question_answer

How do the medium and large farmers obtain capital for farming? How is it different from the small farmers?

Answer:

(a) Medium and large farmers sell the surplus farm products in the market. Part of the earnings is saved and kept for buying capital for the next season. They are able to arrange capital from their saving. (b) Small farmers are unable to produce farm products for sale. They have to borrow money to arrange for capital. They borrow money either from large farmers or the village moneylenders or the traders. The rate of factors on such loans is very high.