Agricultural Financing II


Welcome to class! 

In today’s class, we will be talking more about agricultural financing. Enjoy the class!

Agricultural Financing II

Agricultural Financing

Problems associated with farm credits

The reason why farmers find it difficult to procure loans from banks includes the following:

  1. High-interest rate: The percentage of interest charged on principal sum by banks is usually high and this discourages borrowing.
  2. Lack of collateral security: Most farmers do not have items of value that they can present as collateral to secure loans from financial institutions
  3. High level of loan defaulters: Farmers default in paying back the loan as at when due.
  4. Diversion of loan: Some farmers divert the loan to areas for which the loans are not originally meant for.
  5. Lack of proper farm records and accounts: Most farmers lack accurate farm records and account that can lead be used to access their creditworthiness.
  6. Unpredictable climate can lead to crop failure. Due to various climate factors, farmers may invest so much to their farms and have a very low yield.
  7. Lack of insurance policy: Most farmers do not insure their farms against unforeseen occurrences such as fire outbreak.
  8. Long gestation period of plantation crops.
General evaluation
  1. What is agricultural finance?
  2. What is agricultural credit?
  3. State three type of farm credit.
  4. Outline 5 significance of agricultural credit. What is interest?
  5. Outline 5 reasons why farmers fail to procure loans from banks. 


  1. Explain the meaning of agricultural finance and agricultural credit
  2. Name six sources of agricultural credit available to small scale farmers
  3. Mention six problems associated with agricultural credit WASSCE 1990 question 10, 2014 question 10b
  4. List four sources of agricultural credit
  5. Explain briefly four reasons why farmers find it difficult to loans from banks (WASSCE 1997 question 9).
  6. Briefly explain each of the following types of credit in agricultural production
  • Short term credit
  • Medium-term credit
  • Long term credit


In our next class, we will be talking about Agricultural Insurance.  We hope you enjoyed the class.

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