Determinants and Impact of Credit Utilization among Rural Cocoa Farmers: Evidence from Ondo State, Nigeria

Access to agricultural credit remains a pivotal driver of productivity and income growth among smallholder farmers in Sub-Saharan Africa. This study investigates the determinants and impact of credit utilization among cocoa farmers in the Akoko Southwest Local Government Area, Ondo State, Nigeria. Using primary data from 150 respondents selected through a multistage sampling technique, the analysis employed descriptive statistics, cost-return analysis, and binary logistic regression to evaluate credit access, usage patterns, and profitability outcomes between credit users and non-users. Results reveal that access to credit is strongly influenced by household size and marital status, with smaller households and unmarried farmers demonstrating more efficient credit use. While both formal and informal sources of credit exist, local savings mechanisms remain the predominant source due to the perceived complexity and high interest rates associated with institutional loans. Credit utilization was found to significantly enhance cocoa productivity by facilitating access to farm inputs such as fertilizers, pesticides, and improved seedlings. Furthermore, credit users exhibited higher gross margins, net farm incomes, and return on investment compared to non-users, indicating a positive financial impact. The study concludes that access to credit is a critical determinant of both input adoption and profitability in cocoa production. It recommends the strengthening of farmer cooperatives and the simplification of credit procedures to improve access and utilization. Targeted policy interventions that address constraints related to collateral, interest rates, and loan recovery protocols are also essential for boosting rural financial inclusion and agricultural performance.