Microcredit Effect on Agricultural Productivity: A Comparative Analysis of Rural Farmers in Ogun State, Nigeria

This study examines the effect of access to credit on the productivity of rural farming households in Ogun State, Nigeria. Data were collected, with the use of well structured questionnaire, from 240 small-scale rural farmers, who were categorized into users and non-users of micro-credit based on their statement, through multi-stage sampling technique. Descriptive statistics, budgetary technique and multiple regression analysis, involving the use of ordinary least square (OLS) method of estimation, were employed in analyzing data for this study. The results revealed that total cost per hectare of credit user farmers is higher (N41,632.53) than that of non-credit user farmers (N32,667.79), indicating misallocation of resources by credit-user farmers. Again, profit per hectare of credit users farmer is greater (N44,466.59) than that of non-credit users (N27,833.03), suggesting that, access to credit could lead to improved farmers' productivity and higher income in form of revenue and profit. Regression analysis showed that only fertilizer and farm size, both being positive, affect credit users farmer's output, whereas, planting material, agrochemical, farm size and fixed inputs affects non-credit users farmer's output. R2 values suggested that variation in output by the two categories of farmers is explained by 57 and 52 percent of explanatory variables in their production functions, respectively. F-value of 9.84 and 10.11 recorded for the two categories of farmers respectively, and being significant at 1 percent each, led to the rejection of the hypothesis of inputs having no significant effect on output. It is thus concluded that credit could bring about higher productivity and profit in agricultural production, hence, this study recommends that existing banks should be encouraged to have more rural outlets, while there should be federal government policy of empowering rural farmers to have access to more agricultural lands.