Determinant of farmers participation and repayment of Osun Rural Enterprise and Agricultural Program (OREAP) micro-credit loan scheme

Abstract

This study examines the factors that affect farmer’s participation and loan repayment of Osun Rural Enterprise and Agricultural Program (OREAP) micro credit scheme introduced by the government in Osun State. Respondents were proportionately selected from the three (3) Agricultural Development Zones in Osun State. A three-stage sampling technique was used to proportionately draw 90 beneficiaries and 90 nonbeneficiaries from the three agro-ecological zones of the state. Logit regression and ordinary least square model were used to analyze the data. The results showed that Participation in OREAP is significantly affected by gender, marital status, household size, educational status, farm size, farm income, access to extension service and membership in cooperative society. The results also revealed that education, farm income, size of loan granted, and number of loan disbursement are significantly associated with the time it took the respondents to pay back the loan. The farmer’s inability to market their produce, risk and fluctuations in farm yield and uncooperative attitudes of other beneficiaries were the constraints faced by farmers as it affect their ability to repay the loan obtained through the program. The study concluded that the activities of OREAP had not been properly carried out in the study area as a result of the problems encountered by beneficiaries in obtaining and repayment of the loan. The research therefore, recommends that government and other agricultural agencies should encourage farmers to go into value additions of their produce as this will reduce gloat in the market and wastage of farm produce thereby enabling farmers to be able to repay the loan obtained for their agricultural activities.

Keywords: factors, ‘OREAP’, credit, disbursement, default