Abstract
A Review of Bank Loans to Farmers: Implications for Agricultural Diversification in Nigeria
Highlights
Loans to farmers were amongst the earliest loans made by commercial banks
From the above foregoing discussions, we can establish the followings as findings of research: 1) Among the risk factors attached to farm loans are unfavourable cost-price relationship that exists for major agricultural products and the difficulty of serving adequate information about farming operations
Based on the findings of this paper, we shall make quick to recommend the followings for urgent policy action hereunder; 1) That government should intervene in agricultural lending to farmers with a sole objective to ameliorate most risk factors inherent in agricultural loans such as unfavourable cost-price relationship existing in major agricultural products, mobilize agricultural extension workers in a bid to remove difficulty of serving adequate information about farming operations to farmers
Summary
Loans to farmers were amongst the earliest loans made by commercial banks. commercial banks had continued to extend credits to farmers, direct loans to farmers account for a smaller proportion of total loans. He is seen in the fields, not in air-conditioned offices, at trade and agricultural fairs talking to farmers about their problems, providing information, giving advice, both financial and technical He co-operates with the extension services and with the various farming clubs and organizations who wish to increase agricultural production by the efficient use of land and machinery and facilitate the introduction of new methods. The farmer’s net worth is of less importance in the loan granting decision even though the farmer owns all his land and equipment unencumbered, if he cannot operate the farm to produce an adequate cash flow, he does not deserve bank accommodation. This, in turn, makes it more difficult to obtain additional credit and the loans that are granted at a higher rate than if his net worth were larger
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