Foreign Experience in Creditation of Agricultural Product Producers

Agriculture is one of the biggest contributors to economic growth in developed as well as developing countries, while also providing food security, employment opportunities, and improving the welfare of the rural population. How well these financing mechanisms work will have a decisive impact on progress in sustainable agriculture. The credit systems represent the main tool for mobilizing the financial resources needed by the agricultural producers as a liquidity mechanism to be able to conduct production and invest. Yet access to credit remains disparate, the institutional setup is not diverse enough and there are no working lending models to agricultural sector which restricts productivity, more than in developing context like Uzbekistan. The analysis of foreign experience in the development of systems of agricultural crediting revealed key institutional, financial and structural mechanisms designed to facilitate access to agricultural loans and improve their efficiency. Comparison of practices in USA, Canada, Germany, Great Britain and EU countries shows that diversified credit systems with water and credit unions, as well as mortgage and state loans, are assisting agriculture in many ways. The results suggest that both dedicated institutions, along with government-subsidized credit guarantees and interest-rate subsidies, are important in making sure capital is allocated to farmers. The findings illustrate both nascent structural and institutional mechanisms of agricultural lending overseas which can directly inform reforms undertaken in the developing world. Integrated credit systems with lowest rates, cooperative financing, mortgage-based mechanism should be implemented in Uzbekistan to raise the agricultural development sector and long-range sustainability of the industry as well.