The effect of input value chain financing on rice farmer’s efficiency in IFAD assisted value chain development Programme, Awka

Abstract

To ensure the sustainability of the agricultural sector, some special arrangements should be made to increase farmers’ access to credit through input loans. This study on the effect of input value chain financing on rice farmer’s efficiency in the Value Chain Development Programme, Awka; specifically looks at the value chain financing options obtainable; its economic implication; its effect on food security, determinants of value chain financing effect on food security, and the efficiency of value chain financing on rice production sector. Data was collected from a cross-section of 200 farmers using a value chain financing arrangement. Descriptive statistics, multinomial logistic regression and data envelopment analysis were used for data analysis. The study revealed that 88.2% of the farmers received a certain percentage of input loan support, whereas, 78.2% received total input loan support. To the general economy of the nation, input value chain financing encourages early planting (87.1%), and enables the farmers to access production inputs (85.9%) which eventually springs forth food security in the country. Equally, the study found that value chain financing spurred 73.5% of the farmers to food security, while only 26.5% are food insecure. The food security index was 0.67 with a food security line of 38.3 USD for the farming household. We also discovered that a certain percentage of input loan support, guaranteeing farmers' financial loan applications and helping the farmers to pay for insurance premiums are the three determinants of relative food security. Whereas; certain percentage input loan, 100% input loan by value chain actors, and supports in payment of insurance premium are the four determinants of absolute food security in the study. The study, therefore, recommends that value chain financing should be adopted by stakeholders and policymakers to ensure the availability of credit to farmers.