Estimating agricultural credit demand: case study of sunflower producers in Khoy County

Capital shortage is one of the most important restricting factors for activities and innovations in agriculture. The insufficiency in deprived areas such as Khoy in West Azarbayjan is more intense. Therefore, financial contribution to these farmers is necessary. In this study, effective factors on Khoy credit demand are investigated by interviewing 70 sunflower producers. The results showed that in 2009, demand for credits are dependent on family labor force, cultivation land and agricultural machinery. Moreover, banking credit demand quantity has a direct relationship with product prices. For 1% increase in product price, demand for credit increases about 1.67 percent, but increase in interest rate has negative effect on credit demand. Finally, according to empirical results of this study, we suggest that the banking credit demand has a clear and optimized behavior, and the interest rate has decries for farmers.