Question

How do medium and large farmers obtain capital for farming?
How are they different from small farmers?

Answer 1

(a) Medium and large farmers sell their surplus farm production in the market. Part of their earnings is saved and kept for buying capital for the next season. They have their own savings which they have accumulated from the sale of surplus production. They are thus able to arrange for the capital needed.

(b) Small farmers, on the other hand, have low farm production and do not have sufficient earnings. They have to borrow money to arrange for capital. They borrow from large farmers or the local moneylenders or traders supplying various inputs.