Identifying the Role of Agricultural Loan in Reducing Seasonal Price Fluctuation of Agricultural Crops of Farmers in Bangladesh

Abstract

Agriculture is the heart of the economy of Bangladesh. But our agriculture is affected by many problems. Among many of the problems one of the most important problems is that the farmers are not getting fair price of their crops. There exists wide variation in the price of agricultural crops during on-season and off-season. Price remains very low during on-season and become very high during off-season. More supply than demand during on-season and less supply than demand during off-season is the main reason behind the price variation. Some factors are responsible for this imbalance between demand and supply. Among which the most important fact is the poverty of farmers. Since most of the farmers of our country are poor, they sell their products during on-season at lower price for the need of urgent cash. If they are given agricultural loan at comfortable terms and conditions, then they will store crops instead of selling at lower price. This mechanism will balance the demand and supply conditions of agricultural crops at some extent. As a result, seasonal price variation of agricultural crops during off-season and during on-season will reduce at some extent. We collected data of 350 respondents in 2013 from Dinajpur, Thakurgoan, Rangpur, Lalmonirhat and Nilphamary districts and analyzed data by using Z-test, Chi-square test etc. In our study more than 80% farmers in Bangladesh wanted agricultural loan and 70% farmers opined that agricultural loan will reduce price variation of agricultural crops during on-season and off-season. So government should take initiative to provide agricultural loan to farmers at comfortable terms and conditions.