ACCESS TO CREDIT AND RICE PRODUCTION EFFICIENCY OF RURAL HOUSEHOLDS IN BENUE STATE, NIGERIA

Abstract

The study was conducted to examine access to credit and rice production efficiency of rural households in Benue State, Nigeria. The study focuses particularly on the effects of both formal and informal credits on production levels and production efficiency by using a stochastic frontal analysis. Data were randomly collected from 650 farmers consisting of 339 borrowers and 311 non-borrowers by means of well-structured questionnaire which were analyzed through descriptive statistics and stochastic frontier analysis. The results of the SFA showed a clear effect of credit on rice production levels and production efficiency of farmers. Rice production in the borrower group was significantly higher (P<0.05) than that of non-borrowers. Borrowers planted more rice, and spent more on inputs for rice production such as fertilizers, pesticides and hired machinery than non-borrowers except for expenditure on seeds. The borrowers used on average, 0.23 tons seeds and 0.24 tons fertilizer per hectare compared to an average of 0.22 tons and 0.21 tons with corresponding yields of 6.6 tons/ha and 6.0 tons/ha, respectively, for non-borrowers. Findings revealed that, the accessed credits help rice farmers to purchase inputs and improve farming technologies which ultimately transformed into higher productivity of the borrowers. The calculated technical efficiency (TE) of rice farmers ranged from 16.5% to 98.5%, with an average of 85.20%, indicating that almost all farmers achieved rather high technically efficient production. In addition, findings showed that the technical efficiency levels of borrowers were higher than those of non-borrowers confirming the positive influence of credit on production and production efficiency. Furthermore, the study showed that age, farming experience, family size, gender and access to credit are major determinants of TE in the study area. The study concluded that in order to improve the rice production outcomes, various policy recommendations needed to be considered such as expansion of rural credit systems, establishment of more branches of agricultural and community banks and formation of “Savings and Credit Cooperative Unions” (SACCOS) for collective responsibilities and paying loans.