Some considerations on agricultural credit.
Dear readers, the agricultural sector is considered a strategic link in any nation, since it is responsible for the production of food to satisfy the food needs of the countries. In order to start up the agricultural activity, sufficient economic resources are needed for the construction of infrastructure to support production as well as the acquisition of inputs and medicines as the case may be, therefore, some agricultural entrepreneurs resort to credits to be able to afford such needs.
It is important to begin by pointing out that credit from the financial point of view according to Besley and Brigham (2000), consists of a transaction in which a person who is called the lender grants to another person who is called the borrower a certain amount of money, with the commitment to subsequently receive a sum equal to or greater than the amount borrowed, in this sense the borrower agrees to pay an additional yield that we know as interest.
From the point of view of agricultural companies, the producer seeks credit with the intention of having timely and sufficient capital to acquire a set of resources and services to help improve the productivity of the system, in this sense the experience of the agricultural entrepreneur is crucial to be able to cancel the amount of money obtained by the financial sector.
In this same vein, it is necessary to mention that generally those who grant agricultural financing are private financial institutions (banks), who request some requirements to be granted, other ways by which they receive funding is through the public sector, for this, the state must implement agricultural policies that are decisive to achieve the growth of the agricultural sector, the financing provided by the state focuses on improving infrastructure, acquisition of inputs, marketing and others.
Based on the above, I believe that credit has a positive impact on the company depending on the amount of money acquired and the efficiency with which it is managed, apart from this, it can be said that the improvement depends not only on the economic resources received but also on access to technology, the technical support that private companies and public institutions can provide, as well as the access they have to research to improve their production. It is also important that the producer makes a diagnosis of the market, to observe which are the crops that can offer solid guarantees of the return of money to the financial institution, for example, in Venezuela the oil palm crop is currently generating excellent dividends to agricultural producers, which could possibly quickly return the invested capital in case there were agricultural financing plans.
Dear readers, credit may not be the remedy for all the problems that arise in production units, but it is a fundamental service to support production programs and thus meet the goals proposed by the agribusiness, as long as it is closely linked to the real requirements of the farm.
| Bibliographic references |
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Besley, S. and Brighan, E.(2002). Fundamentals of financial management. 10th ed. Mexico: McGraw Hill Interamericana Editores.
Many countries give little importance to agriculture, they leave it within their financing programs last, but the banking and private institutions are in charge of it, the important thing is to acquire at the beginning of the project to be solvent in the future with it.
thank you for such an interesting topic.
Hello dear @joseph1956, it is true what you mention, many countries do not implement agricultural policies in line with our reality, I think that the agricultural sector has immense potential and with credit support can achieve many productive objectives that favor the producer and food security of any country.
So long friend, have a great weekend.
Hi @amestyj
Loans are sometimes necessary, especially for those who do not have enough money to start a business, or when they are already established and want to expand it. And in terms of agriculture it is more than evident that it is an area of transcendence in every country.
Hello friend @josevas217, you yourself have said it, agriculture plays a fundamental role in the economic and social development of a country, the most sensible thing is that there are credit policies that allow to enhance this sector, the country that does not take care of its agricultural areas seriously runs great risks of going through an economic and food crisis.
Goodbye my friend, have a great weekend.
In my country of origin, there are lots of provisions for farmers to get financial assistance: like the Agric Banks that provide loans, SME schemes, agric grants and the likes. All these are to help the agric sector to be more productive, and I think it is a nice initiative.
Excellent piece buddy. Thanks for sharing
Hello dear friend @samminator, I note that your country values the agricultural sector, producers will always need financial assistance or otherwise qualified technical services to improve the productivity of their land. The idea is to be able to supply the food needs of the country and to be able to export agricultural products.
See you later my friend, have a great weekend.
Greetings friend @amestyj, I like the topic you share with us, usually the machinery and implements used in the agricultural hood are very expensive, so it is very difficult to raise the money needed to acquire this type of machinery, so producers are in the imperative need for the application of a loan to banks, Another point to take into consideration is that if you get to miss with the payment of these loans, you can lose the machinery purchased and even more, thanks for this issue.
Hello dear friend @chucho27, thank you for sharing your opinion with us, you are right agricultural machinery, agricultural implements and inputs tend to be very expensive, make an annual planting plan and that the state can provide financing would be ideal, always with the appropriate supervision, since, if the agreed contract is not met, automatically withdraws any equipment or machinery that has been granted.
So long brother, have a great weekend.
Greetings @ amestyj
For any company or production unit the loan has been a fundamental factor to leverage its production, but some factors must be taken into account.
The ability to repay the loan (time), whether for the purchase of machinery or the production of a crop, because after having the loan everything is happiness and when the lapse of payment of installments is approaching there is no liquidity.
Thank you very much for sharing your publication
Hello dear friend @dgalan, you are absolutely right, the credit helps to enhance our agricultural business, in my own flesh I could live what you mention, at some point I had the power to process some agricultural credits, at the time everything was happiness but at the time of payment of installments, everything went very wrong, most of the time was not fulfilled with what was agreed.
So long brother, have a great weekend.