Perceived Constraints for Microfinance Accessibility of the Paddy Farmers - A Case of Anuradhapura District

Abstract

Inadequate access to finance by the farmers has been identified as one of the contributing factors to the paddy cultivation, value addition and distribution of the country. Microfinance is a key policy strategy to solve the financial difficulties that affect directly the paddy production. The purpose of this study was to identify and assess the problems face by the paddy farmers in using microfinance facilities for their production, processing and selling activities. Primary data were collected through a survey from a sample of 40 paddy farmers and 10 government and non government (NGO) microfinance institutions in Anuradhapura District. Potential problems faced by the lenders and borrowers were analyzed by using the student t test statistical analysis tool. The perceptions of paddy farmers towards the constraints identified were not vary with respect to their age group, education, farming experience and gender. Higher interest rates, collateral requirements, strict repayment structures and high competition were the main constraints that faced by both paddy farmers and microfinance institutions. Government and non government authorities have to make policies to remove the constraints which hinder the accessibility to microfinance facilities by paddy farmers as well as to remove the barriers face by the financial institution within sector.