Abstract
PurposeIn the developing countries, formal credit has dominant role for the development of agriculture sector. It increases the farmer's purchasing power for better farm inputs and agricultural technology for high crop productivity. The main purpose of this study is to examine the influence of socioeconomic characteristics of smallholder farmers for credit demand in Sindh, Pakistan.Design/methodology/approachA cross-sectional data set randomly collected from 90 smallholder farmers in Thatta district, Sindh, Pakistan, is examined. Descriptive statistics, correlation and the OLS regression method were used to demonstrate the important factors affecting the demand for formal credit.FindingsThe results revealed that formal education, experience of farming, landholding size, road access and extension contacts positively and significantly influenced the demand for formal credit.Originality/valueThis study is the first, to the best of authors' knowledge, to demonstrate the influence of various socioeconomic characteristics of smallholder farmers on demand for formal credit in Sindh, Pakistan. It also illustrates the imperative contribution to the literature regarding credit access and demand to improve the agricultural productivity.
Highlights
In the developing countries, agriculture has vital role to reduce poverty and hunger through employment generation, food security and supports to the economic gross domestic product (GDP) of a country
As around 83% of the respondents were headed by males, and the average age of household head was almost 42 years with an average of 26 years of farming experience and about six years of formal schooling, which demonstrate that respondents were middle-aged with substantial farming experience and a good level of formal education in the study area
Land is a basic input in the production system; the average landholding size in the study area was about 10.53 acres and 87% of the respondents operated by tractor
Summary
Agriculture has vital role to reduce poverty and hunger through employment generation, food security and supports to the economic gross domestic product (GDP) of a country. It is a key player for obtaining the Millennium Development Goals (MDGs) to achieve sustainable development. Formal agricultural credit is an important farm input along with modern technology playing role for improved crops yield and accelerating agricultural modernization and economic development (Anang et al, 2015). Ahmad (2011) illustrate the key role played by smallholder farmers in Asia and sub-Saharan Africa in terms of agricultural development, poverty reduction, livelihood and food security by using credit to enhance agricultural productivity The formal agricultural loan is not required only for the small- and medium-scale farmers for survival, and large-scale farmers can get benefit to improve farm income with minimal savings (Das et al, 2009). Ahmad (2011) illustrate the key role played by smallholder farmers in Asia and sub-Saharan Africa in terms of agricultural development, poverty reduction, livelihood and food security by using credit to enhance agricultural productivity
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