MEANING OF AGRICULTURAL CREDIT, AGRICULTURAL SUBSIDY AND INTEREST
Agricultural credits are loans obtained by the farmers to start or to expand his farming business. It is repayable over a period of time with some interest as determined by the source of the credit.
Agricultural subsidy refers to a non-refundable aid granted to a farmer. Agricultural credits are loans. Examples include reduction in the prices of inputs such as fertilizers, imp roved seeds and chemicals, free information such as weather forecast, new technology and market sources.
Interest is the amount paid on borrowed capital or an amount earned above the cost of goods. Interest is usually paid on borrowed capital which usually comes along with loans for example, if a farmer borrows N500,000.00 from a bank and the interest on the loan is 10%, it means the amount he will pay as interest is 350,000.00 per annum, i.e.
10/100 X 500,000/1 = N50,000.00
When the farmer is paying back the loan with the interest, the total amount he will pay to the bank is N550, 000
Agricultural credits are loans
DIFFERENCES BETWEEN SUBSIDY AND CREDIT
Credit is a repayable loan It is a non-repayable loan
Credit is always in cash land It may be in cash or in
It includes bank loans, schemes and cooperative It includes reduction in prices of input credit like chemicals, seeds and fertilizers
It has a time period for its return It is given and never to be returned
Government does not bear part of the burden of a loan Government bears part of the burden of a subsidy
Agricultural credits are loans
PROBLEMS FARMERS MAY ENCOUNTER FROM SOME CREDIT SOURCES
(1) Commercial Banks
(i) They are usually biased in favour of large scale farmers only.
(ii) They demand collateral which farmers cannot provide.
(iii) There is the problem of relatively high interest rate.
Agricultural credits are loans
(2) Community Banks
(i) The amount of credit is usually small and inadequate to meet the needs of farmers
(ii) They insist on a would be lender coming to open account with them before loans are given.
(3) Money Lenders
(i) They are usually biased towards enterprises that bring in quick return to repay the loan.
(ii) Their interest rates are too high to allow for an appreciable input from the farm business.
(4) Family Sources
(i) The use of loan is usually small and inadequate
(ii) They usually insist on short-term credit.
IMPLICATIONS OF FARM CREDITS OR PROBLEMS MILITATING AGAINST FARMERS IN SECURING LOANS
The procurement of loans or credits for farming activities is associated with some implications. In other words, farmers find it difficult to get loans from banks because of the following reasons: Agricultural credits are loans
interest rate is the rate at which farmers can borrow money from bank, i.e the amount of interest a farmer will have to pay on the money borrowed. High interest rate discourages borrowing while low interest rate encourages borrowing. Therefore, a farmers cannot borrow when the interest rate is too high. Agricultural credits are loans
This is what the banks and other financial institutions will want a borrower to present before a loan can be given. Such securities are landed property and buildings. Most farmers do not have these securities and therefore, cannot borrow money. Agricultural credits are loans
Long gestation period of some crops:
Some crops like rubber, cocoa and oil palm take a very long time to mature. Banks, therefore, find it very difficult to grant loan to farmers engaged in the cultivation of such crops. Agricultural credits are loans
Unpredictable climate which can lead to crop failure:
agricultural activities in Nigeria depend naturally on rainfall. A good rainfall encourages productivity but lack of rainfall is a doom to farming activities. Banks, therefore, are always afraid to lend money to farmers because unfavourable climate can lead to crop failure. Agricultural credits are loans
Lack of farm records:
Farmers lack good farm records of all their activities which can be used to assess their credit worthiness.
High level of loan defaulters:
Farmers may not be able to repay the principal, let alone the interest charged, in case of natural disaster.
Lack of insurance policy:
Farmers do not take insurance policy on their farms.
Lack of moratorium:
Banks do not give moratorium or deferent of payment of loans to farmers. Agricultural credits are loans.
Land tenure system:
The prevalent land tenure system works against procurement of agricultural loans.
Agricultural credits are loans
Small farm holdings:
Farm holdings are too small and uneconomical to operate for mechanization and profit.
Lack of awareness:
As a result of high level of illiteracy among farmers, they are hardly aware of the existence of loan facilities in banks. Agricultural credits are loans
bureaucracy (red tapism) which is normally involved in the procurement of loan does lead to non-disbursement of loans to farmers.
PROBLEMS MILITATING AGAINST BANKS AND ORGANIZATIONS IN GRANTING LOANS TO FARMERS
i. Inadequate arm records and account: majority of the farmers do not keep accurate records and account of their farming business and this make it difficult for banks to ascertain the profitability of the farming business.
ii. Uncertainties in farming business: These are lots of uncertainties in the operation of agricultural business as profit may not be easily determine by the bankers.
iii. Unpredictable weather: The weather condition may be unpredictable as this may affect the outcome of harvest. Banks are always afraid to put their money in farming business.
iv. Problems of diseases and pests: Banks are always afraid to put their money in agriculture as pests and diseases may affect crops and livestock which may erode or reduce the harvest from such business.
v. Low level of education by farmers: Majority of the farmers are illiterate and this may result in farming failure due to the inability of the farmers to properly utilize the loan given to them by the bank.
vi. Diversion of loan for other purposes: Most farmers due divert their loans for other purposes because the banks may not be able to monitor the utilization of such loans.
vii. Inadequate technical know-how by the bankers: Majority of the bank of some farming business. The bank accountant for example know notting about poultry farming and may find it difficult to grant loan to farmers.
viii. Long gestation period of some crops: Some crops like cocoa and oil palm take a very long time to mature. Banks therefore find it very difficult to grant loan to farmers.
HERE YOU WILL FIND EVERY AVAILABLE TOPICS ABOUT AGRICULTURAL SCIENCE AND BIOLOGY. AND THE LINKS TO THEIR VARIOUS SOURCES.
1. ENVIRONMENTAL FACTORS AFFECTING AGRICULTURAL PRODUCTION
3. 52. SOIL MICRO-ORGANISMS
4. ORGANIC MANURING
5. FARM YARD MANURE
8. CROP ROTATION
9. GRAZING AND OVER GRAZING
10. IRRIGATION AND DRAINAGE
11. IRRIGATION SYSTEMS
12. ORGANIC MANURING
13. FARM YARD MANURE
16. CROP ROTATION
17. GRAZING AND OVER GRAZING
18. IRRIGATION AND DRAINAGE
19. IRRIGATION SYSTEMS
21. MILKING MACHINE
22. SIMPLE FARM TOOLS
23. AGRICULTURAL MECHANIZATION
24. THE CONCEPT OF MECHANIZATION
25. PROBLEMS OF MECHANIZATION
26. SURVEYING AND PLANNING OF FARMSTEAD
27. IMPORTANCE OF FARM SURVEY
28. SURVEY EQUIPMENT
29. PRINCIPLES OF FARM OUTLAY
30. SUMMARY OF FARM SURVEYING
31. CROP HUSBANDRY PRACTICES
32. PESTS AND DISEASE OF MAIZE- ZEA MAYS
33. CULTIVATION OF MAIZE CROP
34. OIL PALM
35. USES OF PALM OIL
36. MAINTENANCE OF PALM PLANTATION
39. PROCESSES IN COCOA CULTIVATION
HOLING AND LINING
41. LAND PREPARATION FOR YAM
42. DEPT OF PLANTING
43. SPACING OF YAM
44. PLANTING DEPT OF YAM
45. STORAGE OF YAM
46. STAKING OF YAM
47. HARVESTING OF YAM
49. FORAGE CROP AND PASTURE
50. FORAGE GRASSES
53. TYPES OF PASTURE
COMMON GRASSES AND LEGUMES
56. ESTABLISHMENT OF PASTURES
57. 201. FORAGE PRESERVATION
58. HAY SILAGE
59. FORESTRY IMPORTANCE OF FORESTRY 206. FOREST MANAGEMENT FOREST REGULATION DEFORESTATION AFFORESTATION
60. DISEASES AND PESTS OF CROPS
61. MAIZE SMUT
62. RICE BLAST
63. MAIZE RUST
64. LEAF SPOT OF GROUNDNUT
65. COW-PEA MOSAIC
66. COCOA BLACK POD DISEASE
68. CASSAVA BACTERIA BLIGHT
69. BLACK ARM BACTERIA BLIGHT OF COTTON
70. TOMATO ROOT KNOT
71. DAMPING-OFF OF TOMATO
72. ONION DOWNY MILDEW
73. STORED PRODUCE MOULD
74. PESTS OF CROPS
75. STEM BORERS
76. ARMY WORM
77. COCOA MIRIDS(CAPSIDS)
79. WHITE FLY SEED BUGS
80. CASSAVA CULTIVATION
81. CASSAVA MEALYBUGS
82. VARIEGATED GRASSHOPPER
83. GREEN SPIDER MITE
84. COTTON STAINER
86. PESTS OF VEGETABLES
89. LEAF ROLLER
90. BEAN BEETLE
91. RICE WEEVILS
92. . PROBLEMS WITH PESTS CONTROL
93. CROP IMPROVEMENT
94. PROCESS OF CROP IMPROVEMENT METHODS OF CROP IMPROVEMENT
95. HYBRIDIZATION OF CROPS
96. ANIMAL PRODUCTION
97. THE DIGESTIVE SYSTEM OF ANIMALS
98. THE LARGE AND SMALL INTESTINE
99. RUMINANT ANIMALS
100. THE NERVOUS SYSTEM
101. THE NEURONS
102. A SYNAPSE ACTION IMPULSE REFLEX ACTION VOLUNTARY ACTION
103. THE CENTRAL NERVOUS SYSTEM
104. PERIPHERAL NERVOUS SYSTEM
105. THE REPRODUCTIVE SYSTEM MALE AND FEMALE REPRODUCTIVE SYSTEM
106. REPRODUCTIVE SYSTEM OF BIRDS
107. THE CIRCULATORY SYSTEM
108. THE PULMONARY CIRCULATION
109. THE HEART
110. THE RESPIRATORY SYSTEM
111. THE TRACHEA INSPIRATION THE EXPIRATION THE DIAPHRAGM
112. HEAT PERIODS OESTROUS CYCLE
115. MAMMARY GLAND
117. EGG FORMATION IN POULTRY
118. LIVESTOCK MANAGEMENT
119. MANAGEMENT OF GOATS
120. REPRODUCTION IN GOAT
122. POULTRY MANAGEMENT
123. BATTERY CAGE SYSTEM
124. INTENSIVE SYSTEM
125. . SEMI-INTENSIVE EXTENSIVE SYSTEM
PROODING AND REARING IN POULTRY
126. POULTRY SANITATION
127. ANIMAL NUTRITION
131. NUTRIENT SOURCES AND FUNCTIONS
133. PROTEIN FATS
136. FEEDING MECHANISMS IN HOLOZOIC ORGANISMS
137. TYPES OF DIETS
138. FATTENING OR FINISHING DIETS
139. LAYER DIETS
140. BALANCED DIETS
141. LACTATION DIETS
143. DISEASE, CAUSES, SYMPTOM CORRECTION
144. RANGE MANAGEMENT AND IMPROVEMENT
145. LIVESTOCK DISEASES
146. VIRAL DISEASES
147. RINDER PESTS
148. NEWCASTLE DISEASE
149. BACTERIA DISEASES
153. FUNGAL DISEASES
154. PROTOZOAN DISEASES
157. RED WATER FEVER(PIROPLASMOSIS)
158. ENDO PARASITES
159. TAPE WORM
160. ROUND WORM OF PIGS
161. LIVER FLUKE
162. ECTO PARASITES