Credit for equipment
Without financial help, many traditional farmers would not be able or willing to buy animals and animal-drawn equipment. Those with few or no cash reserves could not risk precious food or animal stores for the potential benefits of new methods. Those who could afford the materials might consider it too great a risk if the program were new and the quality of related technical assistance unproven. As a result, many programs offer farmers credit or loans.
Two approaches have been used to extend credit to farmers; either the animal traction instructor and/ or local extension agent handles applications, contracts, equipment distribution, and payments, or the agricultural supervisor or a special credit supervisor handles these functions. Administrators increasingly favor the second approach because instructional agents feel that their image and effectiveness as teachers is hampered when they are forced to collect loan payments.
Whatever the arrangement, the ability and willingness to repay a loan is based on the ability and willingness of extension services to deliver proper tools, skills, and support. From the farmer's viewpoint, the continued presence, interest and guidance of a qualified field instructor is a prerequisite for repayment of the loan; without this support, a return to traditional methods is the only logical and economical choice.
The experience gained in past projects has led to the development of credit systems based on low-interest, medium-term loans. The project may be financed through grants or national banks, or it may operate with its own earnings.
In some credit systems, the farmer pays 5-10 percent simple interest on a 2-5 year loan. The loan usually is reimbursed in a series of equal or increasing annual payments which may begin after a one-year grace period. Rebates may be offered to farmers who make full, early repayment. Because cash down payments are thought to discourage new farmers, most projects accept the purchase of animals, yoke and chain, or harness equipment as ample sign of commitment.
As part of the loan agreement, farmers may be required to do some or all of the following:
• Produce a minimum of one or two hectares of a government marketed cash crop and concur with extension-recommended cropping procedures, including use of hybrid seed, fertilizer, pesticides, planting and weeding procedures.
• Comply with an animal health care plan including construction of shelter, designation of compost area, prepayment of one-year vaccination and deworming treatments, growing and storing forage for dry season feeding, and obtaining animal insurance or maintaining substitute animals.
• Participate in an extension organized clinic on equipment assembly, adjustment, repair, and maintenance.
• Agree to pay penalty on overdue payments, or in case of foreclosures and repossession, to pay outstanding debt and/or depreciation costs.
• Become a member of a group or association of animal traction farmers which stocks supplies, organizes instruction, and maintains a common fund. In some cases, the group is chartered and lends money to members who are unable to make annual payments.
(Examples of equipment title and payment records are found in Appendix E.)