Doctoral Dissertations

Date of Award

6-1973

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Agricultural Economics

Major Professor

David W. Brown,

Committee Members

Merton B. Badenhop, Frank O. Leuthold, nelson M. Robinson, Hans E. Jensen

Abstract

India, and Mysore State in particular, is an example of a developing economy which needs to rationalize its agricultural credit cooperatives. The central objective of this study was to examine the relationship between the repayment of crop production credit and various characteristics of the sample farms and cooperative societies, as well as lending policies and administrative procedures of the district cooperative central banks in selected areas of Mysore State,

Cross-sectional data for a sample of 136 farmer-member-borrowers of 35 primary agricultural credit cooperative societies in Bangalore, Mandya, and Mysore Districts of Mysore State, India, were obtained through interviews with the farmers between May and July, 1972. The sample represented less than 1 percent of the members of all agricultural credit cooperatives in Mysore State. The specific components of the analysis were: 1) to describe the organization of Indian agricultural credit cooperatives as it affects their operational efficiency; 2) to identify existing cooperative lending practices and their difficulties in dealing with borrowers; 3) to examine the sources of difficulty borrowers encountered in repaying crop production loans and other credit sources; and 4) to suggest feasible ways to alleviate repayment problems.

Observations from the sample farmer-borrowers and cooperative societies were classified according to farm size and on the basis of their repayment of 1970-71 crop crop production loans. Averages of farmer resources, cropping patterns, borrowing practices, and problems were compared by farm size for defaulters and non-defaulters. Least squares multiple regression was used to examine the factors associated with the farmers' total amount of outstanding credit, the amount of crop production credit overdue, and socio-economic problems associated with the repayment of cooperative credit.

The results indicated that among all farmers, defaulters and fewer assets in land, livestock, equipment, and grain stocks than non-defaulters, Defaulters had larger average currently financed capital investments than did non-defaulters. The combination of financial obligations to repay other sources of credit and crop production loans was greater than their limited earnings could support. Also, defaulters had, on the average, a lower net output per acre for all crops, less farm income, and owned fewer irrigated acres than non-defaulters.

The analysis of the Mysore farmers' total debt structure demonstrated that some Indian farmers do borrow for unproductive purposes on such occasions as marriage, deaths, births, and litigation. Such spending was a major cause of their heavy indebtedness. However, there was no indication that farmers went into debt to finance annual festival expenditures.

The repayment capacity of the farmer-borrowers was very irregular. Droughts, floods, pests, and a host of other natural calamities resulting in crop failures were primary reasons given by members of cooperative societies for defaulting on their crop production loans. However, supervisors of the cooperative banks tended to disregard the farmers' explanations for their overdue situations and emphasized what they believed to be evidence of willful default by their clients.

The repayment of agricultural credit from cooperative societies can be measurably improved if careful attention is given to selected pivotal issues—loan supervision, marketing and credit, share capital requirements, and educational activities. Also, the land tenure system, the type of agricultural production, and the society's socio-economic objectives are very important environmental factors which influence the success or failure of cooperative credit systems.

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