Impact of Credit on Production Efficiency: Evidence from Cassava Smallholders Farmers in Southwest, Nigeria

Abstract

Aims: This study evaluates credit impact on production efficiency of cassava farmers in southwest Nigeria. Study Design: Cross-sectional study. Place and Duration of Study: This study was conducted in South West Nigeria, between June 2019 and July 2021. Methodology: Multi-stage sampling procedure was used to select 210 small holder cassava farmers for the study. A structured questionnaire was used to collect data on respondents’ socio-economic characteristics, production efficiency and the efficiency distribution of cassava farmers. Results: Results show that the mean technical, allocative and economic efficiencies were 0.55, 0.91, and 0.50 respectively. Results of Stochastic production frontier show farm size (ɤ = 0.664, p<0.01), labour (ɤ = 0.183, p≤0.01) and quantity of stem cutting (ɤ = 0.160, p≤0.05) increased cassava output, while sex ( = 0.797, p<0.01), marital status ( = 0.600, p<0.05), level of education ( = 0.062, p≤0.01), number of extension contacts ( = 0.624, p<0.05) and credit ( = 0.000004, p<0.05) significantly influenced efficiency among cassava farmers. Also, result of Maximum likelihood estimates of cost function shows rent on land ( = 0.455, p<0.01), price of fertilizer ( = 0.078, p<0.01) and price of herbicide ( = 0.069, p<0.01) had positive influence on total cost incurred on cassava production while marital status ( = 0.600, p<0.05) and credit ( = 0.000004, p<0.05) significantly influenced efficiency among cassava farmers. Conclusion: The study concluded that credit had significant influence on cassava farmers’ production efficiency. Hence, credits should be made available by relevant stakeholders to cassava farmers in the study area.