Effect of Credit Acquisition and Repayment on Agricultural Production in Cross River State, Nigeria

ABSTRACT

This research was designed to study the effect of credit acquisition and

repayment on Agricultural production in Cross River State. The major objective

is to study the effect of credit acquisition and repayment on agricultural

production in the state. Specific objectives included: determination of credit

disbursement and recovery strategies of agricultural credit institutions,

determining and comparing agricultural production among beneficiaries and

non-beneficiaries of credit schemes, identifying factors that affect credit

acquisition and repayment and to compare agricultural production among

credit defaulters and non-defaulters.

The analysis was done with sample drawn from 120 farmers, 60 beneficiaries

and 60 non-beneficiaries and credit officers in Cross River State, by the use of

a multistage sampling technique and structured questionnaire, which felicitated

information on farmers credit use, repayment rate, agricultural production of

credit beneficiaries and non-beneficiaries, credits administration etc. Analytical

tools used were descriptive statistics such as percentages, mean, frequencies,

etc. to show the socio economic factors influencing credit acquisition and

repayment in the state, multiple regression analysis was used to estimate the

production function of both credit beneficiaries and non-beneficiaries and the

chow test to determine the magnitude of the coefficient obtained from the two

samples.

Cassava was used for the analysis of the production output of beneficiaries

and non beneficiaries of credit because it is cultivated in the 3 agricultural

zones and a staple food of the people. The mean output of the crop for both

farmers taken from 3ha of land is 1520kg and 967.50kg respectively. The chow

8

test result was 8.920 showing that the marginal effects of the regressors on the

regressants vary. Findings showed that agricultural production is still of

minimal output. Among other factors, the socio-economic characteristics of

credit beneficiaries influence rate of repayment and for non-beneficiaries

influence the acquisition of credit.

The study recommended among others that credit should be released to

farmers during planting or stocking, Credit officers should reduce bureaucratic

processes to encourage farmers to borrow credit and my key

recommendations based on the study were:

- Reduction of interest rate to at most 5 percent to get more farmers to

borrow.

- Long gestation periods of up to two years should be given to allow the

farmers prepare for repayment.

- Increase in the credit amount because of the inflationary era we are into.