The Problem of Financing Small-Scale Agriculture The Case of Rural Credit in Al Shehainab Area Khartoum State 1990-2005

Abstract

The study aims at investigating the importance of potatoes cultivation in Al Shehainab and studying the problems of financing that face small farmers. It examines the conditions of poor farmers who struggle to survive despite the power of the commercial banks, big traders and try to get financing with difficult terms and conditions. The research highlights the ability of the traditional sector in Al Shehainab to adopt modern inputs and methods that can improve and sustain potato cultivation. It attempts to add further information to the scanty available sources and draw the attention of the government, represented by the Ministry of Agriculture to the problems of financing the Agricultural production in Al Shehainab. Finally, the research aims to draw the attention of all those concern to the plight of poor farmers in rural areas who have got little access to credit, land or power. The study is based on both primary and secondary data collected from government ministries, departments and institutions. The primary data has been collected through informal interviews with resource persons and key informers. Lack of capital and limited access to credit compelled farmers in Al Shehainab to use self finance from their own resources. A few use a combination of self finance and formal finance. The research shows farmers prefer formal finance to informal while a small number prefer the informal types of finance. Furthermore, the study shows that the credit is not adequate. However the farmers found that the credit did not solve the problem of finance completely. Government absence and the lack of state intervention in sense of subsidies is tow of the major problems of financing potatoes in Al Shehainab. The research shows that farmers have no enough assets to entitle them to receive credits. The research concludes that farmer in Al Shehainab faces limited access to credit. When he have the credit he suffer form high interest rate, he also have restricted access to market when he reach the market the whole system is defective and need adjustment the research recommends to improve access to credit with long duration loans, and low interest Rate. The research recommends for wide access to market and the establishment of specialized rural institutions to facilitate access to credit. Also the research recommend establishment of associations to express and represent farmers' interest. Government is also required to maintains effective credit polices.