ABSTRACT
THIS CHAPTER 1 Explains why it is important for farmers to have access to purchased
inputs and to credit 2 Describes the nature of rural money markets and the determinants
of rural interest rates 3 Discusses why governments tend to subsidize input prices and credit
and why these subsidies are generally inadvisable
IMPORTANCE of NEW INPUTS Successful agricultural development in most developing countries today requires increased output per hectare and per worker. This agricultural intensification depends in part on the availability and financing of new, often manufactured, inputs. Fertilizers and pesticides, new seeds, irrigation systems, mechanical power, and supplemental minerals and nutrients for animals are examples of these inputs. Uptake of these inputs links farmers with national and international markets and exposes them to the associated risks and rewards. As energy prices increase and demands for food grow over time, the cost of production and relative returns of different input mixes will be affected by internationally determined forces. Governments must address a series of issues related to production, distribution, pricing, financing, and
regulation of inputs, and to the identification and encouragement of optimal on-farm input usage.
