Determinants of Institutional Credit Demand by Small Scale Food Crop Farmers in Owerri Agricultural Zone of Imo State, South East Nigeria

Abstract

The study was designed to investigate the determinants of institutional credit demand by small scale food crop farmers in Owerri Agricultural Zone. A total of one hundred and twenty food crops farmers were selected using multistage random sampling technique. Data were collected from the selected farmers with well structuredand validated questionnaire. Data were analysed using descriptive statistics and ordinary least square regression model. Results showed that loan transaction cost, interest on loan, age, household size, educational level, farming experience, farm size, collateral and farm income were important factors that influenced the demand for credit in the study area. It was concluded that farmers in the area would demand for more credit facilities if the interest rate charges, loan transaction costs and other obstacles that delay loan processing and disbursement to the farmers were reduced. Government should ensure that institutional credits are disbursed to farmers at a minimal interest rate in order to enhance food crop production in the area.

Keywords: Determinants, Credit demand and Small scale farmers.