ABSTRACT

The study examined macro-economic variables and their effects on Agricultural credit in Nigeria from 1970 to 2003, with specific objectives such as the effect of macro-economic variables on demand for agricultural credit by farmers, assess the trend of loans granted for specific agricultural sub-sectors (crop, livestock, fishery and forestry), examine the effect of macro-economic variables on institutional agricultural credit supply and effect of institutional credit supply on agricultural production. The data rely on aggregate secondary data and was analyzed by the used of descriptive statistics and econometric approach. Time series data on crops, livestock, fish and forestry funding were collected from 1978 tO 2003. The result revealed that loans granted for sub-sectors of agriculture (crops, livestock, fishery and forestry) witnessed a fluctuation in both number of loans and real value. Also that more funds were granted for crop production. The regression result of agricultural credit demand equation shows that rural bank branches, level of credit guarantee, level of credit subsidies had a positive effect on agricultural credit demand while availability of technology had a negative effect. Prescribed level of credit for agriculture, rural savings mobilized and level of credit guarantee had effect on agricultural credit supply. The result of analysis on aggregate agricultural output and its sub-sectorial output reveals that credit supply to agriculture, producers price, relative income of each commodity to manufacturing, trend of output and weather condition were important determinant of agricultural output. The policy thus emanating from this study, if properly implement will foster desirable agricultural credit which serve both the interest of the institutional borrowers and lenders and enhance the production of sub-sector agriculture.