Agriculture Term Loan
An Agriculture Term Loan is a long-term financing option provided to farmers and agribusinesses to fund capital-intensive agricultural investments such as land development, farm mechanization, irrigation, dairy, poultry, and other allied activities.
Types of Agriculture Term Loan
Below are the main types commonly offered by Indian banks and financial institutions:
Farm Mechanization Loan
Provided for the purchase of tractors, harvesters, threshers, irrigation pumps, and other machinery that enhance productivity and reduce labour dependency.
Land Development Loan
Offered for land leveling, fencing, soil improvement, and well construction. These loans improve agricultural land quality and increase yield.
Irrigation and Water Resource Loan
Helps farmers set up or upgrade irrigation systems, drip irrigation units, sprinklers, borewells, and pipelines for efficient water management.
Dairy, Poultry & Livestock Loan
Supports animal husbandry activities such as dairy farming, poultry units, goat rearing, or piggery.
Horticulture & Plantation Loan
Covers long-term investments in fruit orchards, vegetable farming, tea, coffee, spices, or medicinal plant cultivation.
Agri Infrastructure Development Loan
Provides funding for cold storage, warehouses, packaging units, and rural godowns to reduce post-harvest losses and increase profitability.
Why Is Agriculture Term Loan Important?
Encourages Long-Term Growth
Enables farmers to invest in durable assets and infrastructure that yield sustained income over time.
Promotes Technological Advancement
Helps adopt modern farming tools and techniques for improved productivity and efficiency.
Supports Diversification
Allows farmers to explore allied sectors like dairy, poultry, fisheries, and horticulture, ensuring multiple income streams.
Reduces Dependence on Informal Credit
Offers access to low-interest institutional credit, minimizing reliance on moneylenders.
Improves Farm Profitability
By investing in quality infrastructure and machinery, farmers can reduce costs and boost profits.
FAQs
What is an Agriculture Term Loan?
It is a long-term loan provided to farmers for investing in agriculture-related assets such as machinery, irrigation systems, livestock, or land development.
Who can apply for an Agriculture Term Loan?
- Individual farmers and joint cultivators
- Tenant farmers and sharecroppers
- Self-help groups (SHGs)
- Agricultural cooperatives and agribusiness units
What is the repayment tenure for agriculture term loans?
Typically ranges from 3 to 15 years, depending on the project size and income cycle.
What is the interest rate on agriculture term loans?
Interest rates generally range between 7% and 12% per annum, with subsidies available for priority sectors under NABARD and government schemes.
What documents are required?
- Aadhaar, PAN, and land ownership proof
- KYC documents and photographs
- Project report / cost estimate
- Bank statements and income proof (if applicable)