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AGRICULTURAL FINANCE - AGRICULTURAL CREDIT
CONTENT- Meaning of Agricultural Credit
- Classification or Types of Agricultural Credits
- Differences between Agricultural Credits and Subsidies
- Problems Faced by Farmers in Procuring Agricultural Credits
- Problems Faced by Institutions in Granting Loans to Farmers
Meaning of Agricultural Credit
Credits are loans obtained by a farmer to start or expand his farming business. It may be in kind or cash. Credits are payable over a period of time with some interest determined by the source of the credits. Before credit is given out to a farmer, the lender needs detailed information about the borrower. Certain vital statistics are usually provided, such as;- Reliability of the citizen
- The intended purpose
- The plan for the proposed projects (feasibility Studies)
- The ability of the farmer to execute the project successfully
- Collateral Security in form of
- Landed property (stationed in good site)
- Stocks and shares
- Life assurance policy
Classification or Types of Agricultural Credits
Classification of Agricultural Credits based on Length or Period of Credit
There are three types or classes of credits given to the farmers. They are based on length or period namely:- Short term credits
- Medium term credits
- Long term credits
Short Term Credit
This is a productive credit which the borrower is expected to refund in a year or less. It may be used to purchase livestock feeds, fertilizers, seeds, or to pay for hired labour. They are used to produce crops such as grains and cereals and animals that mature within short period such as broilers in poultry.You are viewing an excerpt of this lesson. Subscribing to the subject will give you access to the following:
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