ABSTRACT

The low scale of production resulting to low output and low income of smallholder farmers has been related to credit provision suggesting that smallholder rural farmers do not fully enjoy the benefits of credit. Hence, this study examined the effect of credit on the income of cassava-based crop farmers: a case study of the National Special Program for Food Security (NSPFS) in Abia state, Nigeria. The study had the objectives of describing the socio-economic characteristics of the NSPFS credit beneficiaries, identifying the uses of credit by beneficiaries, determining the factors that influenced the amount of credit received by program beneficiaries, comparing the income of beneficiaries and non beneficiaries and estimating the effect of credit on the income of the farmers. A purposive and random sampling technique was used in selecting the respondents. Primaiy data collected from 150 cassava-based farmers, comprising 75 beneficiaries of credit and 75 non-beneficiaries of credit respectively were used for the study. Data collection was done through the cross-sectional method. Data analysis was done using such statistical and econometric tools like frequencies, percentages, means, z-test statistic, multiple regression analysis and Chow's test. The results revealed that the mean age of the beneficiaries was 53 years. They were more of women (about 51%) than men (about 49%). The beneficiaries also had a mean farming experience of 22.5 years with a mean household size of 7 persons and a mean farm size of 1 .86ha with the predominant farm size ranging from 0.1-2.Oha. The results further revealed that majority (about 85%) of the beneficiaries were literate, while about 15% of them had no formal education. The mean amount of credit received by the beneficiaries was N29,218.5 while the mean amount of credit they applied for was N192,534. The analysis of the use of credit by the beneficiaries revealed that about 62% (N1,359,316.10) of the total amount of credit they received was used to purchase capital inputs. Farm size, educational status, age, value of assets owned by the beneficiaries positively influenced the amount of credit received by beneficiaries, while sex negatively influenced the amount of credit they received. The result of the z-test statistic showed that the mean income (l226,282) of the beneficiaries was significantly different from that (134,628) of the non-beneficiaries. Farming experience, value of inputs, farm size, household size, variety of cassava used and access to the market positively influenced the income of the beneficiaries. Hired labor negatively influenced the income of the beneficiaries. Farm size, household size and farming experience positively influenced the income of the non-beneficiaries, while hired labor and access to the market negatively influenced their income. Farm size, household size, farming experience, variety of cassava used, access to the market, value of inputs and hired labor positively influenced the incomes of both the beneficiaries and non-beneficiaries pooled together. The chow's test result showed that credit had a significant, positive and direct effect on the income of the beneficiaries. Policies and programs that could help the beneficiaries increase their incomes should be put in place such as the government and other stakeholders in credit provision putting more money into credit delivery so that many more farmers can be reached with enhanced loan sizes thereby empowering them since it has been established that increase in income is a function of credit.