Management Theory and Studies for Rural Business and Infrastructure Development, Volume 32

Agricultural small and large producers financing impact on innovations and activity results

Audronė Kozlovskaja


Agriculture is a high risky, but very important economy branch. A lot of countries, including Lithuania, give special attention to the financial support of agriculture. It is essential to study how the current financing system of the agriculture meets the needs of agricultural producers, particularly the small ones, and to assess its impact on innovative activities and on activity results. The study reviewed risks and problems of agricultural lending and evaluated borrowing ratios of Lithuanian agricultural producers. Also study disclosed methods and sources of the financing of agricultural production, estimated its impact on investment and activity efficiency. Comparative and dynamic analysis and synthesis of financial data was applied in the study. The main financial information used in a study was weighted averages of performing data of farms and agricultural enterprises. Borrowing, investment and efficiency ratios were calculated and studied. It was found that although external financing of agriculture has a number of peculiarities to be associated with a small scale, seasonality, low capital turnover and others, the country's agricultural lending rates comparable to the EU average for borrowing. Various funds apply for the financing agricultural producers. Credit unions meet small farmers borrowing needs, than commercial banks tend to lend money to large agricultural producers. Large agricultural producers have bigger borrowing ratios, but use less of the received funds for long-term investments. This leads to similar operational efficiency of large agricultural producers and small ones.

JEL codes :Q120, Q140

Keyword(s): innovative activities, relative indicators of borrowing, operational efficiency, external financing system of agriculture

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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editor: Dr Audrius Gargasas.