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2011 (Vol. 3, Issue: 2)
Article Information:

A Marginal Analysis of Agricultural Credit Allocation by Arable Crop Farmers in Benue State, Nigeria

V.U. Oboh, L. Nagarajan and I.D. Ekpebu
Corresponding Author:  Victor U. Oboh 

Key words:  Agricultural credit, farm and non-farm sectors, farmers, linear expenditure model, loan diversion, marginal budget share,
Vol. 3 , (2): 81-86
Submitted Accepted Published
2011 January, 12 2011 February, 10 2011 March, 30
Abstract:

The study employed the concept of marginal analysis to determine the allocation of agricultural credit by arable crop farmers in Benue State, Nigeria. Structured questionnaire was used to collect crosssectional data from 300 randomly selected loan beneficiaries of the Nigeria Agricultural Cooperative and Rural Development Bank (NACRDB). Data were analyzed using frequencies, percentages, Average Budget Share (ABS), and the Linear Expenditure Model (LEM). Results showed that, on the average, farmers allocated about 56.1% of agricultural loans for farm activities while the balance (43.9%) was diverted as non-farm expenses. The adapted linear expenditure model estimated the marginal budget shares to be 0.555 and 0.445 (at 1% significant level) for the farm and the non-farm sectors respectively. This implies that for any marginal increase in credit availability to farmers, 55.5 and 44.5% would be allocated to the farm and non-farm sectors respectively. In all cases, the rate of loan diversion was observed to increase with decreasing loan size and viceversa. In order to reduce the rate of loan diversion, the study recommended increased loan size, partial disbursement of loan in kind, and loan management training for qualified beneficiaries.
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  Cite this Reference:
V.U. Oboh, L. Nagarajan and I.D. Ekpebu, 2011. A Marginal Analysis of Agricultural Credit Allocation by Arable Crop Farmers in Benue State, Nigeria.  Current Research Journal of Social Sciences, 3(2): 81-86.
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ISSN (Online):  2041-3246
ISSN (Print):   2041-3238
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