AGRICULTURAL FINANCE AND CREDIT

MEANING OF AGRICULTURAL FINANCE AND CREDIT

Agricultural finance is defined as the act of acquisition and use of capital in agriculture. In other words, it deals with the supply of and demand for funds in the agricultural sector of the economy.

IMPORTANCE OF AGRICULTURAL FINANCE

(i) It enables farmers to meet seasonal and annual fluctuations in income and expenditure.
(ii) It enables farmers to adjust to changing economic conditions
(iii) It also increases the efficiency of the farmers.

(iv) It enables the farmers to increase the size of his farm.
(v) It helps to protect against adverse conditions on the farm
(vi) It enables farmers to acquire more farm inputs for increased production.

SOURCES OF FARM FINANCE

Farmers can get credit or loan to finance their farming business through any of the following sources:

(1)

Agricultural bank

Agricultural bank such as the Nigeria Agricultural and Cooperative Bank (N.A.C.B) was established in 1973 to grant loans to all potential farmers. Only farmers can borrow money from the bank, hence it is called the “Farmers Bank”.

meaning of economics
concept of economics and scale of preference

Commercial Bank

Commercial banks are major sources of lending to agriculture. Banks like First Bank, U.B.A, Union Bank have agricultural departments where farmers can get loan to carry out their farming activities.

Supervised agricultural credit scheme

This scheme was set up with the purpose of granting loans to farmers. The scheme is supervised by the Central Bank of Nigeria (CBN).

Thrift and saving societies

Members contribute money either daily, weekly or monthly. At the end of an agreed period, the money is paid back to the members which they can use for their farming activities.

Money lenders

These are people who lend out their money to farmers to enable them to produce. However, the money lenders will charge high interest rate and demand security for such loans.
(6)

Cooperative societies

These are the people who come together to pull their resources (money) together to produce. Members can easily get loan from the societies. Apart from this, commercial banks prefer to give loans to cooperative societies than individual farmers.

(8)

Government agencies

Farmers can easily get loans from certain government agencies like the National Directorate for Employment (N.D.E) and Agricultural Development Projects (A.D.P) for their farming activities.

(9)

Self-finance

This refers to the money saved by an individual which can be used to finance his farming activities.

Individual

Farmers can also borrow money from individuals like friends and relatives to finance a project.

(11)

Insurance companies

(12) Insurance companies are important source of credit in Nigeria. They mostly give long-term and immediate loans for the purchase of equipment. They obtain financial resources from policy holders and use excess liquidity to provide credit to farmers.
(13)
(14)

Micro-finance banks

Micro-finance bank is about providing financial services to the poor who are traditionally not served by the conventional financial institutions. Three features distinguished micro-finance from other formal financial products, these are the smallness of loans advanced, the absence of asset-based collateral and simplicity of operation.

(15)

International Development Agencies (IDAs)

IDAs like World Bank, Food and Agricultural Organization (FAO), United Nation Development Agricultural Development (IFAD) also give financial assistance to qualified farmers in Nigeria.

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    public enterprises

    private enterprises

    limited liability companies

    migration

    shares

    population

    money market

    raises funds for expansion

    WEED AND THEIR BOTANICAL NAMES
    1. ENVIRONMENTAL FACTORS AFFECTING AGRICULTURAL PRODUCTION
    2. DISEASES
    3. 52. SOIL MICRO-ORGANISMS
    4. ORGANIC MANURING
    5. FARM YARD MANURE
    6. HUMUGRAZING AND OVER GRAZING
    10. IRRIGATION AND DRAINAGES

    7. COMPOST
    8. CROP ROTATION
    9.
    11. IRRIGATION SYSTEMS
    12. ORGANIC MANURING
    13. FARM YARD MANURE
    14. HUMUS
    15. COMPOST
    16. CROP ROTATION

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