Economic Analysis of Agriculture Small Loan and its Multidimensional Benefits for Farmers’ Community: an Analytical Study from South Region of Punjab Province, Pakistan

Abstract

To enable farming sector more productive and efficient, agriculture small loan can play a vital role. For adoption of modern farm practices and technologies, the shortage of agriculture credit is one of the major problems encountered by small subsistence rural farmers. In Pakistan’s economy, the agriculture sector contributes 21 percent of GDP and absorbs more than 43 percent labor force. The aim of this study was to measure the multi-dimensional benefits of agriculture small loan on the living standard of farmers. This study was carried out in four districts of Punjab province located in south region as it offers a large population of agriculture community. The climatic conditions, soil structure and plain fields favor agriculture farming.  Two groups of farmers who borrowed agriculture small loan and who did not borrowed were selected through purposively sampling technique. T-test, averages, percentages and descriptive statistics were applied to compare the benefits of agriculture small loan between two groups. The results were significant at 5 % confidence interval. The outcomes of t-ratio suggested that technical efficiency of agriculture small loan borrowers was higher than non-borrowers, the crop productivity and average profits earned by loan borrowers group was higher than non-borrowers, 40 percent respondents believed that agriculture small loan had increased their access to basic healthcare facilities, 45 % agriculture loan borrowers had increased their marketing orientation, the number of livestock  animals were more with borrowers, around 76 percent farmers were of opinion that their social expenditures and status had raised and approximately 57 % agriculture small loan borrowers were doing alternative off-farming income generating activities by utilizing the surplus income. The study concluded that if small subsistence farmers are properly educated and adequate agriculture small loans are provided, than agriculture small loan can be used a tool for socioeconomic development and sustainable growth of agriculture sector in Pakistan.

Keywords: Agriculture Small Loan. Crop Productivity, Market Orientation, Social expenditures, poverty eradication, Punjab