Sunday, October 9, 2016

AGRICULTURAL FINANCE

Farmers especially (peasant farmers) cannot generate enough capital from their savings to finance their farm business therefore there is need to source for fund/capital.
SOURCES OF FARM FINANCING/WAYS OF GENERATING CAPITAL FOR AGRICULTURAL  INVESTMENT
Capital or money can be secured for agricultural investment in two ways:
1.   External Generation of Capital: This is a situation whereby capital is generated for agricultural investment from outside (not from the farmer’s account)
2.   Borrowing: This means taking money on loan with the understanding that it will be returned as agreed upon at an appointed time. Money/capital could be from any of these agencies.
i.             Co-operative society
ii.           Commercial banks e.g. first bank, GT bank, Skye bank e.t.c
iii.          Agricultural banks e.g. National Agricultural  and Rural Development Bank
iv.          Micro-finance bank e.g. Olofin microfinance, Ibuaje micro-finance
v.            Money Lenders
vi.          Friends and relatives
vii.      Government approved agencies such as National directorate of employment (NDE) Fadama project, rice project etc.
3.   Internal generation of capital: This is a situation whereby the farmer generates the fund or money to finance his agricultural business without going outside to borrow. Money can be secured internally by:
i.             Personal savings
ii.           Sales of farmer/farm’s asset
iii.          Gift

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