Agriculture Credit Facilities by ADBP (ZTBL) Its Effects On The Growers of Khairpur From 1990-91 To 1999-2000

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DECEMBER 2009
INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS
VOL 1, NO 8
Agriculture Credit Facilities by ADBP(ZTBL): Its Effects on

the Growers of Khairpur From 1990-91 to 1999-2000
Listed in ULRICHS
Muhammad Aslam Memon

Assistant Professor, Department of Commerce
Shah Abdul Latif University, Khairpur.
Abstract
This research is conducted with a view to study the
credit facilities of the Agricultural
Development Bank of Pakistan (now called Zarai Tarkiati Bank Ltd.) and their impact on farm
productivity of different types of growers in Sindh province. This research study is conducted
through primary and secondary data. Following the survey method of study, 500 growers viz
small, medium and large are selected randomly from district Khairpur, who had applied for loan
to ADBP but only 220 growers got loan facilities They were interviewed keeping in view the
objectives of hypotheses. Out of 500 growers, 220 got loan facilities amounting of Rs.
1,42,07,000. The small farmers received 20.62%, medium 09.70% and large 69.68% of total
disbursed loan by the ADBP. The pattern of institutional credit seems to be skewed in favour of
large growers. They received more loan facilities as compared to the small and the medium
growers. The survey further described that despite the development of credit institutions in the
country, the growers still relied on the informal credit institutions, which did not assist to
growers in improving their economic conditions.
Keywords: Agriculture , Credit Facilities , ADBP , ZTBL, Effects , Growers,Khairpur
1. Introduction
Economy of the developing countries depends on the income derived from the agricultural
sector. In modern times, capital is considered as the life-blood of all economic activities. It may
be defined as the existing stock of wealth used for the production of goods and services. It
includes all of those which, if acquired to day, aid us in producing tomorrow
(1) Capital supply in agriculture involves provision of real things used for production. The
produce more, a farmer needs to spend more on inputs, land improvement, wages for hired
labour resources, will result increased production as output is resulted from the transformation of
COPY RIGHT 2009 Institute of Interdisciplinary Business Research
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inputs. Therefore, it is imperative to get desirable capital goods into the hands of common
farmers to obtain increased yield of various crops. Credit is the only device by which this could
be done efficiently.
Credit has been defined as the temporary transfer of assets or wealth from man who has, to man
who has not (2) Inclination of farmers towards the use of modern techniques and qualitative
inputs in optimum quantity in the modern agriculture has resulted in the enhancement of demand
for farm credit in almost all the developing countries with no exception of Pakistan, Accordingly,
there have been many encouraging developments in the sector of agriculture financing. It has
yielded sizeable expansion in the volume of institutional credit.
According to Board of Economic Inquiry, Punjab, (1951), the sources of institutional credit were
formal and informal. The formal sources provided 16 percent loan facilities. The informal
sources provided about 84 percent to growers, for short period on exploitative terms. Realizing
the difficulties of growers, the government established Agricultural Finance Corporation in 1952
and Agricultural Bank of Pakistan in 1957 to extend loan facilities to growers. With the
introduction of new technology in the agricultural sector during mid 1960s the cost of input
increased.
In February 1961, the Agricultural Development Bank of Pakistan (now called Zarai Tarkiati
Bank Ltd.) was established by merging ADFC and ABP for providing short, medium and long
term loan facilities to growers. With the introduction new technology in agricultural sector
during 1966, the demand for loan continued to increase for the purchase of the input. The
government allowed the commercial banks in 1973 to provide loan facilities to growers. In this
way, the credit institution extended more credit facilities to growers. But these institutions hardly
met 32 percent of the requirements. This clearly indicates that there is scope for expansion in the
credit supply.
Agriculture assumes greater importance in a developing country like Pakistan for its varied
contributions to the national economy. Even today, it contributes 25% to GDP and 44% of the
total population directly depends on this sector for their livelihood. (3) in making available the
three basic needs for human existence viz. food, shelter and clothing, agriculture leads all the
sectors of economy.
In addition to these, it provides all the fodder that is needed to sustain livestock whose number
runs into several million. Agriculture sustains much of the non-agriculture activities of the
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economy pertaining to manufactures, trade and transport. To a variety of manufacturing

industries this sector provides raw material or inputs. Both in export and import items of Pakistan
foreign trade, agricultural goods continues to figure considerably. The importance of such goods
lies in the foreign exchange earning and foreign expenditure of the country. Thus, however one
looks at agriculture sector of Pakistan whether from the point of view of accelerating the process
of income generation or widening the scope of employment of solving the problem of balance of
payments situations, one has to turn to agriculture and its development.
In Pakistan 81% farmers are below the subsistence holding. The agricultural sector requires huge
capital due to introduction of new technology. Hence, all the growers are not in position to
purchase costly inputs from their income. Thus a great need of finance is felt by the growers. In
this regard, ADBP and the other financial institutions have played an important role. The
objectives of the study are to investigate; i) the socio-economic conditions of growers of Sindh
province in general ii) pattern of credit allocation among different size group of holdings iii)
factors and their relative importance in influencing credit use in the sample farms iv) agricultural
credit requirements of the growers in Khairpur district v) the pattern of utilization and repayment
of such credit vi) productivity of sample farms and the income of different growers vii)
deficiencies of institutional credit and suggest measures to strengthen the institutional credit
structure in the study area.
2. Methodology
For this research both primary and secondary data is obtained for the analysis. A detailed
questionnaire was used to collect data systematically. Since most of the respondents do not
understand English, so the questionnaire was translated into Sindhi, the provincial language, and
this form was supplied to every interviewer. However, the answers given in Sindhi were
recorded in English. An attempt was made to keep the questionnaire concise and to the point.
The questionnaire was also discussed with experts working in the area of agriculture extension
services and with the concerned professors working at Sindh Agriculture University, Tando Jam.
It was decided that pre-tests were required to improve the questionnaire. So a pilot survey for
each group of respondents was carried out before the survey was conducted, and questions were
added or deleted as necessary. Changes were also incorporated / suggested by the interviewers.
The reasons for these changes were that the farmers initially thought that the survey was an
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attempt to get information which might get them into trouble with the authorities. Farmers were
therefore reluctant to point out problems such as shortage of credit, sharing inputs with landlords
and the role of bank and revenue authorities in the distribution of credit. Therefore, it was
decided that the farmers must clearly be informed, before questions were asked, that the
information was strictly confidential and would be used for academic purposes only. This
encouraged the farmers and they gave the requisite information quite willingly.
Table 1 : Distribution of Sample by Farm Size in District Khairpur
Size of Sampled Farms

Category
wise
in
No. of Growers Applied for No. of Growers Received

Loan
Loan
Small below 0-5
350
140
Medium 05-10
60
30
Large 10-20 and above
90
50
Total
500
220
Hectares
2.1 Survey Procedure

The survey of winter crops was conducted in December and January. The information of summer
crops was collected from the respondents during the month June and July. These were the hot
months of the season. The respondents initially hesitated to give information because they were
afraid that the enumerator might be an officer from the government side. Later on, they
cooperated for giving interviews.
3. Literature Review
Idress Muhammad and Ibrahim Muhammad (1993) have examined the results of the study and
have given a clear picture of the relation between agricultural credit and agricultural
development. The results showed a great diversity in money saving behavior based on education.
It is found that out of the total 120 sampled farmers, 58% do not save money. The farmers also
save money, 50% of this, have education above middle and 36 have education up to middle
level. Study reveals the most of the improved practices that the farmers are adopting, are
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improved seed, improved implements, farm manure and commercial fertilizers after getting
agricultural credit. Khan, Rao, Abdul Rauf, (1994) has discussed the emerging trend of focusing
on more and more attention on improving the production and productivity of farming in
Pakistan. In this regard, the bankers have promoted to evolve better schemes to improve the
income generation capacity of the farming community and help them to repay the borrowed
funds in time. Ahmed Himayat Ullah (1995) has pointed out that the institutional credit in real
term has expanded at a highly rate over the last forty years. But the contribution of institutional
loan to agricultural development has been found weak and below their expectations. Iyare
Osaretin, (1995) has discussed the issue of Agricultural Financing in Nigeria. He has analyzed
the reasons why credit policies have been unsuccessful. He further suggests that the problems of
agriculture and the financial institutions lending to farmers would be worse in the future if the
greater effort is not made to integrate rural financial market into national money markets as well
as controlling the volatility of interest rates. Khan Rao Abdul Rauf (1995) has described that in
any anti-poverty programs as well as in long-term development strategies, supply of credit by
specialized institutions takes a very important place. Qureshi, Sarfraz, Khan (1995) has analysed
that over the last thirty years, Pakistans subsidized supply led approach to increasing rural credit
for the poor has had limited success. Irfan Muhammad Arif, et al have (1999) examined the
structure of informal credit market in Pakistan by combining two approaches; a field survey
administering semi-structure questionnaire to more than 1000 informal lenders supplemented by
case studies. According to the survey, a good deal of inter-linkages exists between formal and
informal credit institutions. Mukhtiar, Kazi, (1999), has examined that the transformations from
conventional to modern farming methods demanded a change in agronomic practices to enhance
productivity per unit area of cultivation. Malik, Sohail, et al (1989) have examined that the farm
sector has increased relative importance of institutional source of credit, specially the ADBP,
Commercial Banks and Cooperatives. Anka, Alhaje, Mohammad Lawal (1992), have reviewed
the concept of supervised agricultural credit its historical perspective, appraisal of credit policies,
lending issues and factors affecting repayment by the clienteles. Khan, M. Hassan (1981)
presented a detailed analysis of financing small-scale farmers and its problems. Kamdar and
Tatri (1992) have examined the relationship between informal rural credit and selected
characteristics of farmers, such as family size and size of holding. They concluded that the size
of holding and acreage under rice and wheat increases the demand for borrowing increases.
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Mellor (1995) concluded that greater access of credit to small farmers would allow for high
volume and high branch density.
3.1 Credit Needs Of Agriculture

Agriculture about 50 years back was regarded purely as sustenance for life, yielding no
commercial profit (Nasir and Hyder 1999). Now days, it is regarded an important large industry.
As the propensity to save of the majority of the farmers is low, therefore, they need credit for
investment in agriculture. Credit, infact, is an essential input in the modern technology package.
The demands for agricultural credit are varied and complex in Pakistan.
3.2 Farm Credit

The items to be considered for short-term credit to farms include seeds, water, fertilizers and
power on hire. The medium and long term credit is required for: Land improvement (clearance of
jungle, leveling, layout, terracing, soil improvement, embankments and land formation).
Watercourse improvement (alignment, lining, silt clearance, construction of modules, culverts);
Wells (tubewells, open-wells, Persian wheels, lift pumps, deep turbines, electrical installations);
Farm power (bullocks, tractor, trailers and implements, thrashers, other agricultural machinery
and equipment); Arboricultural (wind-breakers, shelter-belts, hedges); Orchards; and Fencing
(Khawaja and Malik 1992).
3.3 Non-Farm Credit

In the non-farm sub-sector, the short-term credit is required for livestock and poultry feed and
veterinary expenditure. The medium and long-term credit is needed to purchase livestock,
poultry, shed, tooled and implements; and financing expenditure on electrical installation,
drinking-water tanks for animals, processing of livestock products, labour charges etc. in the
forestry sector only medium and long-term credit is needed for purchase of seedlings, labour
charges, apiculture, sericulture etc. for fisheries short term credit is required to purchase salt, ice
and to pay cold storage charges and curing expense; and long term credit is needed to purchase
nets and twines, trawlers, boats, engines (marine) and fish yards. The other purchases for which
agricultural credit is required include storage, transportation, marketing, packing and processing
by farmers form filed only. The short term credit needs of these are for storage credit,
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transportation hire charges, packing material etc. the long-term needs of these sectors are for
construction of go downs, bins and silos, purchase of trucks, bullock-carts, transport machinery,
country-boats, fork lifts etc. and purchase of processing machinery for use at the farm.
3.4 Sources of Agricultural Credit

In early years of Pakistans history, the main sources of agricultural credit were identified as
relatives and friends, landlords; shopkeepers commission agents, cooperatives and public
agencies (Akhtar 1986). Until 1947 village moneylender were the main sources of rural credit
(Andrus and Muhammad 1966). After independence, with the migration of non-Muslim from
this part of the country, the moneylenders class disappeared from the scene and the rural credit
was left wide open. This vacuum was filled in by the local village shopkeepers, landlords,
commission agents etc. the informal sources are generally regarded as exploitative and
undesirable for many reasons. Firstly the lender is usually in different to the use of the borrowed
amount as such the system encourages borrowing for unproductive purposes. However, it would
be too simplistic to assume that all loans from non-institutional sources are utilized for
consumption purposes. According to study conducted by the Board of Economic Inquiry, Punjab
in 1949 revealed that 16.1 percent loan facilitates were extended by the cooperatives and the
Taccavi and 83.9 percent credit facilities were provided by the informal sources (Board of
Economic Inquiry, Punjab 1957).
3.5 Agricultural Development Bank of Pakistan (ADBP)

The ADBP is the main credit supplier to the agricultural sector in the country. It was established
in 1961 by the merger of Agricultural Development Finance Corporation (ADFC) and the
Agricultural Bank of Pakistan (ABP) (Khawaja and Malik 1992). The ADBP advances loans on
the bais of land mortgage or on personal security. Though the operation of ADBP has reached
38500 villages out of 45000 yet the number of farmers availing of loan facilities (particularly the
small farmers) is small. (Nasir and Hyder 1996). ADBP provides short, medium and long-term
loans for farm and off farm activities. The details are given as under (Khawaja and Malik 1992).
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3.5.1 Short-Term Credit

The short-term credit ranges up to one year. The farmers need short term credit for meeting the
working capital requirements of agriculture.
3.5.2 Medium-Term Credit
The medium-term loan extends from 1 to 5 years. The farmers require medium term credit for
the purchase of cattle, purchase of implements, and improvement in watercourse.
3.5.3 Long-Term Credit
The duration of long term credit exceeds five years. The farmers need long term credit for
making improvement of permanent nature in land, such as sinking of tubewells, reclamation of
land and building, purchase of machinery and implements, etc.
Table 2: Term-Wise Position of Agricultural Credit Advanced by Agricultural
Development Bank of Pakistan in Sindh Province (Rs. in million) (No. of cases in, 00)
Short-Term
Year
No. of
Cases
Medium-Term
Amount
No. of
Cases
Long-Term
Amount
No. of
Cases
Total
Amount
No. of Cases
Amount
1986-87
201
589.95
39.3
64
229.26
15.3
44
683.12
45.4
309
1502.33
1987-88
201
776.64
40.2
122
375.46
19.5
48
778.84
40.3
371
1930.94
1988-89
206
819.87
41.3
99
356.46
17.9
42
811.71
40.8
347
19.88.04
1989-90
182
829.26
43.5
65
301.04
15.8
34
773.91
40.6
281
1904.22
1990-91
155
814.87
48.5
49
307.51
18.3
22
556.63
33.2
226
1679.01
1991-92
146
867.88
60.1
45
261.59
18.1
13
314.52
21.8
204
1443.99
1992-93
530
817.89
50.2
40
270.93
16.6
16
541.01
33.2
586
1629.83
1993-94
163
694.76
35.4
70
649.7
33.1
23
620.16
31.6
256
1964.62
1994-95
389
1665.27
54.6
53
454.36
14.9
40
929.05
30.5
482
3048.68
1995-96
207
1042.09
72.4
10
92.82
6.4
18
304.40
21.2
235
1439.31
1996-97
245
1330.33
63.1
32
517.13
24.5
261.79
12.4
286
2109.25
1997-98
390
2521.38
69.6
70
554.66
15.3
13
548.86
15.1
473
3624.90
1998-99
537
3910.74
78.5
43
406.87
8.2
19
663.72
13.3
599
4981.33
1999-00
491
3998.82
83.5
43
411.27
8.6
15
380.70
7.9
549
4790.79
Source: Government of Pakistan (2005), Agricultural Statistics of Pakistan 2003- 2004,

Islamabad, p. 156.
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Chart No.1
Series1
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Short Term Credit from 1886-87 to1999-2000
Ye a rs
Chart No.2
A
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Medium Term Credit from 1986-87 to 1999-2000

700
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500
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Series1
300
200
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0
Series2
19
8687
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8889
19
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9394
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9495
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9596
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9697
19
9798
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9899
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9900
Ye a rs
Chart No.3
Am
ount
Long Term Credit from 1986-87 to 1999-2000

1000
900
800
700
600
500
400
300
200
100
0
Series1
Series2
19
8687
19
8788
19
8889
19
8990
19
9091
19
9192
19
9293
19
9394
19
9495
19
9596
19
9697
19
9798
19
9899
19
9900
Years
3.6 Status of Agriculture in Sindh

The total area of Sindh is about 14.1 million hectares (34.84 million acres), which represents
18% of total geographical area of Pakistan. Out of this nearly 39 percent or 5.45 million hectares
(13.45 million acres) are cultivable (Pithawala 1968). The current population of the province is
more than 30 million (Shaikh 2001). The rural population of the province constitutes 51.1% of
the total population12. Majority of this population is living in its 66,000 villages and settlements
(Shaikh 2001). More than 80% of the rural population depends on agriculture and its allied
businesses. Agriculture is the dominant economic activity in the province. The agricultural sector
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of Sindh province is analyzed by two methods. Firstly, it is described by the traditional methods
of cultivation and secondly in the light of new technology that was introduced in the year 1966
and brought changes in the rural economy (Saeed 2003).
3.7 General Overview of District Khairpur

Khairpur district is located in the northern Sindh. It lies between 260 11 and 270 44 north
latitudes and 680 12 and 70 1 east longitudes. The district is bounded on the north by
Shikarpur and Sukkur districts, on the east by India on the south by Sanghar and Nawabshah
districts and on the west by Nawabshah and Larkana districts. The total area of the district is
15910 squire kilometers (District Census Report of Khairpur 2000).The district is divided into
two parts the plain cultivated area in the west comprising Khairpur, Gambat, Kot Diji, Miwah
and Faizganj taluka where irrigation and influence of the Indus river and its canals extends. The
south eastern half of the Khairpur district is the second part which consists of hills or wind blow
sand running in parallel rows from north east to south east. This known as Register and is part of
the great desert which continues into the Tharparkar district. A range of hills which starts worth
of Rohri taluka of Sukkur district rising to a height of about 150 meters above the sea and 100
meter further after passing into the Khairpur district. The desert portion of the district is very
extensive and is covered with sand hills. The western boundary of Khairpur and Gambat taluka is
formed by the river and is covered with forests. The climate of this district is hot in summer and
cold in winter. The average household life is 6 percent (District Census Report of Khairpur
2000).
Table 3 : Disbursement of Loan by ADBP in District Khairpur from 19990/91 1999/2000
Year
Disbursement of Loan in Million Percent

R.s
Decrease
1990/91
155.23
+08.25
1991/92
177.35
+14.25
1992/93
193.52
+09.12
1993/94
215.40
+11.31
1994/95
248.17
+15.21
Increase
or
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1995/96
156.42
-37.00
1996/97
202.23
+29.29
1997/98
350.88
+73.50
1998/99
546.15
+55.65
1999/2000
593.39
+08.64
Total
2838.74
188.22
Average
283.874
+18.82
VOL 1, NO 8
Source: Agricultural Credit Indicators 2000, Agricultural Development Bank of Pakistan,

Islamabad, Nov. 2000, P. 181-182
Chart No.4
700
600
500
400
300
200
100
0
19
99
/2
00
0
19
98
/9
9
19
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/9
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19
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/9
7
19
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/9
6
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/9
5
19
93
/9
4
19
92
/9
3
Series1
19
91
/9
2
19
90
/9
1
Amount
Credit By ADBP in Khairpur
Years
It is evident from the Table that the loan facility was increased from Rs. 155.23 million to Rs.
593.39 million during the period 1990-91 to 199-2000. This shows an increase of more than
three times. The average loan facility stood Rs. 283.874 million with the average growth rate
18.82 percent. Such increasing investment has not yet removed the poverty from the rural area of
the district.
3.8 Credit Supply

Since the demand for use of credit on farms is partly conditioned by the supply or availability of
credit an examination of the supply side of credit becomes an essential part of any credit
analysis. This contains an analysis of agricultural credit borrowed by the different categories of
growers during the study period 1999-2000.Data presented in respect of loan provided by the
ADBP to all the categories of growers as mentioned in Table 4
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Table 4: Agricultural Credit Received by the Various Categories of Growers through

ADBP in District Khairpur during Surveyed Period 1999-2000
Percentage of
Size of
Sampled
No. of
No. of
Farms
Growers
Growers
Category
Applied for
Received
Wise in
Loan
Loan
Cultivated
Total Loan
Area of
Received in
Sampled
Rs.
Farms in
Hectares
Hectares
Small below
0-5
Medium
05-10
Large 10-20
& above
Total
Average
Loan Per
Hectare in
Rs.
Total Loan
Received by
Each
Category
Sampled
Growers
350
140
29,29,500
630
4650
20.62
60
30
13,77,500
290
4750
09.70
90
50
99,00,000
2000
4950
69.68
500
220
1,42,07,000
2920
100.00
4865.41
Average per
Hectare
Loan
Source: Survey Data

It is evident from the Table that loan amounting to Rs. 1,42,07,00 is distributed among 220
respondents. The small growers have received 20.62 percent, the medium category 09.70 percent
and the large growers 69.68 percent to the total loan given by ADBP. This table further indicates
that the large growers have got more facilities of loan as compared to the small and the medium
categories of growers.
3.9 Comparison of Loan Disbursement among Different Growers in District Khairpur
The main purpose of this study is to analyze comparatively credit facilities to different types of
growers extended by the Agricultural Development Bank of Pakistan and their impact on
agricultural production. Capital is urgently required for the modern methods of cultivation. In
this regard, the growers arrange it from the institutional and non institutional sources of credit.
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Table 5: Comparison of Loan Disbursement among Different Growers in District Khairpur

during Survey Period 1999-2000
Size of Sampled
Farms Category
Wise in Hectares
No. of
Growers
Applied
for Loan
Difference
Total Loan
Total
Between
Received in
Requirements
Demand and
Rs.
of Loan in Rs
Supply in
Rs.
Percentage
of Total
Disburseme
nt by Each
Category of
Grower
Small Below 0-5
350
140
29,59,500
69,30,000
20.62
Medium 05-10
60
30
13,77,500
30,56,600
09.70
90
50
99,00,000
2,01,20,000
69.68
500
220
1,42,07,000
3,01,06,00
100
32.06
Large 10-20 &

Above
Total
Percentage
of
Requirement
Source: Survey Data
Table 5 analyses the loan facility extended by the ADBP in district Khairpur. It is pointed out
that the large growers have got 69.68% loan facility, medium growers 09.70% and the small
growers 20.62%. The overall credit facility met the requirements 32.06% of the growers. This
proves that major portion of credit is arranged by the growers from the non-institutional sources
of credit. The inconvenience in loan disbursement occurs due to ineffective policies of the policy
makers in the country.
3.10 Impact of Agricultural Credit on Farm Productivity in District Khairpur

Judged from the view point of per hectare physical productivity, it was found that in all major
crops viz. Wheat, cotton and sugarcane, total output and per hectare yield in district Khairpur are
described in this study show considerable increase. The cultivated area of wheat rose from
1,05,190 hectares, to 1,15,735 hectare, output from tones 2,23,312 to tons 2,97,325 and yield per
hectare from 2159 Kgs to 2381 Kgs which shows an average increase 1.6% in cultivated area,
2.66% in output and 1.84% yield per hectare. Sugarcane is a cash crop which is supplied to sugar
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mills as raw material for the production of sugar. With the encouraging output of sugarcane two
sugar mills were set up in district Khairpur and provided every year two thousand job
opportunities to the people of this district. Besides, the infrastructure around the district
improved which provided marketing facilities to the growers. In this way, the revenue of the
growers increased and had brought changes in their living standards. Cotton is also the cash crop
of district Khairpur. The cultivated area of cotton increased from 69,750 hectares to 77,928
output hectares from 1,36,231 ton to 2,85,765 tons yield per hectare rose from 356 kgs to 576
kgs which shows an average increase of 4 percent in the cultivated area, 11.27% in output and
yield per hectare 8.59%. This increasing trend encouraged private sector for the establishment of
ginning factories and currently 16 ginning factories are functioning in this district. Thus, this
crop extended job opportunities in the district and change the socio-economic conditions of the
rural people.
4. Findings of the Study
a. 500 different respondents were interviewed viz small, medium and large growers who applied
for loan to ADBP. All growers adopted new methods of cultivation.
b. Out of 500 growers, 220 got loan facilities from the ADBP amount of Rs. 1,42,07,000.
The classification of growers who received loan is as under
Table 6: Classification of Growers
Size
of Number
of Loan Received Percentage
of
Growers
Growers
in Rs.
Each Category
Small
140
29,29,500
20,62
Medium
30
13,77,500
09,70
Large
50
99,00,000
69,68
Total
220
1,42,07,000
100
Source: Survey Data

The pattern of institutional credit seems to be in favour of large growers. They received more
credit facilities as compared to the small and medium growers.
i.
The study analyzed that the average per hectare cost of production of small grower stood
Rs. 15,650 and against it he got loan facility of Rs. 4,620 per hectare, the medium
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growers cost was Rs. 15,290 and against it he received Rs. 4750 per hectare and the
large growers cost became Rs. 15,010 and against it he sanctioned Rs. 4950 per hectare
which was low amount.
ii.
The net revenue of small grower stood Rs. 6,450 per hectare, the medium growers net
revenue comprised Rs. 7,310 and the large grower earned Rs. 7,890 net revenue per
hectare.
iii.
The research proved that growers did not receive loan facilities according to their
requirements.
iv.
The survey further describes that despite of development of credit institutions, the
growers still rely on the informal credit institutions which did not improve their income
due to high rate of interest and pre-conditions put by the agents.
v.
Reasons for inadequate supply of credit. While conducting interviews from the growers,
they described the following main problems during getting the loan.
a. Inadequate supply of credit by the formal institutions.
b. Bribe for sanctioning of loans
c. Delay in sanctioning and payment of loans
d. Lengthy and completed procedure
e. Political interference
f. Mismanagement in the system
g. These problems bring adverse effects on the production.
5. Conclusion
Modernization of traditional agriculture requires adoption of improved farm technology, which

in turn requires capital investment. The investment required for this purpose might come either
from the farmers on resources / saving or through borrowing. In case where the propensity to
save is low, recourse to credit becomes the only option to meet the required investment to bring
about the increase in productivity and production. Agricultural credit has, therefore come to be
regarded as an essential input in the modern technology package. The present research examines
the required demand for credit by the different categories growers as well as supply of credit
extended by the formal institutions in the country.
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