1. Why enhancing of farm credit supply is important in PICs? What are different

Question

1. Why enhancing of farm credit supply is important in PICs? What are different sources of finance for agricultural activities? (2 marks) 2. Explain with the help of some suitable example the method used in preparing partial budget for a change in a farm enterprise. (2 marks) 3. Explain the three factors (3 R’s) that a farmer should consider while borrowing money. (2 marks) 4. Describe the method of calculating return on the farm investment. (1 marks) 5. What do you understand by the term ‘break-even volume’? How break-even analysis can help in farm planning. (1 mark) 6. Explain the importance and the main components of ‘Profit and Loss Account’ and ‘Balance Sheet’ in farming business. (2 marks) 7. Briefly explain various reward structures for motivating farm labour to improve work performance. (2 marks) 8. Explain the essential steps in farm production control.

Explanation / Answer

Enhancing the farm credit is important as it is one of the promising step by the Government to the former. It will help farmers to invest more and earn better profits for their farming ventures. It divided into 2 types.

A) Non institutional sources

B) Institutional sourcea.

A)Non Institutional sources :

1. Money lenders

2. Relatives

3. Traders

4. Commission agents

5. Landlords

B) Institutional sources:

1) Cooperative bank's.

2) Scheduled commercial banks

3) Regional rural banks

3) *Understand the terms and conditions of the loan

*Efforts to re payment

* need of money.

4) Return on the farm investment = Net profit / total investment either increased or decreased * 100

5) number of units sold at which sales revenue equals total costs. The amount of the product produced and sell to cover total costs of production.It can help decide when to sell or buy for the future sake.And helpful as a way to figure out the best pricing structure for their products.

6) components of the profit loss account : 1) expenses

2) loses

3) incomes

4) gains.

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