INFLUENCE OF SOCIO-ECONOMIC ATTRIBUTES ON LOANS UTILIZATION CAPACITY OF SMALL HOLDER CROP FARMERS IN EKITI STATE, NIGERIA

Abstract

Inadequate credit supply to agriculture has been identified as the main drawback to sustainable agricultural development in Nigeria. In response to this, most States in Nigeria have put in place, public credit schemes in an attempt to reverse the declining fortunes of agriculture. This study was undertaken to analyze the influence of farmers socio-economic attributes on public credit utilization in agricultural investments. The case study relied on data from Ekiti State (south-west, Nigeria) Multipurpose Credit Agency (ESMA) scheme. Data on socio-economic characteristics, credit received, credit used and allocation were collected from a total of 135 randomly selected small holder beneficiaries of public agricultural credit. Tobit regression model was used to analyze the influence of farmers socio-economic attributes on credit utilization. The results revealed that 81.5% of beneficiaries were males with mean age of 48 years and an average of 25 years farming experience. Also, the mean farm size cultivated and credit received were 1.5ha and N113,037.04 respectively. The Tobit regression model showed that male (p<0.05) and married farmers (p<0.01) have greater likelihood to divert agricultural loans for non-agricultural use. However, larger farm sizes (above 1.5ha) (p<0.01) as well as farm (p<0.01) and non-farm income (p<0.05) were significant determinants of borrowers likelihood to expend borrowed capital on farm expenses. A key recommendation is that to encourage effective utilization of loans and reduce defaults, public loans agencies, working with small holder farmers, should adopt cooperative disbursement and target economic farmers; those living above subsistence.