Increasing small farm income and resource use through agricultural credit in Bangladesh : a case study

Abstract

Rural development with distributive justice is the major goal of the economic development strategy of Bangladesh- To achieve this goal efforts are being made to raise agricultural output and to create more employment opportunities for the rural unemployed. The adequate flow of agricultural credit to quicken the diffusion of capital and labour intensive HYV crops with increasing use of modern inputs is the major component in the rural development programme of the Government of Bangladesh. This study is an attempt to assess the credit requirement of the small farmers and to analyse the impact of credit on cropping intensity, farm income and labour use in the "Barind" area of Rajshahi district of Bangladesh. A linear programming approach has been adopted. The study has revealed that working capital is the most binding constraint and adequate availability of institutional credit substantially raises cropping intensity and farm income. But the credit for crop farming alone has a limited role in creating additional job opportunities. Further, the study has shown that the relatively smaller farmers utilise credit more efficiently and as such their optimal credit need per acre is also much higher than that of the existing per acre credit ceiling of the institutional agencies. Therefore to exploit fully the potentialities of the rural areas and to ameliorate the impoverished conditions of the small farmers an increased flow of rural credit for farming activities is essential.