The Capital Needed in Farming
This section delves into the importance of capital in farming within the context of Palampur. As agricultural practices evolve, particularly with modern farming methods, the need for financial resources has significantly increased. Small farmers, who make up a substantial portion of the agricultural community, often find themselves in precarious financial situations due to their reliance on loans from larger farmers or moneylenders, which come with high-interest rates.
For instance, Savita, a small farmer, needs approximately Rs 3,000 for her working capital to cultivate wheat on her one-hectare land. Lacking savings, she borrows from Tejpal Singh, a large farmer, at an interest rate of 24%, forcing her into a labor arrangement while undertaking her own farming obligations. This creates a cycle of debt and labor intensiveness that traps her financially.
In contrast, medium and large farmers benefit from their own savings, allowing them to reinvest in their agricultural practices, enhance productivity, and secure financial stability. This disparity in capital access highlights a critical economic divide within the farming community. Understanding this dynamic is essential for addressing the challenges faced by small farmers in achieving sustainable agricultural production.