Farm Level Capital Formation in Agriculture: Pattern and Sources of Investment in Southern Karnataka

Abstract

Farm level capital formation by farmers is largely for the creation of productive assets. An understanding of pattern of investment on capital assets and the source of funds for investment at farm level has greater significance in the present context from the point of view of agricultural development. With this background, the study aims at analysing the farm level agricultural investment in Southern Karnataka specifically focusing on progressive (Tumakuru) and less progressive (Ramanagara) agriculture districts with an objective understanding the pattern of investment and source of funds at farm level. The study revealed that, a lion share was accounted by investment on irrigation structures, livestock and farm machinery and implements, across all type of farms in both progressive and less progressive regions. However, magnitude of investment was different across the region. On an average, in both progressive area and less progressive area, large farmers invested greater amount on farm assets per farm followed by irrigated farmers, small farmers and rainfed farmers. In the progressive area, the irrigation development was the preferred area of investment, where as in less progressive area, it was the livestock. The small and rainfed farmers depended on borrowed funds for investing in assets. In progressive area, institution source of funds played a major role than the non-institutional source of funds and vice versa in less progressive area. On the other hand, the large and irrigated farmers, because of their resource base, made investment from their own sources.