EFFECTS OF AGRICULTURAL CREDIT DELIVERY ON THE INCOME OF ARABLE CROP FARMERS IN NIGER STATE OF NIGERIA

Abstract

Abstract The study examined the performance of agricultural credit delivery on the income of arable crop farmers in Niger State, Nigeria.Multistage sampling technique was used to select the respondents who are the beneficiaries and non-beneficiaries of credit facilities, as well as the officials of the lending institutions. Primary data where collected using structured questionnaires and interview schedules to elicit informations required for the study from 163 credit beneficiaries and equal numberof non-beneficiaries. Data were analyzed using Descriptive Statistics, simultaneous equation model and Chow test. The result of the analysis revealed that most of the respondents (60%) were within the age brackets of 31 – 50 years and their average age was 45 years. They were mostly males and married too. The result of the analysis also shows that most of them had modern education due to primary, secondary and tertiary education stitches. Most of the respondents (78%) cultivate 0.5 – 3.0 hectares, which is an indication of them being small scale farmers. The result of the analysis of the determinants of agricultural credit, potential credit demand and loan repayment were all significant at 1% probability level. Similarly, interest on loan, loan application cost, farm size and predicated loan repaid were all significant and important determinants of credit demand by farmers. However, coefficient of application form cost was negative, suggesting that high cost of loan application reduces credit demand among the beneficiaries. Furthermore, lending experience, transaction cost, credit source, interest on loan were all significant at 10%, 10%, 5% and 1% respectively as the determinants of credit supply. On the effects of agricultural credit delivery to the beneficiaries, the result of the analysis reveals that farm size, agrochemicals, quantity of seeds, capital input and fertilizer application were all significant. The study also revealed that late release of approved fund for disbursement, inadequate information and equipment, insufficient funds, loan diversion, illiteracy and lack of awareness, poor loan repayment and lack of infrastructure were the constraints affecting the loan beneficiaries or credit institutions in the area. However, constraints to credit by farmers include insufficient amount of loan, excessive bureaucracy, poor credit delivery, high interest rate, demand for collateral, short repayment period, farvouritism, lack of supervision and advisory services, dishonesty among lenders, etc were the constraints affecting loan delivery by the beneficiaries. It was therefore, recommended that, formation of cooperative societies, use of credible credit officers, increase in farm size etc. be put in place to effect the needed change in credit delivery in the area.