Explain the difficulties faced by small due to lack to capital
Answers
Answer:
Explanation:
Capital is the most needed factor of production. Capital is needed in every stage of farming. The capital needed is of two types, fixed capital and working capital. Fixed capital is needed to buy long-term investments like machines, tools etc., working capital is needed in every stage of production such as procurement of seeds, wages for the labourers etc.,
a. Unlike medium to large-scale farmers, the small farmers who do not have much savings suffer a great deal to build up the capital needed.
b. They have to borrow money from banks, money lenders etc., Sometimes money lenders charge a high rate of interest which puts them under distress.
Thus, small farmers are in a way exploited by these people due to lack of capital.