Determinants of Credit Access by Small Scale Farmers in Dekina Local Government Area of Kogi State, Nigeria

Abstract

This study is on the determinants of credit access by small scale farmers in Dekina Local Government Area of Kogi State, Nigeria. The specific objectives are to; identify the major source of credit among the small scale farmers; estimate the determinants of farmers' access to formal credit; compare the farm income of farmers who have access to formal credit and those who have not and identify constraints to farmers' access to credit. A total of 120 respondents was selected through random sampling technique. Primary data obtained through questionnaire administration were analysed using descriptive statistics, binary logistic regression model, t-test and mean score. Findings of this study revealed that the major source of credit to finance agricultural production was the informal credit source-money lenders (76.7%). Estimates of the binary logit regression model revealed a significant chi-squared value at 1%. The marginal effect of membership of cooperative society, experience, farm size, extension contact and distance to credit source significantly determined the probability of small scale farmers' access to credit at 5%. Expectedly, farmers who had access to formal credit recorded significant increase in farm income to those who had not. Constraints to farmers' access to formal credit source include inadequate collateral security (mean score=2.9), bureaucracy (mean score=2.8), high interest rate (mean score=2.7). That of informal credit source included high interest rate (mean score=2.6) and low level of lending (mean score=2.5). The study recommended deliberate policy to ensure that rural farmers have access to adequate credit facilities for improved agricultural production.