Micro Finance Influence in Agriculture Productivity
Globalization, decreasing land space for agriculture and decreased underground levels, rising population have made agriculture of significant importance (Intergovernmental Panel on Climate Change, 2014). While challenges are opposed to agriculture with rising problems and climatic disturbances there are very less number of financiers and support framework available that can enhance the overall agricultural system. Microfinance is the major support system that farmers make use of such that they can continue with their process of agriculture and irrigation. Very less effort towards microfinance from government and other bodies have been taken such that the flow of funds can be maintained in a steady manner (Dale, 2012). Especially in less developed and developing countries as major source of earnings for majority of the population depends upon agriculture it becomes crucial that such activities are funded. Microfinance forms a major source of funding for individuals who are into agricultural activities. Hence, it becomes essential to review and evaluate the scopes and role of microfinance into that of agriculture (Huai, 2016).
Agricultural productivity requires a steady flow of funds such that farmers and other stakeholders involved can continue with the tasks with steady efforts. Small holders of agricultural lands and who are into farming deploy a series of endeavors such that they can grow produce on their lands and feed their families (Adato, 2007). Sources of funds and funds availability to these smallholders as well as farmers are limited in nature hence they mostly opt for microfinances which are readily available. They resort to microfinance for the purpose of buying seeds, purchasing other supplies for cultivation, protecting their crops, fertilizing them and so on. Without such steady source of finance it is impossible to sow and cultivate vast stretches or smallholding of lands as the returns generated form such is not sufficient to meet sowing in the next period of time (Murray-Prior, 2011).
Greater the source of readily available microfinance available more are the capabilities of these farmers to generate output. Further availability of microfinance impacts productivity by means of quality of produce, as better quality of insecticides and pesticides can be bought. In case farmers are constrained from source of microfinance it becomes immensely difficult to carry on agricultural activities and protecting their produce from insects or other powerful climatic impacts (Khuu, 2013). Recent trends in greenhouse farming also reflects the impact that are caused by way of microfinances. This source of finance constitutes almost 74% of total funds that goes towards the purpose of agriculture.
Prospects of Microfinance to Agricultural Productivity
Microfinance are said to create an ample aspects to raising agricultural produce to high rates, though the costs of borrowing such funds are significantly higher. Recent trends over the past twenty years depicts relevant efforts from non-governmental bodies, government, international organizations, community and other stakeholders in order to reshape the vibrant microfinance sector that can impact on agricultural productivity (Islam, 2011). Microfinances forms a wide range of financial services as loans, deposits, savings, money transfers, payment services, insurance and other forms of micro-enterprises that does not form part of the formal financial systems. Microcredit and microfinance are almost used quite interchangeably and they have a relevant role in the field of agriculture. Productivity in agriculture is a reflection of overall effectiveness and efficiency such that ratio of input as against that out output can easily be measured (Anita, 2010). While larger financial infrastructural bodies highly criticize and bargain regarding the existing roles of microfinance their productivity can be increased by means of improved seeds, fertilizers, labor, technology and so on and so forth. such advanced functionalities is brought about and plays a role only due to the presence of microfinance structures. There still lies unutilized structures that can be readily used in the field of microfinance to make funds easily available and reach out to poorer masses of people such that high impact in agricultural productivity can easily be generated (Dowla, 2009).
Strategies for improving Agricultural Productivity by Micro finance
Microfinance has been playing significant role in agricultural productivity since a long time. While they have penetrated and has greater outreach to a large number of people their scopes can further be enhanced by means of a number of complex structures and systems (Beddington, 2011). The primary strategy that needs be incorporated into agricultural productivity of microfinance is to extend and accommodate for a governmental level of policy. There exists a series of types of microfinances availability in Korea and other countries however there are no defined and formal structure that can define them and enhance their scopes (Hossain, 2012). The reach out capacities of microfinances needs to be enhanced as well such that it can be easily assessed by farmers and poor segment of the society who needs it the most. There is a trend that depicts that is less developing countries there is a steady increase in the interests rates associated in the field of microfinance that are provided to the poor. Such interests rates alleviates poverty rates and is said to do more harm than good to prospective loan takers (Rohadi, 2015). Thus, interests rates for these microfinance schemes needs to be regulated such that poverty in villages can easily be reduced and can impact the entire poverty in a particular region from there low servicing costs. There conceptual framework also needs to be monitored with targeted to find and evaluate their possible impacts on the same. there was a study undertaken that reflected that smallholder farmers faces immense amounts of challenges in order to have access to funds and microcredit system facilities that further deters their ability to cultivate and develop agricultures on their vast or small stretches of land. thus, government or non-governmental agencies needs to step in and provide a suitable framework for the purpose of developing a structure that can easily support and enhance the entire system of microfinance system within scopes of agriculture to provide a helping hand to the community for the same.
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