Date of Award:

1968

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Agricultural Systems Technology and Education

Advisor/Chair:

George T. Blanch

Abstract

Agriculture is the backbone of Jordan's economy. It provides employment and a living for 40 per cent or more of the total population. However, very few farmers have accumulated enough capital to finance their farm operations from planting to harvest. The Agricultural Credit Corporation was established to provide farmers with credit at a relatively low cost. Without the low cost loans many farmers cannot s tay on their farms. The Agricultural Credit Corporation is the most important agency in terms of the direct help it offers to farmers.

The Agricultural Credit Corporation has followed a policy of making loans at a relatively low rates of interest. As a result they have had difficulty in obtaining loans from competitive markets to meet their needs. This problem has been accentuated by a persistently low level of collections from its loans. Apparently they expect to collect no more than 85 per cent of its claims. However, during the year 1965-66 collections were only 44 per cent of the principal after excluding doubtful loans, and 43 percent for interest.

The weaknesses of the Corporation Administration appear to be:

(a) Lack of studies to determine how well the corporation is serving the needs of agricultural borrowers.

(b) Lack of planning for improvement in the future.

(c) Loopholes in lending rules and procedure.

(d) The low limits on loans to farmers.

(e) Regulations that property offered as security for a loan should not exceed 60 per cent of the value of the mortgaged property.

(f) Frequency of seasons in which drought occurs and results in the inability of farmers to make payments on their loans.

It is recommended that the ACC should continue to seek low cost credit from sources such as the International Development Association and similar agencies. It is also recommended ACC use all of its financial resources in lending operations instead of depositing them in commercial banks.

Recommendations for correcting the existing weaknesses:

(a) The Corporation should develop repayment schedules for each borrower at the time the loan is made. These should be adhered to by both the borrower and the lender. The statistics and research section of the ACC should be assigned responsibility of the schedule of repayments.

(b) Procedures for appraising the value of property offered as security for a loan should be developed and used as a part of every application for a loan and before any loan has been made.

(c) The upper limit on loans should be raised to 100 per cent of the appraised value of the security mortgaged rather than the present 60 per cent of loans.

(d) The Corporation should establish a special fund from which emergency loans could be issued to drought stricken areas. These funds should be provided by the Treasury. This should improve the rate of collection of loans when they are due.

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