ABSTRACT

The Abia State Agricultural Loan Scheme evolved from the Imo State supervised Agricultural Credit Scheme at the creation of Abia State. The main aim of the State agricultural loan scheme is to provide micro credit to small-holder farmers. The extent to which the small-holder trainers have benefited from the scheme have to be investigated. This study is an attempt to analyze smallholder farmers' credit under Abia State agricultural loan scheme. The study among other things examined the determinants of credit demand, the determinants of credit supply and factors which influence loan repayment by small holder farmer beneficiaries of the State agricultural loan scheme. The study also identified the problems of smallholder farmer beneficiaries in obtaining credit under the scheme. Ninety smallholder farmer beneficiaries of Abia State agricultural credit loan scheme were randomly selected from the three agricultural zones of the state. The ninety small holder farmers comprised sixty crop farmers and thirty livestock farmers. All the ninety farmers were interviewed with the help of a structural questionnaire. The result of the study show that farm income, age and loan transaction costs were factors that had positive significant influence on the credit demand of smallholder crop farmer beneficiaries of Abia State agricultural loan scheme. On the other hand, household asset holding and farm size had positive significant influence on the credit demand of small holder livestock farmer beneficiaries of the State agricultural loan scheme. Household asset holding and monetary savings positively and significantly influenced credit supplied to smallholder livestock farmers. Monetary savings and estimated cost of inputs positively and significantly influenced credit supplied to the crop farmers. The level of adoption of innovation had a positive significant influence on the amount of loan repaid by crop farmer beneficiaries of the State loan scheme. Distance between farm and source of loan and age of farmer had negative influence on loan repayment by the small holder crop farmers. Farm size was a significant determinant of the amount of loan repaid by smallholder livestock farmers. The study recommends that loan should be made to be easily accessible to the farmer source of loan should be located close to the farm families. Every difficulty inherent in the process of granting loan to farmers should be removed and the loan should be provided at relatively no cost.