Does Credit Play a Role in Increasing the Yields of Wheat and Cotton: A Case Study of District Sahiwal

Abstract

Agricultural credit plays a pivotal role in enhancing crop productivity by making possible easy access to essential inputs. The present study has been conducted during 2010-11 to investigate the effect of agricultural credit on wheat and cotton crops productivity in Sahiwal district. The data were collected from 100 farmers, among which half were loanee while the other half were non-loanee farmers. A Cobb Douglas production function was employed to assess the effect of various agronomic and production variables on productivity of wheat and cotton crops. The analysis estimated the coefficients of seed cost (scost), irrigation cost (ircost) and agricultural credit (dummy variable for credit) as 0.378, 0.098 and 0.026, respectively for wheat. All the variables were found to be highly significant for wheat crop. While in case of cotton, all variables except irrigation cost were significant at 1 percent while the variable of seed bed preparation was significant at 7 percent level of significance. Since agricultural credit has a significant role in enhancing the productivity of these crops, therefore, the study suggests of devising easy lending procedure, financing agricultural machinery on subsidized rates and creating the awareness regarding agricultural loans. These measures will enhance loan disbursement to farmers considered to be imperative for increasing productivity of wheat and cotton crops. DOI: 10.5901/mjss.2015.v6n4s3p482