EFFECT OF INSTITUTIONAL CREDIT ON INCOME OF SMALL-SCALE RUBBER FARMERS IN EDO STATE, NIGERIA

Abstract

The study investigated the effect of institutional credit on income of small-scale rubber farmers in Edo State, Nigeria. Agricultural credit programmes designed and implemented in the country are at variance with the objectives. Most of the small-scale rubber farmers who dominate the industry in terms of numbers and total land area under rubber are not benefiting from these programmes. The public credit agencies design tend to discriminate against rubber farmers because funds are always inadequate and the cost of administration of dealing with numerous small-scale rubber farmers scattered all over the state is very high. One hundred and eighty (180) respondents were interviewed, including ninety (90) borrowers and ninety (90) non-borrowers. Six local government areas that are dominantly noted for rubber farmers in the three (3) senatorial districts out of the eighteen (18) Local Government Area in the state were purposely selected for this study. Data collected were analysed, using frequencies, percentages and means to explain the age, marital status, educational attainment, household size, farming experience, occupation, leadership role, method of land ownership, farm size, farm income per annum, period of credit collection, problems encountered in credit collection, previous experience in credit collection. Regression analysis using linear, semi log and double-log functional forms were used to examine the effect of the credit on income of the rubber farmers. The study thus revealed that 63% of the borrowers were within the age bracket. of 35- 60 years which could be considered as the active age bracket. The study also showed that 93% of the respondents were found to be literates while the remaining 7% were non-literate. The t-test statistic used between the means of the amount requested and the amount disbursed showed that there is a significant difference that is t = 10.164 at 5% level of significance between amount requested and amount disbursed can have a meaningful effect on farmers income if used effectively. It was observed that the lending institutions were slow in releasing the loan to the respondents, only 46.7% collected their loan at pre-planting period. About 72% of the respondent said that shortage of fund and delay in payment of approved loans were the limiting factors in their production. Among the borrowers, 71% complained that untimely credit disbursement and the poor market situation at harvest period resulted in farmers late repayment. The regression analysis regressed between income (dependent variable) and age, educational attainment, farm size, volume of credit and leadership role (independent variables) in case of borrowers indicated that farm size, volume of credit and leadership role were positively significant at 5% level of significance, while with non borrowers, only farm size was found to be positively significant.