Comparative analysis of the profitability of rice production by credit and non-credit users in Abakaliki Local Government Area of Ebonyi State, Nigeria

Abstract

The study focused on the comparative analysis of the profitability of rice production by credit and non-credit users in Abakaliki Local Government Area of Ebonyi state. The specific objectives of the study were to; determine the socio-economic characteristics of rice farmers in the study area, analyse the factors influencing the output of rice farmers, compare the profitability of rice production by credit and non-credit users and to identify the constraints militating against rice production in the study area. The Multi-stage sampling technique was used to select 72 rice farmers that were categorized into users and non-users of credit. The descriptive statistics, multiple regression analysis, net income model and profitability index were employed in analysing data for the study. The findings revealed that the mean age of credit and non-credit users were 42 years and 43 years  respectively, majority of the respondent were males for both credit (64%) and non-credit users (78%). The study further revealed the mean  household size for both the credit and non-credit users was 5 persons, while majority of the respondent had attained primary education (36%) for credit users and (39%) for non-credit users. The results of the ordinary least square regression revealed that the coefficients of farming experience, household size, farm size and access to credit were positive and significant at 1% level, implying that there is a direct relationship between these variables and the output of rice farmers and that an increase in the years of farming experience, household size, hectare of farmland and the ability of farmers to access credit will invariably lead to an increase in the output of rice farmers in the study area. The study further revealed that rice farmers in the study area that accessed credit facility had a net margin of ₦ 969,982.99 as against the net margin of ₦ 418,539.48 for farmers who did not access credit facilities. The profitability index ratio for farmers who accessed credit facility was 0.86 while the profitability index ratio for farmers who did not access credit facility was 0.52,which implied that for every naira invested in rice production by the rice farmers who accessed credit facility, 86 kobo was returned to the rice farmer while 52 kobo was returned to the rice farmers who did not access credit facilities, which implied that rice production is a profitable enterprise in the study area but it is more profitable amongst the farmers who accessed credit facilities. The study further identified inadequate credit facilities, high cost of labour and inputs as the major constraints militating against rice production in the  study area. It is recommended that Government, Policy makers and Non-governmental organizations should create an enabling environment to boost the productivity and income of rice farmers through the provision of adequate credit facilities to farmers, and by providing input subsidies to farmers.

Keywords: Profitability, Rice farmers, Credit and Non-credit users