An Analysis of the Factors Influencing Access to Credit by Poultry Farmers in Abuja, Nigeria

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Abstract

Access to credit remains an important tool in the development of the poultry industry in Nigeria. Yet, the majority of poultry farmers in the country have no access to credit from formal sources. This paper, therefore, investigates the factors influencing access to credit by poultry farmers in Abuja. A two-stage sampling technique was used to elicit information from 107 poultry farmers in Abuja metropolis. Descriptive statistics and the Heckman two-step model were employed to analyze the data. The results of the descriptive analysis show that commercial layer production enterprise was the most popular among the poultry farmers in Abuja, while the least was quail production. Only about 30% of the respondents had access to credit from formal sources and the majority of them got their loans from cooperative societies. Results from the Heckman two-step model show that different sets of factors affect the probability of access and amount of credit. The factors that were found to be important in explaining access to the credit include extension visits, distance to formal credit sources, hours of entrepreneurial training, and commercial broiler production enterprise. Years of schooling, household size, and broiler parent stock enterprise were the important factors influencing the amount of credit received. To enhance access to credit by poultry farmers in the study area, policies that will encourage the expansion of formal financial services to the rural areas, and human capacity development should be strengthened.

Introduction

The poultry industry plays important role in the development
of the Nigeria economy. The industry provides employment oppor-
tunities for both skilled and unskilled labor, thereby serving
as a source of income to the people. It provides a good source of
animal protein in terms of meat (chicken) and eggs (Abedullah
et al., 2003). Th e most widely accepted meat in Nigeria is chick-
en because of its high-quality protein. Unlike beef or pork, it
does not have any religious or health taboo. Also, eggs are a very
good source of vitamin A, iron, and zinc, which are essential for
health, growth, and well-being; the egg is a complete protein with
excellent quality (Food and Agriculture Organization, 2005;
Tijani et al., 2006). A little wonder the poultry sub-sector today
is unarguably one of the most attractive investment options in
the agricultural industry in Nigeria. Poultry enterprise consists
of chickens (breeders, cockerels commercial layers and broil-
ers), turkeys, guinea fowls, ostriches, ducks, geese, and quails.
A study by Laviria et al. (1998) in developing countries re-
vealed that poultry production is capital intensive and the capital
includes: poultry pens, feeds, drugs, equipment, day-old chicks
etc. Likewise, in Nigeria, poultry enterprise is among the agri-
business sub-sectors that require additional financing apart from
the farmer’s own investment fund because it is capital intensive.
Unfortunately, the majority of small scale farmers including poultry,
in Nigeria have low income and savings capacity (Audu et al.,
2007). As a result, most of them find it difficult to adopt modern
technology that would have led to an increase in their farm incomes
(Agom and Idiong, 2002). Modern poultry production requires
the application of modern technology in the management of the
poultry businesses. Agricultural credit is widely recognized as
one of the intermediary factors between adoptions of farm tech-
nologies and increase of farm incomes among poor farmers in
Nigeria (Omonona et al., 2008; Oladeebo and Oladeebo, 2008;
Anyiro and Orriaku, 2011; Akudugu, 2012). Access to credit is
regarded as one of the key elements in raising agricultural pro-
ductivity (Development Bank of South Africa (DBSA), 2005).
More and more farm households have come to depend on credit.
The credit provides cash reserves required to fast track the process
of production and consumption in the next cycle. Th e develop-
ment process of the agricultural sector can be triggered by the
ease with which credit is obtained by farmers.

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Additional information

Type

Project Topic and Material

Category

Agricultural Economics

No of Chapters

5

Reference

Yes

Format

PDF

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