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Agricultural finance is a branch of finance which comprises financial services for agricultural production, processing and marketing, leasing (both land and equipment), and crop and livestock insurance.
Although agricultural finance mostly overlaps with rural finance, some larger agricultural companies are also located in bigger towns and cities. Moreover, not every rural finance operation is directly related to agriculture.
Agricultural financial services include loans, savings, payment and money transfer services, and risk management.
Agricultural financial services are provided by a spectrum of organizations of various size and level of formality. They include:
- Rotating savings and credit association or accumulating savings and credit associations;
- Banks;
- Leasing companies;
- Insurance companies;
- Investment funds;
- Non-bank financial institutions;
- Mutualist financial institutions such as credit unions or savings and loan associations.
The demand side of agricultural finance sector is also diverse, ranging from semi-subsistence households to micro and small enterprises engaged in agricultural activities, and medium/large companies engaged in production, manufacturing, trade and services. Their financial needs differ widely in terms of amounts, terms and conditions as well as the degree of sophistication of financial services required.[1]
- ^ Dr. Frank Höllinger, “Agricultural Finance – Trends, Issues and Challenges” Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, 2011.
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