Theory question 109
Agricultural Finance(a) Explain briefly each of the following types of credit in agricultural production: (i) short term credit (ii) medium term credit (iii) long term credit.
(b)(i) List four sources of agricultural credit. (ii) Explain briefly four reasons why farmers find it difficult to get loans from banks.
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(a)(i) Short-term credit: repaid within about one year; for seeds, fertilizers, wages, feed
(ii) Medium-term credit: repaid in about 1–5 years; for machines, livestock, small buildings, irrigation equipment
(iii) Long-term credit: repaid over more than 5 years; for land, permanent buildings, tree-crop plantations, large projects
(b)(i) Any four: commercial banks; Bank of Agriculture/agricultural development banks; cooperative societies; microfinance banks; government agencies; money lenders; friends and relatives; thrift and savings groups
(ii) Any four: lack of collateral security; high interest rates; illiteracy and complicated procedures; lack of farm records; small farm size/low income; high risk of farming (weather, pests); delays and bureaucracy; poor repayment history
Define each type with its period and an example use.