MEANING OF AGRICULTURAL FINANCE AND CREDITAgricultural 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 FINANCEFarmers can get credit or loan to finance their farming business through any of the following sources:
Agricultural bankAgricultural 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”.
Commercial BankCommercial 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 schemeThis 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 societiesMembers 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 lendersThese 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.
Cooperative societiesThese 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.
Government agenciesFarmers 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.
Self-financeThis refers to the money saved by an individual which can be used to finance his farming activities.
IndividualFarmers can also borrow money from individuals like friends and relatives to finance a project.
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.
Micro-finance banksMicro-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.
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.
HERE YOU WILL FIND EVERY AVAILABLE TOPICS ABOUT AGRICULTURAL SCIENCE AND BIOLOGY. AND THE LINKS TO THEIR VARIOUS SOURCES.
1. DEVELOPMENT OF AGRICULTURE
2. IMPORTANCE OF AGRICULTURE
3. SUBSISTENCE AGRICULTURE
4. COMMERCIAL AGRICULTURE
5. PROBLEM OF AGRICULTURAL DEVELOPMENT
6. SOLUTIONS TO POOR AGRICULTURAL DEVELOPMENT
7. AGRICULTURAL LAWS AND REFORMS
8. ROLES OF GOVERNMENT IN AGRICULTURAL DEVELOPMENT
9. AGRICULTURAL POLICIES
10. PROGRAM PLANNING IN AGRICULTURE
35. WILDLIFE CONSERVATION
39. BIOLOGICAL FACTORS
42. CLIMATIC FACTORS AFFECTING AGRICULTURAL PRODUCTION
47. SOLAR RADIATION
48. BIOTIC FACTOR AND AGRICULTURAL PRODUCTION
52. SOIL MICRO-ORGANISMS
53. SOIL PH
54. ROCK FORMATION
55. IGNEOUS ROCK