Theory question 110
Agricultural Finance(a) Briefly explain (i) agricultural finance; (ii) agricultural credit.
(b) Explain four significance of agricultural finance.
(c) Mention one problem farmers encounter in obtaining credits from the following credit sources: (i) commercial banks; (ii) community banks; (iii) money lenders; (iv) family sources.
Show the model answer
(a)(i) Agricultural finance: the study of how money/capital for farming is obtained, managed and used
(ii) Agricultural credit: money or inputs lent to farmers to be repaid later, usually with interest
(b) Any four: enables purchase of inputs and machinery; expansion of farm size; adoption of new technology; payment of labour; meeting emergencies; improved efficiency and income; acquisition of land
(c)(i) Commercial banks: demand collateral and charge high interest; long procedures
(ii) Community banks: small amounts available, short repayment period
(iii) Money lenders: very high interest rates, exploitation
(iv) Family sources: small amounts, may cause family quarrels if not repaid
One problem for each source.