Pattern and Sources of Farm Investment in Agriculture of West Bengal: A Comparative Analysis Between Small and Large Farm

The analysis of the farm level investment is a complex problem, being very useful in the planning as well as in policy making process. This paper is the first to attempt a systematic comparison of investment between small and large farms in West Bengal. There has been a growing interest in recent years in the pattern of the capital formation, and sources of farm investment between different categories of farmer. The paper identifies the pattern of investment on different farm assets viz., purchase of land and land improvement, livestock, machinery, farm building, irrigation equipments and perennial crops. Data for the study was generated through a sample survey of 90 farm households from two districts in West Bengal. The rate of capital formation increased as the farm size increased. Purchase of irrigation appliances and land were the major item of capital formation in the farms of both small and large categories. Large farms invested highest on irrigation implements (` 66,467) and least on perennial crops (` 10,700). However, magnitude of investment was different across the different categories of farm. The per hectare investment on different farm capital assets found higher in case of small farms (` 2,77,559 per ha) than large farms (` 2,77,010 per ha). On aggregate, share of investment on different items was more than three times higher than investment made by small farmers in the last twelve month on their farms.

Off-farm Income, Credit Constraints, and Farm Investment

Many farmers face borrowing limits that depend on their household income and net worth. Given such credit constraints, an increase in off-farm income should allow farmers to borrow more, thus influencing production decisions and productivity. To test this hypothesis, the education level of the farm operator’s spouse is used to identify exogenous variation in off-farm income. Findings indicate that higher off-farm income leads to more borrowing, capital expenditures, capital input intensity, farm labor use, output, farm income, and productivity. Results suggest that Federal programs that promote access to credit for limited-resource farmers may increase farm investment and productivity.

Eliminating Uncertainty in Market Access: The Impact of New Bridges in Rural Nicaragua

We measure the impact of increasing integration between rural villages and outside labor markets. Seasonal flash floods cause exogenous and unpredictable loss of market access. We study the impact of new bridges that eliminate this risk. Identification exploits variation in riverbank characteristics that preclude bridge construction in some villages, despite similar need. We collect detailed annual household surveys over three years, and weekly telephone followups to study contemporaneous effects of flooding. Floods decrease labor market income by 18 percent when no bridge is present. Bridges eliminate this effect. The indirect effects on labor market choice, farm investment, and savings are quantitatively important and consistent with the predictions of a general equilibrium model in which farm investment is risky, and households manage labor market risk and agricultural risk simultaneously. In the calibrated model, the increase in consumption‐equivalent welfare is substantially larger than the increase in income due to the ability to mitigate risk.

Farmer innovations in financing smallholder maize production in Northern Ghana

Purpose The purpose of this paper is to explore smallholder agricultural financing in Ghana’s Northern region by identifying farmers’ preferred traditional and innovative financing methods and estimating the determinants of use of innovative financing methods. Design/methodology/approach This paper presented a list of documented traditional financing methods to farmers during in-depth interviews and employed descriptive statistics to summarize choice and amounts sourced from traditional methods. Two questions from the survey revealed a felt need for extra financing sources for credit-rationed farmers. Farmers with positive responses to either or both questions were classified as “users of innovative financing”. The authors then used a probit model to examine factors that influence decisions to use innovative financing method. Findings Farmers’ own savings, reinvesting past season’s profits and financing maize production with income from other commercial crops were the most popular traditional methods. The authors found complementary relations between formal and informal lending systems in the rural financial market. Smallholders also took farm and non-farm “by-day” jobs to raise income for farm investment and/or joined Village Savings and Loans Associations (VSLAs) specifically to take advantage of possible credit opportunities. These two latter methods were operationalized in this study as innovative agricultural financing. The results show that access to credit, social capital and market participation increased the likelihood of using innovative financing methods. Alternatively, farmer group membership, diversity in crop production and being a household head diminished the likelihood of innovative financing use. Practical implications The activities of VSLAs can be regulated and expanded to spread its benefits to more farmers. Also, creating avenues for dry season labour market participation in the region could enable farmers raise capital for farm investment. Originality/value This study explores existing practices and farmer innovations to agricultural financing and, by so doing, deviates from the vast literature focussing mainly on microcredit provisioning as the main model of smallholder agricultural financing in Africa.