#Agriculture Finance
» Agriculture Finance is the multiple type of services dedicated to supporting both on and off form agriculture activities and business including input provision, production and marketing also.
#source of Agri- Finance
» The main source of non-institutional agri-finance are money lender, landlord, traders and private borrowing. These are called informal institution
~Institutional source
Farm Finance has become an important input due to the advent of capital intensive agriculture technologies. Farmers require capital in order to enhance the productivities of various form resources
Indian agriculture, in general is characterized by low and uncertain returns in order break the vicious cycle of low returns ~low saving~ low investment ~low returning, provision of external finance become inevitable.
Important /significance of agriculture Finance.
- credit is essential for agriculture development and also for the development of the economy as a whole.
• The scope of extensive agriculture in India is limited. There therefore, increase in agricultural production is possible only by intensification and diversification of farming, intensive agriculture needs
huge capital.
• Extreme inequalities exist in the distribution of operational holding and operational area. The purchasing power of these small and marginal farmer is limited to their subsistence farming. Hence, they have to depend on the external financial assistance to use the costly (modern) inputs.
• Farmer economic condition is subject to Frequent onslaught of flood drought Famine. Therefore either the continuance of cultivation of crop of making improvements on the farm depends on the nature and availability of Finance.
• In recent years, more area is brought under irrigation which in turn would increase the use of input like fertilizer and plant protection chemicals. In order to accomplish this external finance is needed.
•In order to sustain the development of agro-based Industries, there should be a substantial increase in the supply of raw materials needed for such industry to develop of farm sector a constant flow or credit is essential and it would enhance over all growth of the economy.
• In agriculture, fixed capital is locked up in permanent investment like land, well, building, more ever it takes long time to get returns from farm. Hence, farmers needs finance to continue their form operation.
• small and marginal Farmers are trapped in the vicious cycle of poverty.
low return ~ low saving ~ low investment ~ low return.
To break this cycle, credit has to be injected in agriculture sector.
# scope of Agricultural Finance
- "Agriculture finance" various in ( scope from the "micro concept" to " macro concept".)
from the point of view of both concepts ,aspect of the study individual farm units include ÷
A] Financial management of forms -
which has to do with
1) Decision making( decision to invest on a farm machinery)
• Investment decision
• Financing decision
• Dividend decision
- Identify the extent and the correct time of financing that could facilitate production
and marketing plans
- provide information on the farm's financial position as well the efficiency and profitability of farm operations.
B) organization of financial Accounting system
• Important for sound Financial management
• farm operator would need the knowledge Keeping financial record and accounts like the Balance sheet, income statement, cash flow statement, statement of changes in ownership farms and investments.
C) Organization and Growth of farms
• Identification of the input-output combination
for maximization of goals
• Determination of size and rate of growth as well as rate of growth and expansion that will justify financial investment in the agriculture enterprises.
D) Internal and external factors.
• These factors can be controlled by the
Farm operator
• Rationing of credit use
• External credit rationing
• Taxation policy
• policy made on the use of net Farm income
• Government regulations.