Sources of agricultural finance, risk and mitigation by farming community in Kandaghat Block of Solan district, Himachal Pradesh, India

Vol-6 | Issue-05 | May-2021 | Published Online: 15 May 2021    PDF ( 227 KB )
Farooq Mohammad Sadaqat 1; Buzurgzada Mohammad Bahir 2; Sharma Krishan Kumar 3

1Technical Evaluation Specialist, Technical Service Unit, Agriculture Development Fund (ADF), Nangarhar, Afghanistan

2Lecturer, Academic Member, Department of Agricultural Economics and Extension, Laghman University, Mehterlam, Laghman, Afghanistan.

3Professor and Head, Academic Member, Department of Business, Dr YS Parmar University of Horticulture and Forestry, Solan, Himachal Pradesh, India.


Finance plays a vital role in every business activity. Since agriculture is moving toward commercialization, so the credit needs become crucial. Finance is required for various purposes throughout the year, and this need is met via different sources. Agriculture involves many risks which led to instable income to producers which led them to face many problems and requires adequate strategies to minimize these problems. Therefore, it’s important to study sources of agricultural finance, risks and how risks are controlled. For this purpose, the data was collected from 60 farmers with the help of structured questionnaire through personal interview. From the analysis of data it was found that the formal institutions were considered as main source of microcredit, but the high interest rate and demand for collateral were the main barriers in taking loans from formal institutions. It was further observed that reduced consumptions and borrowing from relatives and friends were used to mitigate the financial risks. It was found that farmers in the area were risk averse. Study suggests government intervention, changes in credit sanctioning processes and procedures, promoting cooperative farming.

Financial risk, farming community, risk mitigation, agriculture finance, socioeconomic
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