Demand and supply of agricultural credit - a case study of Madakathra Panchayath

Abstract

The study viz – ‘The Demand and Supply of Agricultural Credit – A case study of Madakathara Panchayath’ has been carried out to assess the total credit requirements for paddy and other seasonal crops and to assess the extent of credit applied by different credit agencies so as to estimate the credit gap. Hundred farmers consisting ten percent of the population in Madakathara Panchayath were selected at random for detailed survey. Percentage analysis of the cost of cultivation and credit supplied for paddy banana and tapioca revealed that in the case of borrowers from co-operatives, the credit gap was 54.89 per cent, 52.10 per cent and 88.90 per cent for the size classes 1.5 to 2.5 acres, 2.5 acres to 5.0 acres and 5 acres and above, respectively. Commercial banks were not giving loans for paddy cultivation. In the case of banana, as far as borrowers from co-operative are concerned, it was noticed that there was a large credit gap for the size classes 5 acres and above followed by 1.5 to 2.5 acres and below 1.5 acres. In the case of borrowers from commercial banks, the credit gap was just 14.32 per cent for the size- class below 1.5 acres, but there was over financing for the remaining size-classes ranging from 23 per cent to 71 per cent. Only co-operatives provided finance for tapioca and over financing existing for all size- classes. It was thus observed that credit availability is a major constraint on farms cultivating paddy and banana.