Question

How do the medium and large farmers obtain capital for farming? How is it different from the small farmers?

Answer 1

Modern farming methods such as the use of HYV insecticides pesticides etc require a great deal of capital so the farmer needs more money than before.

• The medium and large farmers have their own savings from farming. They are thus able to arrange for the capital needed. They also have access to formal sources of credit such as banks and cooperatives.
  
• In contrast, the small farmers have to borrow money to arrange for the capital. They borrow from large farmers or the village moneylenders or the traders who supply various inputs for cultivation. The rate of interest on such loans is very high. They are put in great distress to repay the loan, which is not so in .the case of medium and large farmers.