Relative Technical Efficiency of Credit and Non-credit User Crop Farmers

Credit has become a prominent resource in agriculture production in Nigeria in an effort to redress resource poverty endemic among the farming populace. Formal and informal credit schemes have been established, however, their success in addressing the credit needs of food crop farmers remains a matter of debate. This study was designed to examine the impact of rural credit on resource use in arable crop production in Imo State of Nigeria. Primary data collected from random samples of 132 arable crop farmers consisting of 57 credit using and 75 non-credit using farmers were used. Data were analyzed using the stochastic frontier production function modeling. It is evident that credit using farmers are more technically efficient than their non-credit using counterparts. Age of the farmer, household size, level of formal education, farming experience and membership of farmer associations/cooperatives were statistically significant factors influencing technical efficiency. The ranges of technical efficiency were 0.131 to 0.951 for the credit using farmers, and 0.311 to 0.941 for the non-credit using farmers. The mean technical efficiency for the 10 worst performing farmers was 0.157 for the credit users and 0.185 for the non-credit users. Values for the 10 best performing farmers were 0.749 for the credit and 0.886 for the non-credit users. It would take an average credit using farmer 64 percent cost savings and an average non-credit using farmer 50 percent cost savings to become the best performing farmers in their respective groups. Based on these results, appropriate policies and programmes that could strengthen the farmers' participation in rural credit markets and for enhancing their efficiency in resource use are recommended.