Agricultural development without credit

Inadequate attention has been paid to the careful appraisal of the need for small farmer credit schemes. The need has been assumed to exist. A survey undertaken in three Chiefdoms of northern Zambia, which have experienced recent and rapid expansion of cash crop production, calls this assumption into question. Over 80 per cent of the sample financed their first agricultural input purchases from sources other than borrowing: mostly from home-based businesses. The study concludes that, under conditions of land surplus, such as in Zambia, seasonal credit for small farmers is unnecessary and wasteful and should be abandoned in favour of medium-term credit for oxenisation, or large, curative lime applications.

It has always been difficult for credit agencies to assess the risk involved in lending money to emergent-commercial farmers and this paper attempts to show a flow of practical ideas from which steps emerge to show the process of estimating credit worthiness using a minimum of information. Basically, the steps require information from a sample of farmers to be interpreted under a number of progressive systems of cultivation for commercial crops and a measure of the management performance of farmers under their current system of farming. Plans for an advancement in their farming activities are then derived and the most feasible plan determined in order to assess credit needs and indicate the risk involved in the granting of such credit.