Preconditions for sustainable agricultural finance and credit systems

Rural preconditions for sustainable agricultural finance and credit include , 1) profitable farms, 2) rational public policy, 3) adequate supply of app ropriate productive inputs, 4) efficient input application, 5) adequate sto rage and transport and 6) market demand. Financial preconditions include, 1 ) access to credit institutions, 2) information to evaluate risk, 3) freedo m in credit decision making, 4) adequacy and quality of lender capital and loanable funds, 5) well structured loans and 6) contract enforcement. Forma l agricultural credit in transition economies is probably most likely to be characterised initially by tied transactions involving input suppliers, pr oduce buyers or landlords as lenders. Essential characteristics of financia l markets offer building blocks for sustainable systems.