Effect of Credit Utilization on Output of Rural Youth Rice Farmers in Shiroro Local Government Area, Niger State

The study aimed at examining the effect of loan utilization on the output of youth rice farmers in Shiroro Local Government Area of Niger State. The specific objectives are to determine the socio-economic characteristics of the respondents, determine whether there is significant difference in output of the beneficiaries and non beneficiaries and compare the mean output of the youth farmers with and without credits facilities. To achieve the study objectives, 100 respondents from 10 wards was used for data collection. The collected data analyzed using simple descriptive statistics and T-test was used to compare the mean output of credit beneficiaries and nonbeneficiaries. The study revealed a significant difference in the mean output of rice farmers who utilize loan (1,375kg/h) with those without credit which was (275kg/ha) (t-cal=18.44,p<0.05). It was recommended that, the process of acquiring loan should be simplified to encourage and motivate rice growers to acquire loan in order to increase their productivity as well as improve their standard of living. Also farmers on their part should be encouraged to pay back loan obtained. INTRODUCTION Agricultural loan refer to temporary transfer of purchasing power from an individual or cooperative society to another (Oyatade, 1981). This facilitate agricultural production efficiency through special function of the skilled farmers, small financial resources such as loans and those who have substantial resources but lack the ability to manage their farms (Oyatode, 1981). Agricultural productivity is boosted by the small – scale farmers who dwell in the rural areas of the country. The Nigeria rural sector accommodates about 70% of the nation’s population, which makes them play a very vital role in the country’s food sector. These small scale farmers operate with little or no capital, as they are low income earners with very low investment, thereby resulting in low efficiency in the utilization of the resources at their disposal, hence affecting their potential to payback. For without credit, new technologies such as use of tractor, herbicide facilities and improved seed varieties may not be adopted. While when these credits have been provided by the financial institutions to the farmers, there is need for an empirical work in the study area to compare the mean output of those farmers with credits and their counterpart in order to generate research information to credit institutions. 76 77 Journal of Agricultural Extension Vol. 13 (2) December 2009 The role credit play in agricultural development has to be widely recognized. The lack of capital or loan results in lack of agricultural development. For instance in most developing countries, a vicious circle of low capital, low income, low saving, low investment and low productivity were found operating and it was perceived that credit was the only input that could break this circle. Awoyemi (1998) discovered that if small scale farmers in the country were to grow and operate on a large scale, there must be an assured supply of credit for short, medium and long terms for without credits, high investment would not be feasible for many farmers. Rice (Oryza sativa) is the most important cereal in the world with a prime income source for farmers in Nigeria, The fact that rice farmers have mostly small scale farm holdings; domestic production has not increased to meet the economy’s demand. As a result of this demand, the Nigeria government has mapped out strategies through policies such as restriction, import tariffs and production incentives as well as subsequent ban in 2006 to boost domestic production of rice. Most rice farmers being small scale farmers have low income and productivity which make it difficult to acquire enough capital to invest in improved agricultural technologies. The financial institutions involved in disbursement of loan have performed far below expectation. Many a times, credits are issued to the wrong individuals while the small scale farmers end up not receiving credit at all. The cost of production is raised, due to high interest rate which deprives most small scale farmers from obtaining credit. In the light of these problem in the study areas, the study specifically seek to: (i) Determine the socio-economic characteristics of farmers (ii) Compare the mean output of farmers with credit and those without credits. (iii) Determine whether there is significant difference in the output of borrowers and nonborrowers. Theoretical frame work: The impact of loan on rice production in Ondo and Oyo States of Nigeria using simple linear regression model found out that farm size, loan experience were very significant and also the out put of rice was mainly determined by the amount of credit, farm size and experience of rice farmers. Revenue was also determined by the same factors (Fabiyi and Osotimetim, 1984). Similarly a study carried out in Akoko south and Akoko north Local Government area of Ondo State shows that borrowers cultivated large hectare and earned large total and net income than non-borrowers (Ilebami, 1984).