ABSTRACT

This study was designed to examine rural credit and production efficiency among yam based farmers in Isuikwuato L.G.A of Abia State, Nigeria The objectives of the study were to describe the socio-economic characteristics of borrowers and non-borrowers in yam based cropping system, to determine the relative technical and allocative efficiency among users and non-users of rural credit, to determine the rate of repayment and the factors determining amount of credit received, to identiFy the factors influencing users and non-users of rural credit among yam based cropping system in production, to identify the major problems confronting the two groups and to make policy recommendations based on the outcome of the study. Costroute approach using two sets of structured questionnaires were administered to a purposively sampled 120 yam based farmers (six credit users and six non-credit users from ten major yam producing villages in the area) constituting 60 credit users and 60 non-credit users. Data analysis consisted of the use of such statistical and econometric tools like percentages, frequencies and chi-square test to determine the socio-economic characteristics of the farmers. Regression analysis using additive multiplicative dummy variable approach was used to determine the technical and allocative efficiency, while the allocative efficiency was determined by equating marginal value product (MYP) of the ith variable to its marginal factor cost (MFC). Double log functional form was chosen as the lead equation for technical efficiency. It showed a high R2of 63.3%. The intercept and four variables were statistically significant at 5 percent. The two groups of farmers operated under the existing technology. The result further shows that the credit users and non-credit users were factor biased or non-neutral in their production function (the two group of farmers differ significantly in more than one slope co-efficient). Credit users were also found to use labour intensively in line with the priori expectations. For the allocative efficiency, the linear form fitted the data for credit users at 66% and the value of output of credit users were significantly influenced by labour, farm sizes and other production inputs. While farm size, value of fertilizer and depreciated assets were significant at 5% probability level. A comparative allocative efficiency revealed that both group of farmers did not achieve optimum or absolute allocative efficiency in their production process. They were in-efficient in the allocation of resources within the production period covered by this study. The result also showed that most of the credit users obtained their credits from informed sources and that there was low default rate (11.7%) among the borrowers. Estimated factors that determined the volume of credit received which were statistically significant were household size, total amount previously borrowed, farm size, gross income of farmers and farming experience. The following factors significantly influenced the production of credit users: household size, age of the farmer total cost of production and extension contact; while the non-credit users were influenced by farm size, age of farmer, number of years spent in school and membership to co-operative society. The following problems ranks top among the farmers, insufficient capital, bad roads, high transportation cost, lack of incentives to farmers, high incidences of pests and diseases, non-existence of co-operative society and lack of extension contact. Based on the above results, the following recommendations were made: since credit users allocated their resources better than non credit user, appropriate policies and programmes that can further strengthen the existing credit and poverty alleviation in the area should be formulated. Government should ensure that agricultural credit facilities and incentives are given to yam-based farmers in the area. The fact that the two groups of farmers operated under the existing technology reveals the need for the use of modern techniques in the area, this will make them to be more efficient. Policies that will favour the acquisition of large farm size by credit users should be formulated and implemented. More extension agents should be sent to the area. More co-operative societies should be formed and more access road should be constructed to reduce the problem of transportation. Finally, insecticides and other chemicaL