Question

From where do farmers get capitals needed for farming ? how does it affect the farmers ?

Answer 1

Farmers get capital for their farming either through their savings or by borrowing money. The main source of capital is borrowing since typically, farmers, being poor, do not save much.

Borrowing can be either from moneylenders or banks. Traditionally, moneylenders have been the main source of loans. But moneylenders can be exploitative as they charge high interest rates. Banks are a more attractive source of loans. But farmers find it difficult to get loans from banks as banks usually ask for security, called collateral, for lending money.