Short Note On Problem Of Capital

Problem of capital: While the big farmers usually have surplus cash, the

small farmers may need to borrow to buy seeds, fertilisers and farm equipments. They may go to a bank or cooperative to borrow money. 

But most of the time, the local merchant or moneylender comes to their rescue. Taking a loan from the local merchant and moneylender is more risky as it carries a higher rate of interest compared to what is prevalent in the banks. There are many cases, when

a small farmer is unable to repay the debt on time. Such farmers often get caught in the debt trap.