Lent a sum of money to a farmer who will give him an amount of his product
Fatwa No: 102358

  • Fatwa Date:5-12-2007 - Thul-Qi'dah 26, 1428
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Question

A businessman lend a money to farmer, example 1000, the farmer must pay it 4 sacks out of his products. Is this allowed in Islam. Another is that I have a small rice mill, for 2 months my gross income from this rice mill is about 20,000.00 (this includes fuel and the operators share), and my net income after diducting fuel operators cost is only 12,000.00 My question is that, how do I give zakaah on this, the gross or the net income

Answer

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.

 

If you mean that the businessman gave him this amount of money as a loan on the condition that the farmer would give him those sacks on top of the lent amount, then this loan brought a profit for the creditor–which are those sacks that he conditioned in order to give him the loan.

The scholars  may  Allaah  have  mercy  upon  them agreed that any loan which yields a profit is a loan with Riba (interest and/or usury) and this is forbidden. 

However, if you mean that he gave him that amount on the grounds of buying a described or known product which is not present at the time of the sale contract with an immediate payment, like this item being an amount from a definite produce, then this is permissible in principle with the conditions mentioned in the books of Fiqh.

For more benefit in this regard, please refer to Fatwa 89527.

However, it is not permissible to condition the product to be the produce of a specified piece of land because there is a high risk in such a contract. It might be that this specific piece of land will not produce anything at all, and if it does, it might be that it will not yield the agreed quantity.

As regards Zakat, it should be given on all the profit of that mill when a whole lunar year elapses and if it reaches the Nisaab (i.e. the minimum amount liable for Zakat) by itself or when added to other Zakatable money and cash money, as clarified in Fatwa 90777

As regards the workers salary and other expenditures; if these are a debt on you, then it should be deducted from the money on which you are obliged to pay Zakat, and then you pay the Zakat only on the remaining amount on the condition that you do not possess more than what you need from the other money on which you are not obliged to pay Zakat, like cars, houses and lands, which can be used to pay your debts.

For more benefit, please refer to Fatwa 87557.  

Allaah Knows best.

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