EFFECT OF CREDIT ON FOOD CROP PRODUCTION AM0NG SMALL SCALE FARMERS IN ONDO STATE

Abstract

Nigeria's food problem has worsened over time judging from the staggering food import bill that has continued unbated. The smallholder agriculture is considered strategic in order to alleviate this intractable problem of food insecurity. This would however. require measures such as supplies of credit to ameliorate their marginal economic conditions and thereby increasing their productivity. Hence variations of credit programme have been used as policy action directed towards improving the productivity of the small-scale farmers. In spite of this. there exists a considerable lack of consensus regarding their effectiveness. This may be probably clue to the magnitude of credit requirements. This study therefore investigated the effect of credit on the level of food production of small-scale farmers in Ondo State. Specifically it assessed the effect of credit size on farm output. examined the socio economic characteristics of farmers using credit. measured farmers perception to credit use and highlighted the constraints to credit use. Primary data were collected from 200 small scale farmers through the use of standardized interview schedules, The respondents were selected using multi-stage random sampling method. In the first stage, five Local Government Areas (LGAs) were selected from existing Eighteen LGA's of Ondo State by random sampling. Two communities were further selected from each of the selected LGAs from the list obtained at the various Local Government offices. Out of the list of fanners obtained, twenty farmers utilizing credit were selected from each of the selected communities making a total of two hundred respondents. The data obtained \\as subjected to descriptive analytical techniques such as frequency and means on the socio- economic characteristics of the farmers. The relationship of credit size to farmers' socio- economic characteristic was tested with Pearson Product Moment Correlation. While Multiple Regression Analysis was the predictive tool employed to estimate the effect of variables that influenced credit size used by fanners and the determinants of farm output. A 22 variable item on 5 point Likert Scale was adopted to measure farmers perception of credit. Findings reveal that fanners were mostly middle aged (x = 49.46 years); had large households (x = I 1.36): possessed fairly low-levels of formal education and had small farm sizes (x = 0.86 ha). The credit profile showed that the mean credit size of W13295.50 received by the respondents was lower than their mean expenditure of WI7,704.50 meaning that the loan was only 75.1 % sufficient. In addition, the farmers recorded a mean farm output of #67,340.50. Correlation analysis revealed that farmers age (r = 0.27), education (r = 0.38) and total family size (r = 0.32) were found significant and positively related to credit size, while credit experience was not. Regression analysis gave an F value of 68.638 with an R2 of 0.715, which indicated that selected independent variables accounted for 71.5% of observed changes in credit size. Variables that made significant contributions to changes in credit size included farm experience. Extension agents' visit, adoption of innovations, farm size and farm output. With farm output as dependent variable, regression analysis gave an F value or 30.061 with all R2 of 0.437. This indicated that selected, variables accounted for 43.7% of the observed variations in farm output. Independent variables that made significant contributions to these include farm labour, operating expenses. credit size and Extention Agents' Visit. Perception of credit by the farmers had a mean score of 86.5 varying from 47.0 to 100.0. This was against the expected minimum perception score 01'22 with a maximum of 110. Correlation between perception and credit was r = 0.394 which was significant at 0.0 I level. Based on the findings. it was inferred that the credit provided appeared insufficient to cover fanners capital needs. Provision of credit however. enhanced farmers level of production. Farmers socio-economic characteristics such as age. education. farm experience, farm size and total family size positively influenced small-scale farmers ability to manage credit obtained by them. Also, farm characteristics such as adoption of innovations and Extension Agents' Visit improved the productive use of credit by the farmers. Finally, the positive correlation of farmers' perception with credit use suggests that credit fulfills important functions in farmers resources use.