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 (\(\gamma=0.664, p<0.01\) ), labour ( (\\gamma\) (\=0.183, \mathrm{p} \leq 0.01)\) and quantity of stem cutting (\(\gamma=0.160, \mathrm{p} \leq 0.05)\) increased cassava output, while sex (\(\delta\) (\=0.797, \mathrm{p}<0.01)\), marital status (\(\delta=0.600, \mathrm{p}<0.05)\), level of education (\(\delta=0.062, \mathrm{p} \leq 0.01)\), number of extension contacts (\(\delta=0.624, \mathrm{p}<0.05)\) and credit (\(\delta=0.000004, \mathrm{p}<0.05)\) significantly influenced efficiency among cassava farmers. Also, result of Maximum likelihood estimates of cost function shows rent on land (\(\omega=0.455, p<0.01)\), price of fertilizer (\(\omega=0.078, p<0.01)\) and price of herbicide \((\omega=0.069\), (\p<0.01\) ) had positive influence on total cost incurred on cassava production while marital status (\(\delta=\) (\0.600, p<0.05)\) and credit (\(\delta=0.000004, p<0.05)\) significantly influenced efficiency among cassava farmers.