The effect of microcredit on technical efficiency of smallholder rice farmers in Ikot Ekpene Agricultural Zone, Akwa Ibom State, Nigeria

Abstract

The study analyzed the effect of microcredit on technical efficiency of smallholder rice farmers in Akwa Ibom State, Nigeria. The specific objectives were to; describe the socio-economic profile of the rice farmers in the study area; identify microcredit sources accessed by rice farmers; analysis the factors that determine access to credit as well as examine the influence of credit and other factors on technical efficiency. A multi-stage sampling technique was employed to sample the rice farmers in the study area. Data obtained was analyzed using descriptive statistics, profit regression and stochastic production frontier. Results showed that 64.7% were male, 68.2% were married, and about 96.5% were literate. The mean household size was 7 persons per households, with a mean farm size of 2.19 hectares, 38.8% had 6-10years of farming experience, and 83.5% belonged to an association and earned an annual income of above ₦400,000. The main source of credit accessed by the smallholder rice farmers is the cooperative society. Extension contact, farm size, farming experience and household size were the significant factors that determined the access to credit by the smallholder farmers. Quantity of seed, farm size and family labour were the significant variables that had a significant effect on the output of rice at 1% and 5%. The value of the returns to scale (RTS = 0.914) shows that the farmers were producing at the decreasing return to scale (Stage II). The mean technical efficiency was 0.64 with minimum and maximum efficiencies of 0.09 and 0.92. Respondent’s educational level, household size, farming experience and credit were the significant variables that increased the technical efficiency of the smallholder rice farmers. The study recommends that smallholder rice farmer should increase access to credit per production season, since the access to credit has efficiency increasing effect

Keywords: Microcredit, Technical Efficiency, Smallholder Rice Farmers