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An Analysis of the Impact of COVID–19 Crisis on Farmers Credit Repayment Capacity in Kamburupitiya DS Division


The COVID-19 is a novel virus that has negatively impacted on the service, industrial and agricultural sectors in the whole world. In particular, poor farming families in the developing world are highly affected by the COVID-19 pandemic situation. Therefore, this study aims to identify the impact of the COVID -19 pandemic situation on the livelihood pattern of the farmers in the Kamburupitiya DS division in order to analyse the impact of COVID-19 on the attributes of loan repayment of farmers, explain the strategies followed by farmers and financial institutions to minimise the loan default rate and suggest means of promoting loan repayment during the COVID -19 pandemic period. Primary data were collected from 60 farmers who borrowed the project loan in the Kamburupitiya DS division using a simple random sampling technique. Secondary data were collected from Govi Jana Bank, Kamburupitiya. Semi-structured questionnaires were used for primary data collection. Descriptive statistical methods and a paired sample t-test were employed to analyse the data. Results revealed that the COVID-19 pandemic situation has negatively affected the income of the farmers (before COVID-19, farmers had gained Rs.25606.06 as a monthly income but after COVID-19 farmers have gained Rs.15757.57 as a monthly income), the cost of education of farmers’ children (before COVID-19, money spent on the education of children was Rs.8045.45 but after COVID-19, it was Rs.10295.45), market access (before COVID-19, 81.82% of the respondents had good market access but during the COVID-19, 12.12% of the respondents had good market access) and market price of agricultural commodities (before COVID-19, 81.82% of the respondents had good market price but during the COVID-19, 12.12% of the respondents had good market price of their commodities). Also, farmers could not repay monthly premium and interest on time during the negative economic shock caused by the COVID-19 pandemic. Further, results revealed that financial reservoirs, non- interest loan and request for concession period were used by farmers as the strategies to avoid loan default rate. Research findings highlighted the important strategies and gave remedial measures to improve loan repayment capacity of the farmers who borrowed agricultural loans from Govi Jana Bank during the pandemic period.

Keywords: Agriculture Loan, COVID-19 Pandemic, Interest Rate, Loan Default, On- Time Payments