Impact of credit use on profitability among cassava smallholder farmers in Southwest, Nigeria

Nigeria has large economic potential with high profitability but profitability is not increasing, and agricultural production is poor. This is hinged on the understanding of the impact of credit use on profitability, however, the influence of credit use on cassava production remains poorly understood, consequently affecting the profitability of cassava farmers. Thus, this study assessed the impact of credit use on the profitability of cassava farmers among smallholders in southwest Nigeria. Multi-stage sampling procedure was used to select 210 smallholder cassava farmers for the study. A structured questionnaire was used to collect data on the socio-economic characteristics and profitability of cassava farmers. Data were analysed with descriptive statistics, budgetary analysis, ordinary least squares (OLS), and t-test statistics. Results show that 60.0% of the farmers were male, 81.0% were married, 33.3% had secondary education, 70.5% had no contact with extension agents, 71.9% were members of a cooperative society, 61.9% had savings and 49.5% had access to credit. Furthermore, the mean age, farming experience, farm size, and household size of the sampled cassava farmers were 43 years, 19 years, 3.1 hectares, and 6 persons, respectively.

Budgetary analysis shows that mean revenue per hectare from cassava production was ₦131,917.8 ($369.4)/ha for credit users with gross margin of ₦85,138.7 ($238.4)/ha and return on investment of 1.54, whereas ₦117,602.5 ($329.3)/ha for non-users with gross margin of ₦71,923.4 ($201.4)/ha and return on investment of 1.31, implicating that cassava production is a profitable and viable enterprise and that credit users are more profitable than non-users. Farm size (p < 0.01), membership in cooperative society (p < 0.10), and credit (p < 0.01) significantly influenced the profitability of the cassava farmers. The test of the mean difference in revenue and net farm income was significant at 1%. The study concluded that credit had a positive significant influence on cassava farmers’ profitability. Hence, credits should be made available by relevant stakeholders like government and non-governmental organisations, to cassava farmers in the study area.