Determining the Factors Affecting Investment in Punjab Agriculture

Abstract

Investment is the expenditure incurred for real capital formation. A sample of 150 farmers was taken with 23 (15.3%), 28 (18.7%), 46 (30.7%), 43 (28.67%) and 10 (6.7%) farmers selected from marginal, small, semi-medium, medium and large farm size categories respectively in proportion to the share of respective category in total farmers in Punjab. Income, consumption, funds available post-consumption and investment level of the respondent farmers was worked out to find the factors that affect farm investment. Information related to education level, family type, cropping pattern and credit availability was also collected to see if they affect the level of investment. Income, consumption and funds available post-consumption were higher for larger farm households. The level of investment was higher on large farms but the investment per hectare was highest on marginal farms. The availability of credit was more on larger farms but per cent share of credit in investment decreased as the farm size increased as large farmers were using owned funds extensively. The regression analysis revealed that the size of the operational holdings, saving and the credit availability showed positive relation with the level of investment while the education level, family type and cropping intensity were non-significant.