The Role of Agricultural Credit on Farm Development in Kyrgyzstan:

One central problem in the efforts to increase rural productivity and reduce poverty is insufficiency of production capital. There are high expectations that credit can help to enhance farm income. This book investigates the relation of agricultural credit on farm development in three regions of Kyrgyzstan. It is widely contended that capital shortages significantly constrain the productivity of peasant farmers and as such they remain within the group with the lowest income in the society. Credits are needed by peasant farmers to be able to invest in fertilizers, improved seeds quality, and modern farm machinery to enhance their productivity. While the inadequate infrastructural facilities, which limit the access to improved inputs and extension services by peasant farmers, and raise transportation costs for both inputs and produce, are one of the main constraints on the realisation of production potential. Therefore, in order to improve present situation of peasant farms during transition period needed to develop appropriate finance institutions for rural areas with low interest rate, low transaction costs and simplify application procedures. The current study has brought into focus a salient research problem that is yet to be addressed so as to gain more knowledge on the possible ways of enhancing agricultural development and alleviating the problem of poverty. This study has looked into the determining use and productivity of the different factors of production by peasant farmers also the credit lending policies. The financial services are financing insufficiently in order to increase farm production because the demand for credit for agricultural purposes is weak due to marketing problems as reported by farmers. A detailed study on marketing is needed to show that the availability of marketing services will stimulate the demand for credit for agricultural purposes and thus increase productivity. Therefore, further research is necessary to understand in detail the conditions and existing transactions.