Agricultural Science

• The main function of the root system is to anchor the plant, absorb water and minerals from soil.
• Root hairs are found on the surface of roots and increase their absorptive area
• Capital is a factor of production used in combination with land, labour, and management to provide goods and services to satisfy consumers
• Capital are both physical and financial resources
• Capital is a total investment in agribusiness
• There are two types of capital, fixed/durable and working/operating
• Fixed/ Durable Capital refers to resources on the farm that have more than a year of productive life. For example, land, equipment, machinery
• Working/Operating Capital refers to resource used in daily operations of the business
• Working Capital has two sub-groups: cash and stock/consumables
• Land appreciates
• Equipment depreciates
• Stock includes feed, fertiliser, seed, chemicals etc.
• Consumables include fuel, oil, grease, lubricants, spare parts etc.
• The amount of capital a farmer has at his disposal enables him to:

  1. make decisions about the size, type of the farm, the type of crop to be grown and the best system to use
  2. to decide on the level of mechanization he can afford
  3. improve and develop the farming business
  4. increase from assets and values
• Sources of Capital

  • Agricultural Development Bank
  • Agricultural Societies
  • Ministry of Agriculture
  • Commercial Bank / Enterprise & Insurance Company
  • Credit Union
  • Co-Operator
  • Sou-Sou Groups
• Agricultural Societies


  • Offer loans at low rates of interest (3% -16%)
• Ministry of Agriculture


  • Manages subsidized farm inputs
• Commercial Bank / Enterprise & Insurance Company

  • Offer loans at rates of 8%
  • Sell land, planting materials, machinery & equipment
• Credit Union


  • Offer loans at low rates of interest
• Co-Operator


  • Rent out machinery & equipment
  • Offer loans at low rates of interest
• Sou-Sou Groups


  • Partner
• How To Obtain Loans


  1. Farmer must provide the following to be approved for a loan:

  2. Oladit

  3. Credit-Worthiness (measure of farmer's ability to pay off debts, determined on basis of assets, liabilities, net worth)

  4. Lending institution judges whether farmer will be able to repay loans off of incomes and expenses of the farm 5.
• Farm Proposal


  Document which details farmer's objectives, enterprises proposed, farming techniques, resources needed, anticipated input & income
• Budget Estimate


  Justifies the amount of money loan required for the proposed farming business
• Farm Records


  Provide documentary evidence of previous enterprises to justify the experience of the applicant
• Financial Institutions


  • Ensure farmer has some form of collateral to offer that will cover the total amount of the loan
  • Guarantor (a friend or relative) pledging property as security for recovery of the loan should the farmer fail to repay it
• Problems with obtaining loans

  • Lack of Collateral
  • Poor Credit-Worthiness
  • Insufficiently detailed (farm) budget estimates and proposal
• Average cost per unit = total fixed + total variable / total units produced
• Fixed costs do not vary with output (e.g. rent) while variable costs change as production increases (e.g. labour)
• Capital is money or other resources that are used by an individual or organisation to achieve their goals
• Variable costs are those that vary directly with output e.g. feed, fertiliser, labour
• The average cost per unit is calculated by dividing the total cost by the number of units produced.
• Fixed costs do not change regardless of how much is produced e.g. rent, insurance, depreciation