Why do farmers borrow money?

Answer 1

A farmer to look after his crop day and night, irrigate, pump water and use machines to get some money in terms of return . They also don't have regular income source other than agriculture but when due to unseasonal rains and late monsoon, they loss their crops and to survive their life they borrow money from money lender.

Answer 2

It's more difficult to make money from farming than most people realize. Often net returns or income received from selling the year's harvest or excess livestock aren't enough to make the payments on other things like fertilizer, fuel, feed, pesticides, machinery purchases or repair bills, paying land leases, and other things. What money that is made goes right back to the farm, not to luxury items like a new sports car or to build a pool in the backyard.

Loans have to be taken out to help make payments on things mentioned above that the farmer wouldn't have enough money to pay for him- or herself. Even purchasing more land can take a big chunk out of a farmer's bank account, and fuel, fertilizer and pesticide never come cheap either. It's not a pleasant thing to have a $3000 fuel bill come in the mail from fuel that had to be purchased on credit over the last few months.

Loans aren't something a farmer wants to utilize, because it always means having to pay it all back in the end. Any and every farmer would tell you that they would rather find ways where they don't have to take out a loan every now and then than be forced to consider borrowing money from the bank. Even those who are starting up don't like the thought of taking out a loan, especially when there's risk that they may not be able to pay it all back in the next 5 to 10 years. Even veteran farmers find it quite risky to consider having a loan because they know any year could leave them in the red or put them out of business altogether, leaving the bank with no choice but to foreclose on their investments and assets. Nobody wants that. Loans are something that a farmer has to think very carefully on and can't risk jumping into immediately. Putting it this way, taking out a loan for a farmer is a much, much difficult and scary prospect to consider than someone applying for a loan to go to college or university. It could also be said that one should never, ever think that considering applying for a loan to a farmer is like someone taking out a loan to go to school.