Question

How the medium and large farmers obtain capital for farming? How is it different from the small farmers?

Answer 1

Hi there,

Medium or large farmers are those who have larger lands and earn larger amounts due their own cultivation so usually when they are in need of capital, they use their own savings from the crops or go to the banks for the purpose.

On the other hand, when small farmers need capital, they do not have any savings because they own very little land. So they turn to medium or large farmers for the purpose of loaning capital.

I hope the answer was helpful.

Thanks for asking.

Answer 2

1)Most small farmers have to borrow money to arrange for the capital. They borrow from large farmers or the village moneylenders or the traders who supply various inputs for cultivation. The rate of interest on such loans is very high and these farmers are in great stress to repay the loans taken.

2)In contrast to the small farmers, medium and large farmers have their own savings from farming. They use this savings to arrange for next year’s capital and make high profits by selling surplus production and earning higher amounts. Sometimes, they deposit their savings in a bank or lend their money to small farmers or save their savings or buy cattle, truck or to set up shops.

Happy to help