I Fiance Apicultural

125
can be attained. Multifunctional RFIs directly and indirectly undertake
operation of farm-level loans (both in cash and kind, and in short and
longer terms for crop and other enterpises), extension, input sales,
produce marketing, consumer goods sales, collection of deposits or share
capital, other borrowings, and loan recovery. Not all RFIs have to be
multifunctional in explicit and direct terms, nor is it feasible given the
common history of both unifinctional and somewhat-riultifinctional
RFIs in a given country at a given time. For example, land development
banks may not be able to lend for short periods nor undertake auxiliary
services such as produce marketing directly. Similarly, government departirients
will not have coriJ).a, ltive advantage in collecting deposits. But
botll of these RFIs can elf-ctively coordinate with other RFIs and thereby
indirectly become n tilifinctional. Among other RFIs, vertically orgianized
(nonilanl) cooeratives can directly play a riiultifnrrictional I-ole by
)romoting financial services for aim
lug,
inputs
and consumer
sales, farn
goods
produce
sales
market­
by their field-level constittliets. RFIs,
commercial
like
banks and s)ecial ize Iagriicuhtural banks, can make
their
available
financial scrvices uot only to f[rilcrsbut also to fi1u,1tniput distributots,
.ar11produce marketers, and conisuticr goods shopkeepers.
A finlhifiutu-tional RFI systculi is advantageous
reasoi.
for rurore
Virst,
than
it facilitates
one
protiotiori of both working aid fixed capital,
the ol)tiliitttt comlbinaltior of which is ncccssaly to exploit flly the
potcnitial of new reclinology.
Second, by making loans for daiiy faiirming, sheep-tearing,
forestiry,
fishery,
and other rural sideline ccuttpatuions, such a systemu promotes
diversified
a
and more robust agriculture, in addition to reaping scale
ecolomties iii its own tranisactioni costs.
Third, frm-level credit acts as an impetus to investment
resources,
in real
which riiust be matched by supplies, which in turn
encouraged
could be
by loans to input and irodluce iarketing agencies.
these
Through
types of agricultural credit, RI'ls can forge much-needed backward
ainc forwai-d linkages ariong agricultural production, agriculural
distribution,
input
and agromrkcting and processing subsystems. These
ageslink­
improve rh, efficiency of agricultral productivity and tile econolilies
of scale ail-] scope, and thereCby increase viability, besides pronoting
Iarger noninflationrty prodluction and saving linkages of agriculture.
Fourth, tIultifinctional RFIs will also accelerate the consumption
linkages of technological change l)ecatrse they have a larger impact
r-11-al
oil
incomes as a reslth of stronger and notiinflationary production
and saving linkages.
Fifth, such RFIs wiJl be an eftfctive alternative to informal lenders
who undertake a range of fuictions. In most developing countries,
informal private lenders' opci-ations arc chiaracterized by horizontal
integration of local comrodlity, lIad, labor, an( credit markets.
Both horizon(ally and verlically organized RFIs are widely
such
found
counltries
ill
as Japan, tlhe United States, ihe Republic of Korea, and
Taiwan. "lc), are also found iii developing cotltrics-wihely in China,
at to s)me cxteint in other Asian countries such as Bang aclesh,
Malaysia,
India,
and Thailand, and to a Iriuch lesser extent elsewhere.
share
The
of countries with unifiinctional RFI systeris is highest in Afi-ica,