question_answer

In what way are sources of capital required for farming by large farmers different from the capita sources for small farmers?                                 (5)  

Answer:

Large farmers retain a part of their produce and sell the surplus in the market. This provides them with the required capital for the next season. They may use some of this for giving loans to small farmers at high interest rates, thus increasing their capital further. Thus, medium and large farmers have ready capital with them from one agricultural season to the next. In the small farmer's case, they begin with no working capital and have to take loans at high rates of interest. Due to the small sizes of their farms. Their total production is kept for their needs or for repaying their lenders. Hence they have no savings.