FARMERS

UDENSI A.I.¹, ANYIRO C.O.², OREBIYI J.S.³, EZE C.C.⁴, OHAJIANYA D.O.⁵, EZEH C.I.^6
1Department of Agricultural Economics, Federal University of Technology, Owerri, Nigeria.
²Department of Agricultural Economics and Extension, Abia State University, Umuahia Campus, Umuahia, Abia state, Nigeria.
³Department of Agricultural Economics, Federal University of Technology, Owerri, Nigeria.
⁴Department of Agricultural Economics, Federal University of Technology, Owerri, Nigeria.
⁵Department of Agricultural Economics, Federal University of Technology, Owerri, Nigeria.
⁶Department of Agricultural Economics and Extension, Abia State University, Umuahia Campus, Umuahia, Abia state, Nigeria.

Received : 14-11-2013     Accepted : 09-12-2013     Published : 27-12-2013
Volume : 1     Issue : 2       Pages : 27 - 30
World Res J Trop Agr 1.2 (2013):27-30

This study sought to examine farmers’ credit stock determinants from commercial banks and its effect on agricultural production in Nigeria. Time series data, covering the periods of 1977-2007, culled basically from the Central Bank of Nigeria’s Statistical Bulletin, 2009 were used. Adopting a simultaneous equation system, Two-Stage Least Square approach, results showed that commercial banks’ credit accessed by farmers (CR) had significant direct positive effect on the Index of Agricultural Production (IAP) at 1% α-level and also indirectly exerted significant positive effect on IAP by attracting more Foreign Private Investment in agriculture (FPI-Agr) at 1% α-level. It was also observed that all the modeled macroeconomic determinants of the volume of commercial banks’ credit accessed by farmers were significant and positively correlated with CR except for Minimum Rediscount Rate (MRR) which was negatively correlated with CR. Minimum rediscount rate (MRR) was found to be the most important macroeconomic determinant of the volume of commercial banks’ credit accessed by farmers (CR) while interest rate, contrary to major opinions, was the least. This study therefore, suggests that the Nigerian government should strategize on effective means of restructuring her monetary policy options that will increase commercial banks’ loan disbursement ability to farmers by carefully lowering the minimum rediscount rate and maintaining a considerable amount of interest rate that will neither be too high for farmers to borrow nor too low for commercial banks to lend, without, jeopardizing the general price level in the economy and other cardinal macroeconomic objectives of the federal government.

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