Research on the Types of Agricultural Finance

Abstract

The shift to environmentally friendly farming and food production is not supported by the financial infrastructure that is necessary to enable it. Since the beginning of time, the industries have received a very little amount of money from financial institutions, microfinance organisations, and institutional investors. At the moment, the proportion of the gross domestic product that is contributed by the agriculture sector is too low in lending and investment portfolios. Along the agriculture value chains, there are a large number of micro, small, and medium enterprises (MSMEs) and small farmers, in addition to the unique risks that agriculture presents. The financial markets also have to deal with a limited effective demand for finance, a lack of expertise among financial institutions in managing agricultural loan portfolios, and a large number of small farmers. On the other hand, a great number of countries have imposed regulations and instruments that are either inadequate or ineffective, which has resulted in a reduction in the number of available channels for the mobilisation of private capital.