Access to Credit and Performance of Small Scale Farmers in Nigeria

Access to Credit and Performance of Small Scale Farmers in Nigeria

ABSTRACT

In spite of the attempts made by some studies to explore access to credit and its effect on output of small scale farmers in Nigeria, most of these studies did not apply the widely accepted impact assessment methodologies and therefore, may be subject to serious problems due to sample selection bias.

This problem inspired this study which seeks to find the demographic and socio-economic features of small scale farmers in Nigeria which significantly determine their access to credit and the effect of credit access on the output of theses farmers,

and a further attempt was made to check whether or not the poverty and marital statuses of small scale farmers who accessed credit caused a significant difference in their output using Instrumental Variable(IV) and Heckman Two-Step Estimation Techniques to correct for endogeneity and sample selection biases.

Both the first stage of IV and first step of Heckman approach revealed that value of land, household size and the highest level of education of small scale farmers were, at 5% level, the significant determinants of their access to credit.

Both techniques agree that household size, acreage cultivated, age in years, years of experience, sex and total annual income of the small scale farmers were the variables that significantly influence their output at 5% level.

INTRODUCTION

Agriculture is the mainstay of most developing nations’ economies. It accounts for about 70 percent of full-time employment, 33 percent of national income and about 40 percent of African countries’ total export earnings (Otsuka, Larson & Hazel, 2013).

Agricultural sector is fundamental to the provision of food for human development and raw materials for industries. In Nigeria, agriculture has great potential for growth.

This comes from the country’s abundant natural resources, particularly land, and the large yield gap that we can explore to increase food security and reduce poverty (AGRA, 2013).

The proportion of rural poverty is the highest in Sub-Saharan Africa and it also has the greatest potential for smallholder agriculture-led poverty reduction (Christiaensen, Demery & Kuhl, 2011).

Christiaensen et al. (2011), also found that a 1% increase in agricultural per capita Gross Domestic Product (GDP) reduced the poverty gap five times more than a 1% increase in GDP per capita in other sectors, mainly among the poorest people who, mainly, are small scale farmers.

Since agriculture employs a large number of people in Nigeria, increasing productivity is essential to eradicating extreme hunger, poverty reduction and ensuring food security (Chigbu, 2004).

REFERENCES

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AGRA (2013). Africa Agricultural Status Report: Focus on Staple Crops. Nairobi, Kenya. Alliance for A Green Revolution In Africa (AGRA). pp 202. Akinnagbe, O. M. & Adonu A. U. (2014). Rural Farmers Sources and Use of Credit in Nsukka Local Government Area of Enugu State, Nigeria. Asian Journal of Agricultural Research. 8(4): 195-203

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