Some Operational Issues and Institutional Constraints in Lending to Small Farmers

Rao Abdul Rauf Khan


The small farmer, as is apparent from this term, is one who
does not have enough land to produce more or his family labour is
scarce, or he is using outdated modes of cultivation or his family feels
a compelling need for cash income from non-farming pursuits because of
strict adherence to the traditional cropping pattern. As such, it is
because of this typical socio-economic environment that limits the
possibility of raising his standard of living through the harnessing of
available limited resources to its maximum in a skillful manner.
However, there is quite a difference of opinion about the definition of
what is a small farmer. Usually, he is taken to be synonymous with a
poor farmer. A notable feature of the agrarian scene in Pakistan is the
predominance of small holdings. Small farmers, defined as those with
landholdings upto 5 hectares constitute 74 percent of the total number
of farmers in the country, though the area commanded by them is only 34
percent of the total cultivable area. As against Pakistan, in India
small farmers are those who own holdings upto 5 acres (or 2.02 hectare)
constituting 69.9 percent of the total number of farmers in the country,
though the area commanded by them is only about 21 percent of the total
area. The area of this size in Pakistan is adequate, from the viewpoint
of income and productivity, to support life at subsistence level. As per
information gathered from the field and evidence from research studies
the average income derived from 12.5 acres (5 ha) land, varies from 7000
to 16000 rupees and for land holdings of 25 acres (10 ha), it varies
from 19,000 to 25,000 rupees, depending on farm practices carried out
and the level of improved inputs used. This is the average income which
is earned by an extended family consisting of six members.

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