IDEAS home Printed from https://ideas.repec.org/a/ags/pojard/356122.html
   My bibliography  Save this article

Determinants of agricultural loan decision-making process for rice (oryza sativa) farmers in Abuja, Nigeria. Applications of Heckman two-stage model and factor analysis

Author

Listed:
  • Alabi, Olugbenga Omotayo
  • Oladele, Ayoola Olugbenga
  • Usman, Mohammed Bello

Abstract

This study focuses on determinants of the agri-cultural loan decision-making process of rice (Oryza sati-va) farmers in Abuja, Nigeria, using the Heckman two-stage model and factor analysis. This study was designed spe-cifically to achieve the following objectives: determine the socio-economic profiles or characteristics of rice farmers, analyze the costs and returns of rice production, evaluate factors influencing rice farmers’ decision to obtain an agri-cultural loan, evaluate socio-economic factors influencing the amount of the agricultural loan, and determine the con-straints or problems facing rice farmers. A multi-stage sam-pling design was employed. A total sample of one hundred (100) rice farmers was included, and primary data were uti-lized. Data were obtained through the use of a well-structured and well-designed questionnaire. Statistical and economet-ric tools used in analyzing data included descriptive statis-tics, gross margin analysis, financial analysis, the Heckman two-stage model, and principal component analysis. The re-sults show that 63% of rice farmers were between the age of 31–50 years. The mean age was 41.90 years. About 65% of rice farmers were male, and 54% of them were married. Also, 93% of rice farmers had formal education and were lit-erate. The household sizes were large, with an average of six persons per household. An average of 71,550 nairas was the loan amount granted to rice farmers by financial institutions. The average farm size amounted to 1.49 hectares. Factors influencing the decision of rice farmers to obtain agricultural loan included age (P < 0.01), marital status (P < 0.05), house-hold size (P < 0.10), educational level (P < 0.05), farm size (P < 0.05), farm and non-farm income (P < 0.10), farm ex-perience (P < 0.05), collateral property (P < 0.05), extension services (P < 0.10), and awareness of loan or credit facilities (P < 0.05). Rice production was profitable with a net farm in-come of 744,300 nairas. The gross margin ratio of 0.95 means that 95 kobos covered profits, taxes, expenses, interest, and depreciation for every naira invested in rice production ac-tivities. Socio-economic factors statistically and significantly influencing the amount of agricultural loan obtained by rice farmers included (P < 0.05) sex (P < 0.01), household size (P < 0.05) and educational level (P < 0.01). The constraints facing rice farmers in obtaining the agricultural loan and pro-duction activities included lack of collateral property, lack of fertilizer input, poor-quality feeder roads, lack of credit facilities, inadequate labor input, and complicated and costly administrative procedures to obtain a loan. It is recommended that agricultural loans be made available to rice farmers in sufficient amounts and at low-interest rates. Also, farm inputs, fertilizer inputs, improved seeds, and chemicals should be made available to rice farmers.

Suggested Citation

  • Alabi, Olugbenga Omotayo & Oladele, Ayoola Olugbenga & Usman, Mohammed Bello, 2021. "Determinants of agricultural loan decision-making process for rice (oryza sativa) farmers in Abuja, Nigeria. Applications of Heckman two-stage model and factor analysis," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 59(1), January.
  • Handle: RePEc:ags:pojard:356122
    DOI: 10.22004/ag.econ.356122
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/356122/files/document%20-%202025-04-14T143746.940.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.356122?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Olugbenga Omotayo Alabi & Alimi Folorunsho Lawal & Henry Onyebuchi Chiogor, 2016. "Access to formal credit facilities among Smallscale crop farmers’ in Gwagwalada area Council, Abuja, Nigeria," Russian Journal of Agricultural and Socio-Economic Sciences, CyberLeninka;Редакция журнала Russian Journal of Agricultural and Socio-Economic Sciences, vol. 49(1), pages 57-66.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.

      More about this item

      Keywords

      Agricultural Finance; Farm Management;

      Statistics

      Access and download statistics

      Corrections

      All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pojard:356122. See general information about how to correct material in RePEc.

      If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

      If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

      If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.jard.edu.pl/en/main .

      Please note that corrections may take a couple of weeks to filter through the various RePEc services.

      IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.