.
In conclusion, it isn`t permissible for the marketing company to lend farmers and stipulate marketing their produce in return for a commission, even if the loan is zero-interest, since this is a form of usury. Jabir said that God's Messenger cursed the one who accepted usury, the one who paid it, the one who recorded it, and the two witnesses to it, saying they were alike. {Transmitted by Muslim}. And Allah the Almighty knows best.
