Spiralling food prices worldwide have helped to put agriculture back on the agenda of the development debate. The many years' neglect of agricultural investment in the developing countries, partly resulting from the collapse of many agricultural credit banks in the 1980s, has played a crucial role in creating a situation in which existing potentials to increase the production and productivity of small farms have remained untapped. Alternative financial intermediaries and instruments have improved the availability of credit in rural areas, but in most cases these are incapable of fully meeting requirements. Many family farms do not have access to agricultural production loans. What is needed, therefore, is a re-appraisal of the possibilities and the role played by state-owned promotional banks in agriculture.