Determinants of Credit Constraint among Smallholder Farmers’ Co-Operators in Oyo State, Nigeria
Year 2024,
Volume: 7 Issue: 6, 613 - 621, 15.11.2024
Oluwaseun Komolafe
,
Akaninyene Obot
,
David Oluwafisayo Ikotun
,
Ikechukwu Samuel Obiajulu
Abstract
Credit constraint (CC) has been identified as one of the factors that diminish the production efficiency of farmers. Although Multipurpose Cooperative Societies (MCS) have been identified as an avenue to reduce (CC) among farmers, (CC) persists. Thus, the effectiveness of (MCS) in credit delivery and the determinant of (CC) of co-operators were examined. A four-stage sampling procedure was used where Oyo State was purposively selected based on high numbers of registered Agricultural Cooperative Societies. One block was selected from each zone of the four Agricultural Development Project zones. Two cells were randomly selected from each block. Multi-purpose cooperative societies from each of the cells were randomly selected. Co-operators were randomly selected proportionate to size and in all, 200 respondents were randomly selected. Co-operators access credit, inputs, tractors, market information and processed their produce by (MCS). Female co-operators were more credit constraint than their male counterparts. Education, default history farming experience, monthly contributions and dependency ratio were the determinants of credit constraint. Default history has the highest impact in determining credit constraint of co-operators, therefore conscious effort is needed by co-operators to avoid it occurrence. Credits should be made available to farmers through cooperative societies to enhance their efficiency.
References
- Adeoti A. 2014. Trend and determinants of multidimensional poverty in rural Nigeria. J Devel Agri Econ, 6(1): 220-231.
- Awotide BA, Abdoulaye T, Alene A, Mnyong VM. 2015. Impact of access to credit on agricultural productivity: Evidence from smallholder cassava farmers in Nigeria. International Conference of Agricultural Economists (ICAE), August 8-14, Milan, Italy, pp: 123.
- Anyanwu CM. 2004. Microfinance institutions in Nigeria: Policy, practice and potentials. G24 Workshop on “Constraints to Growth in Sub Saharan Africa,” Pretoria South Africa, pp: 29-30.
- Bernard M, Hellin J, Nyika RA, Mburu JG. 2012. Determinants for use of certified maize seed and the relative importance of transaction costs. Conference Paper Presented African Association of Agricultural Economists at the AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, pp: 1-26.
- Carter M, Olinto P. 2003. Getting institutions ‘right’ for whom? credit constraits and the impact of property rights on the quantity and composition of investment. Amer J Agri Econ, 85(1): 173-186.
- Chandio AA, Jiang Y, Gessesse AT, Dunya R. 2017. The nexus of agricultural credit, farmsize and technical efficiency in Sindh, Pakistan: a stochastic production frontier approach. J Saudi Soc Agri Sci, 18: 348-354.
- Chandio AA, Jiang Y, Rehman A, Twumasi MA, Pathan AG, Mohsin M. 2020. Determinants of demand for credit by smallholder farmers': a farm level analysis based on survey in Sindh. Pakistan J Asian Busin Econ Stud, 28(3): 225-240. https://doi.org/10.1108/JABES-01-2020-0004
- Diagne A, Zeller M. 2001. Access to credit and It Impact on Welfare in Malawi IFPRI Research Report No 116 URL= http://www.ifpri.org/pub/abstract/116rr 116.pdf (accessed date: May 12, 2024).
- Dube L, Mariga T, Mrema M. 2015. Determinants of access to formal credit by smallholdertobacco farmers in Makoni district, Zimbabwe. Greener J Agri Sci 5: 034-042.
- Effiomi RA. 2014. Impact of cooperative societies in national development and the Nigerian economy. Global J Soc Sci, 13(1.2): 19-29. http://dx.doi.org/10.4314/gjss.v13i1
- EFInA. 2012. Enhancing Financial Innovation and Access: Understanding Cooperatives in Nigeria. Qualitative Report. 1-73.
- FAO. 2011. Food and Agriculture Organization: Agricultural cooperatives are key to reducing hunger and poverty. URL= http://www.fao.org/news/story/en/item/93816/icode (accessed date: March 15, 2024).
- Feder G, Lau LJ, Lin JY, Luo X. 1990. The relationship between credit and productivity in Chinese agriculture: A microeconomic model of disequilibrium. Amer J Agri Eco, 72: 1151-1157.
- Foltz J. 2004. Credit market access and profitability in Tunisian agriculture. Agri Econ, 30: 229-240.
- Guirkinger C, Boucher SR. 2008. Credit constraint and productivity in Peruvian agriculture. Agri Econ, 39: 295-308.
- Haichao F, Edwin LC, Amber LI. 2015. Credit constraints, quality, and export prices: Theory and evidence from China, Working Paper No. 2015-02 January 2015, HKUST, IEMS URL= http://iems.ust.hk/W (accessed date: March 15, 2024).
- Hussain A, Thapa GB. 2012. Smallholders’ access to agricultural credit in Pakistan. Food Secur, 4: 73-85.
- Hussein HK, Ohlmer BO. 2008. Influence of credit constraint on production efficiency: The case of farm households in Southern Ethiopia’. Department of Economics, Swedish University of Agricultural Sciences, Sweden, pp: 28.
- Ijioma CJ, Osondu CK. 2015. Agricultural credit sources and determinants of credit acquisition by farmers in Idemili Local Government Area of Anambra State. J Agri Sci Technol, 5: 34-43.
- Kay RD, Edwards WM, Duffy PA. 2012. Farm management. McGraw-Hill, New York, US, pp: 55.
- Kidane H, Lemma T, Tesfay G. 2018. Determinants of smallholder farmers’ participation in seed producing cooperatives in Southern Zone of Tigray, Ethiopia. J Agri Exten Rural Devel, 10(4): 75-83.
- Komolafe JO, Adeoti IA. 2018. Influence of social capital on the use of improved maize seed among farmers in Southwestern Nigeria. Int J Agri Forest, 8(3): 129-138. https://doi.org/10.5923/j.ijaf.20180803.03
- Mukasa AN, Simpasa AM, Salami AO. 2017. Credit constraints and farmproductivity: Micro-level evidence from smallholder farmers in Ethiopia, Working Paper Series N° 247, African Development Bank, Abidjan, Côte d’Ivoire, pp: 87.
- Nagarajan G, Meyer RL, Hushak LJ. 1998. Demand for agricultural loans: A theoretical and econometric analysis of the Philippine credit market. Savings Devel, 22(3): 349-363.
- Nwafor GO, Agu AF, Anigbogu T, Umebali EE. 2018. Loan repayment behavior among member of farmers multipurpose cooperative societies in Anambra state. Int J Commun Coop Stud, 6(1): 28-49.
- Okem AE. 2016. The meaning and defining characteristics of cooperatives. In: Okem A. (eds) Theoretical and Empirical Studies on Cooperatives. Springer Briefs in Geography. Springer, Cham, New York, USA, pp: 42. https://doi.org/10.1007/978-3-319-34216-0_1
- Okonkwo-Emegha K, Achoja FO, Anarah SE. 2018. Credit worthiness and repayment among farmer cooperators in Delta State, Nigeria. Int J Appl Econ Stud, 6(1): 7-18. http://sijournals.com/IJAE/ ISSN: 2345-5721
- Omonona BT, Lawal JO, Oyinlana AO. 2010. Determinants of credit constraint conditions AND production efficiency among farming households in Southwestern Nigeria. 3rd African Association of Agricultural Economists (AAAE) and 48th Agricultural Economists Association of South Africa (AEASA) Conference.
- Orebiyi JS. 2002. Agricultural loan repayment performance and its determinants in the rural credit markets of Imo State, Nigeria. Int J Agri Rural Devel, 3(1): 37-45.
- Orisadare MA. 2019. An assessment of the role of women group in women political participation, and economic development in Nigeria. Front Soc, 4: 52.
- Petrick M. 2004. A micro-econometric analysis of credit rationing in the Polish farm sector. Eur Rev Agri Econ, 31: 23-47.
- Pishbahar E, Ghahremanzadeh M, Ainollahi M, Ferdows R. 2015. Factors influencing agricultural credits repayment performance among farmers in East Azarbaijan province of Iran. J Agri Sci Technol, 17: 1095-1101.
- Stiglitz JE, Weiss A. 1981. Credit rationing in market with imperfect information. Amer Econ Rev, 11(3): 393-410.
- Thompson M, Cassidy L, Prideaux B, Pabel A, Anderson A. 2017. Friends and relatives as a destination information source advances in hospitality and leisure. eJournal, 13: 111-126.
- Von Pischke JD, Adams DW. 1980. Fungibility and the design and evaluation of agricultural Credit Projects. Amer J Agri Econ, 62(4): 332-338.
- Wellalage NH, Thrikawala S. 2021. Bank credit, microfinance and female ownership: Are women more disadvantaged than men?. Finance Res Lett, 42: 101929.
- Zhang D, Wellalage NH, Fernandez V. 2022. Environmental assurance, gender, and access to finance: Evidence from SMEs. Int Rev Finan Analy, 83: 102326.
Year 2024,
Volume: 7 Issue: 6, 613 - 621, 15.11.2024
Oluwaseun Komolafe
,
Akaninyene Obot
,
David Oluwafisayo Ikotun
,
Ikechukwu Samuel Obiajulu
References
- Adeoti A. 2014. Trend and determinants of multidimensional poverty in rural Nigeria. J Devel Agri Econ, 6(1): 220-231.
- Awotide BA, Abdoulaye T, Alene A, Mnyong VM. 2015. Impact of access to credit on agricultural productivity: Evidence from smallholder cassava farmers in Nigeria. International Conference of Agricultural Economists (ICAE), August 8-14, Milan, Italy, pp: 123.
- Anyanwu CM. 2004. Microfinance institutions in Nigeria: Policy, practice and potentials. G24 Workshop on “Constraints to Growth in Sub Saharan Africa,” Pretoria South Africa, pp: 29-30.
- Bernard M, Hellin J, Nyika RA, Mburu JG. 2012. Determinants for use of certified maize seed and the relative importance of transaction costs. Conference Paper Presented African Association of Agricultural Economists at the AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa, pp: 1-26.
- Carter M, Olinto P. 2003. Getting institutions ‘right’ for whom? credit constraits and the impact of property rights on the quantity and composition of investment. Amer J Agri Econ, 85(1): 173-186.
- Chandio AA, Jiang Y, Gessesse AT, Dunya R. 2017. The nexus of agricultural credit, farmsize and technical efficiency in Sindh, Pakistan: a stochastic production frontier approach. J Saudi Soc Agri Sci, 18: 348-354.
- Chandio AA, Jiang Y, Rehman A, Twumasi MA, Pathan AG, Mohsin M. 2020. Determinants of demand for credit by smallholder farmers': a farm level analysis based on survey in Sindh. Pakistan J Asian Busin Econ Stud, 28(3): 225-240. https://doi.org/10.1108/JABES-01-2020-0004
- Diagne A, Zeller M. 2001. Access to credit and It Impact on Welfare in Malawi IFPRI Research Report No 116 URL= http://www.ifpri.org/pub/abstract/116rr 116.pdf (accessed date: May 12, 2024).
- Dube L, Mariga T, Mrema M. 2015. Determinants of access to formal credit by smallholdertobacco farmers in Makoni district, Zimbabwe. Greener J Agri Sci 5: 034-042.
- Effiomi RA. 2014. Impact of cooperative societies in national development and the Nigerian economy. Global J Soc Sci, 13(1.2): 19-29. http://dx.doi.org/10.4314/gjss.v13i1
- EFInA. 2012. Enhancing Financial Innovation and Access: Understanding Cooperatives in Nigeria. Qualitative Report. 1-73.
- FAO. 2011. Food and Agriculture Organization: Agricultural cooperatives are key to reducing hunger and poverty. URL= http://www.fao.org/news/story/en/item/93816/icode (accessed date: March 15, 2024).
- Feder G, Lau LJ, Lin JY, Luo X. 1990. The relationship between credit and productivity in Chinese agriculture: A microeconomic model of disequilibrium. Amer J Agri Eco, 72: 1151-1157.
- Foltz J. 2004. Credit market access and profitability in Tunisian agriculture. Agri Econ, 30: 229-240.
- Guirkinger C, Boucher SR. 2008. Credit constraint and productivity in Peruvian agriculture. Agri Econ, 39: 295-308.
- Haichao F, Edwin LC, Amber LI. 2015. Credit constraints, quality, and export prices: Theory and evidence from China, Working Paper No. 2015-02 January 2015, HKUST, IEMS URL= http://iems.ust.hk/W (accessed date: March 15, 2024).
- Hussain A, Thapa GB. 2012. Smallholders’ access to agricultural credit in Pakistan. Food Secur, 4: 73-85.
- Hussein HK, Ohlmer BO. 2008. Influence of credit constraint on production efficiency: The case of farm households in Southern Ethiopia’. Department of Economics, Swedish University of Agricultural Sciences, Sweden, pp: 28.
- Ijioma CJ, Osondu CK. 2015. Agricultural credit sources and determinants of credit acquisition by farmers in Idemili Local Government Area of Anambra State. J Agri Sci Technol, 5: 34-43.
- Kay RD, Edwards WM, Duffy PA. 2012. Farm management. McGraw-Hill, New York, US, pp: 55.
- Kidane H, Lemma T, Tesfay G. 2018. Determinants of smallholder farmers’ participation in seed producing cooperatives in Southern Zone of Tigray, Ethiopia. J Agri Exten Rural Devel, 10(4): 75-83.
- Komolafe JO, Adeoti IA. 2018. Influence of social capital on the use of improved maize seed among farmers in Southwestern Nigeria. Int J Agri Forest, 8(3): 129-138. https://doi.org/10.5923/j.ijaf.20180803.03
- Mukasa AN, Simpasa AM, Salami AO. 2017. Credit constraints and farmproductivity: Micro-level evidence from smallholder farmers in Ethiopia, Working Paper Series N° 247, African Development Bank, Abidjan, Côte d’Ivoire, pp: 87.
- Nagarajan G, Meyer RL, Hushak LJ. 1998. Demand for agricultural loans: A theoretical and econometric analysis of the Philippine credit market. Savings Devel, 22(3): 349-363.
- Nwafor GO, Agu AF, Anigbogu T, Umebali EE. 2018. Loan repayment behavior among member of farmers multipurpose cooperative societies in Anambra state. Int J Commun Coop Stud, 6(1): 28-49.
- Okem AE. 2016. The meaning and defining characteristics of cooperatives. In: Okem A. (eds) Theoretical and Empirical Studies on Cooperatives. Springer Briefs in Geography. Springer, Cham, New York, USA, pp: 42. https://doi.org/10.1007/978-3-319-34216-0_1
- Okonkwo-Emegha K, Achoja FO, Anarah SE. 2018. Credit worthiness and repayment among farmer cooperators in Delta State, Nigeria. Int J Appl Econ Stud, 6(1): 7-18. http://sijournals.com/IJAE/ ISSN: 2345-5721
- Omonona BT, Lawal JO, Oyinlana AO. 2010. Determinants of credit constraint conditions AND production efficiency among farming households in Southwestern Nigeria. 3rd African Association of Agricultural Economists (AAAE) and 48th Agricultural Economists Association of South Africa (AEASA) Conference.
- Orebiyi JS. 2002. Agricultural loan repayment performance and its determinants in the rural credit markets of Imo State, Nigeria. Int J Agri Rural Devel, 3(1): 37-45.
- Orisadare MA. 2019. An assessment of the role of women group in women political participation, and economic development in Nigeria. Front Soc, 4: 52.
- Petrick M. 2004. A micro-econometric analysis of credit rationing in the Polish farm sector. Eur Rev Agri Econ, 31: 23-47.
- Pishbahar E, Ghahremanzadeh M, Ainollahi M, Ferdows R. 2015. Factors influencing agricultural credits repayment performance among farmers in East Azarbaijan province of Iran. J Agri Sci Technol, 17: 1095-1101.
- Stiglitz JE, Weiss A. 1981. Credit rationing in market with imperfect information. Amer Econ Rev, 11(3): 393-410.
- Thompson M, Cassidy L, Prideaux B, Pabel A, Anderson A. 2017. Friends and relatives as a destination information source advances in hospitality and leisure. eJournal, 13: 111-126.
- Von Pischke JD, Adams DW. 1980. Fungibility and the design and evaluation of agricultural Credit Projects. Amer J Agri Econ, 62(4): 332-338.
- Wellalage NH, Thrikawala S. 2021. Bank credit, microfinance and female ownership: Are women more disadvantaged than men?. Finance Res Lett, 42: 101929.
- Zhang D, Wellalage NH, Fernandez V. 2022. Environmental assurance, gender, and access to finance: Evidence from SMEs. Int Rev Finan Analy, 83: 102326.