14 Ways Farm Credits Contribute to Rural Development That Will Amaze You
Overview
Rural development are initiative designed in the rural areas to ensure the well-being of the rural dwellers. The rural area where 80% of the global food production takes place is marked by inadequate basic amenities such as good schools, piped water, good road networks, electricity supply, and so on.
Due to the inadequate basic infrastructure, the young boys and girls find it difficult to live in the rural area and farm, abandoning farming for the aged farmers. However, with the help of farm credit, farmers can invest in farming by acquiring farm machines, improving farm inputs and exotic breeds of animals, and building or purchasing properties that can aid community development.
Farm credits contribute to rural development programs through the help of Government agencies, cooperative societies, and financial agencies which help to provide financial assistance to farmers and agri-businesses to aid rural development.
Ways Farm Credits Contribute to Rural Development
Rural Development programs through farm credits are initiated to alleviate the financial difficulties encountered by rural dwellers. Some of the ways farm credits contribute to rural development and increase the standard of living of rural dwellers and rural economies are:
Access to Financial Assistance
Farmers in rural areas do not have the large capital to boost their farming, hence the practice of subsistence farming has affected their inability to provide little basic amenities that will increase their standard of living and the rural economies.
Farm credit contributes to rural development in that farm credit programs will enable farmers and small-scale businesses in rural areas to have access to credit to boost their farms and businesses respectively.
Farm credit programs help to provide loans to farmers and small-scale businesses at a single-digit interest rate to enable them to purchase or hire farm implements and farm inputs to expand their farming as well as to enable small-scale business owners to expand their businesses. In this way, farm credit contributes to rural development
Farm Infrastructural Development
One of the best methods of developing the rural area is to invest in modern agricultural infrastructure such as improved barns, silos, milling machines, locally fabricated farm machines, and irrigation systems.
Farm Credits contribute to rural development because if farmers have access to farm credits they will able to build and install farm infrastructure that will enhance food production, boost rural economies, and increase farming enthusiasm for young farmers.
Farm credit institutions often make provision for loans to enable farmers to have access to modern farming equipment.
Provide Risk Management in Farming
The incidences of natural hazards and price fluctuation in the market have made farming very unpredictable. The presence of natural disasters such as floods, wildfires pests, and diseases in rural areas can reduce the economies of the rural dwellers.
Farm credit agencies can help rural development by offering risk management tools to help Curb the effects of uncertainty in farming.
Over the years, risk management facilities, such as agricultural insurance (I.e., crop, livestock, farm produce, and farm machines insurance.) and credit hedging options, have become effective tools to help farmers cope with financial losses.
Provisions of risk management tools to Farmers during natural incidents will stabilize farmers and them to stay in food production. All these illustrate the similarity between Farm credit and rural development. In these ways, farm credits contribute to rural development
It Encourages Value Added Agricultural Products
In developing countries, most of the farm produce is wasted due to inadequate processing technology and competencies. Farmers need to be empowered to be able to process their food, package, and market them effectively.
Credit institutions can provide credits to farmers to enable them to add value to their agricultural products to generate higher returns. Farm credit and rural development foster Investment in the processing of agricultural products, help create jobs for the rural dweller, and prevent rural-urban migration.
Provide financial Support for Beginning Farmers
This is another area where Farm credit can help improve rural development, in the rural areas, the lack of financial institutions coupled with the problem of sourcing funds from friends and family discourages youth from taking up farming as an occupation.
But with the help of farm credit from financial institutions beginning farmers can have the confidence to start taking up farming as a profession.
Encourage Sustainable Farming In the Rural Area.
Farmers in rural areas do not have sound knowledge of the conservation of natural resources because of the practice of traditional farming systems. Farm credit can be provided to rural farmers specifically for conservative agriculture.
Farm credit can help farmers invest in conservative agriculture such as no-tillage, integrated pest management, bush burning, and deforestation that endangers the natural resources in the environment.
Promote Community Development
The economy of the rural dweller strictly depends on farming, and an increase in the price of agricultural commodities in the rural area excites rural farmers and small-scale agricultural businesses, as their business will receive a boost by the reason of high demand by the farmers in the communities.
Increased prices of the farmers’ agricultural products will enable the farmers to invest in properties, hire more labor to expand their farm size, and spend money on the purchase of goods and services, hence contributing to the economic development in the community. All these accounts for the ways Farm credits contribute to rural development.
Support Agricultural Extension Servicers in the Rural Area
Agricultural credit institutions provide financial support for agricultural extension services in rural areas to enable farmers to understand the innovation and the need to adopt better farming practices that increase agriculture productivity.
Farmers in rural areas are usually skeptical of accepting changes because they are used to the traditional methods of farming which affect rural development.
The financial support for agricultural extension will sensitize and educate farmers on better farming methods that lead to increased Agricultural productivity and the same time increased rural development.
Provision of High-Speed Internet Facilities in the Rural Area.
Access to information in rural areas cannot be possible without internet facilities to aid agriculture and small-scale business development.
Credit agencies can offer credit support to aid the provision of high-speed internet facilities in rural areas to help farmers acquire knowledge on how to improve farming practices. These show some of the ways farm credits contribute to rural development.
In Conclusion
Farm credits contribute to rural development because, with the aid of farm credit farmers can source capital from financial institutions to invest in farming activities, and the outputs can be used to aid community development such as investing in properties, provision of high-speed internet facilities, support agricultural extension services in the rural area, and provide financial support for beginning farmers.