Capital problems are a major challenge for farmers

Oct 13, 2025 by wbrum.org 38 views

Analysis of the Effect of Credit Realization on Tomato Production: Case Study at Credit Union La Erlatih, Cinta Rakyat Village, Merdeka District, Karo Regency

The Importance of Credit in Agricultural Development

The national economy seeks to improve the welfare of the community supported by the agricultural sector. Agricultural development is crucial for economic growth, and the role of the agricultural sector will be more optimal if supported by an integrated, sustainable, and balanced planning system with adequate budget provision, such as venture capital. Capital problems are a major challenge for farmers, and although many farmers have the potential to increase their agricultural output, without sufficient capital, they will not be able to develop agricultural businesses to the maximum.

The Role of Credit in Agricultural Production

In recent years, credit growth, especially in the agricultural sector, has increased rapidly, thanks to government programs aimed at improving the rural economy in agricultural areas. Agricultural loans play a very important role in the development of this sector, so farmers can get better results. Increased production will impact on increasing farmers' income, which in turn will improve their welfare. Access to credit can have a direct impact on agricultural production, especially in the context of tomato farmers in the village of Cinta Rakyat.

Methodology and Research Variables

This research was conducted by distributing 40 questionnaires to tomato farmers in Cinta Rakyat Village. The research variables used are equity (X1), capital credit (X2), and land area (X3), and use multiple linear regression analysis. Based on the analysis conducted, it can be concluded that the application of agricultural loans in Cinta Rakyat Village has been going well, although there are still several aspects that need to be improved in the management of tomato agriculture.

Results and Analysis

With a 95% confidence level, the test value shows the coefficient of determination of 0.973. This means that the analysis of the effect of agricultural credit on farmers' welfare, with predetermined research variables, can explain the variation of production levels of 97.3%. Meanwhile, the remaining 2.7% is explained by other variables that are not included in the estimated model.

Additional Analysis

The Impact of Credit on Agricultural Production

It is essential to understand how access to credit can have a direct impact on agricultural production, especially in the context of tomato farmers in the village of Cinta Rakyat. First, credit allows farmers to make greater investment in agricultural input, such as fertilizers, pesticides, and agricultural equipment. Thus, farmers can improve the quality and quantity of their yields.

Diversification of Business and Risk Reduction

In addition, the existence of credit can also encourage farmers to diversify business. For example, farmers who previously only plant tomatoes can start considering planting other types of vegetables or expanding their agricultural land. This not only increases their income, but also reduces the risk of crop failure due to dependence on one type of commodity.

The Importance of Good Management

However, it is essential to remember that good management is also needed to maximize the positive impact of credit. Farmers need to get training on better financial management and agricultural engineering in order to be able to use loan funds efficiently. Without proper management, there is an unpaid risk of debt that can trigger economic problems for farmers.

Conclusion

In conclusion, the effect of the realization of credit on tomato production in the village of Cinta Rakyat shows that although there has been progress in access to capital for farmers, there is still space for improvement in the management of agricultural businesses. With the right support, both from the government and financial institutions, the potential of agricultural production in the region can continue to be improved for better welfare of farmers.

Recommendations

Based on the findings of this study, the following recommendations are made:

Improving access to credit for farmers: The government and financial institutions should continue to provide support for farmers to access credit, especially in the agricultural sector.
Providing training on financial management and agricultural engineering: Farmers need to get training on better financial management and agricultural engineering in order to be able to use loan funds efficiently.
Encouraging diversification of business: Farmers should be encouraged to diversify their business by planting other types of vegetables or expanding their agricultural land.
Improving management of agricultural businesses: The management of agricultural businesses should be improved to maximize the positive impact of credit.

By implementing these recommendations, the potential of agricultural production in the region can continue to be improved for better welfare of farmers.
Frequently Asked Questions (FAQs) on the Effect of Credit Realization on Tomato Production

Q: What is the significance of credit in agricultural development?

A: Credit plays a crucial role in agricultural development as it enables farmers to access the necessary funds to invest in their agricultural businesses, leading to increased production and improved welfare.

Q: How does credit impact agricultural production?

A: Credit allows farmers to make greater investments in agricultural inputs, such as fertilizers, pesticides, and agricultural equipment, leading to improved quality and quantity of yields.

Q: What are the benefits of credit for farmers?

A: The benefits of credit for farmers include increased income, improved welfare, and reduced risk of crop failure due to dependence on one type of commodity.

Q: What are the challenges faced by farmers in accessing credit?

A: Farmers face several challenges in accessing credit, including capital problems, lack of collateral, and limited access to financial institutions.

Q: How can farmers improve their management of agricultural businesses?

A: Farmers can improve their management of agricultural businesses by getting training on better financial management and agricultural engineering, and by diversifying their business.

Q: What is the role of government and financial institutions in supporting farmers?

A: The government and financial institutions play a crucial role in supporting farmers by providing access to credit, training, and other forms of support.

Q: How can the potential of agricultural production in the region be improved?

A: The potential of agricultural production in the region can be improved by implementing the recommendations outlined in this study, including improving access to credit, providing training on financial management and agricultural engineering, encouraging diversification of business, and improving management of agricultural businesses.

Q: What are the implications of this study for policymakers and financial institutions?

A: The implications of this study for policymakers and financial institutions are that they should continue to provide support for farmers to access credit, and that they should implement policies and programs that promote agricultural development and improve the welfare of farmers.

Q: What are the limitations of this study?

A: The limitations of this study include the small sample size, the limited scope of the study, and the lack of data on other variables that may impact agricultural production.

Q: What are the future research directions?

A: Future research directions include conducting a larger-scale study, exploring the impact of credit on other types of agricultural production, and examining the role of other variables that may impact agricultural production.

By addressing these FAQs, we hope to provide a better understanding of the effect of credit realization on tomato production and the implications for policymakers, financial institutions, and farmers.