Doctoral Dissertations

Date of Award

6-1981

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Agricultural Economics

Major Professor

Merton B. Badenhop

Committee Members

David W. Brown, Charles M. Cuskaden, Keith E. Phillips

Abstract

Limited access to formal institutional credit and paucity of financial capital at the farm level have prevented the Cross River State food crop farmer from adapting to simple, low-cost technological change. These limitations have perpetuated traditional agricultural techniques and the concomitant low farm income in the state.

This study was designed to provide an empirical examination of the capacity of production credit to induce technological change among the food crop farmers in the Cross River State of Nigeria and to measure the impact of such change on the farmer's income. In attempting to estimate the effects of production credit on the farmer's income and to determine the credit needs of the farmers, three representative farm IP models were formulated on the basis of survey data from Ika Clan in Abak L6A of the state. The first two models were based on traditional technology without and with borrowing activity, respectively. The third model represented modern technology made possible through borrowing. The objective was to maximize net farm returns subject to limitations imposed by operating capital and institutional credit.

The result of the study showed that the farmer's own operating capital was inadequate to execute an optimal farm plan, even under traditional technology. It showed that the farmer could increase his net farm income by borrowing from institutional sources to execute an optimal farm plan under traditional technology. Private credit was unprofitable under this technology because of high interest rates. Net farm income per acre was highest under modern technology made possible through the use of credit both from institutional and private sources. Results of this study suggested, other things being equal, that the adoption of modern technology through borrowing would significantly improve farm income. However, credit from noninstitutional sources was profitable only within narrowly defined limits.

Also, the optimal cropping pattern given by the solutions of the models suggested some form of quasi-specialization among the food crop farmers. The model results showed the high opportunity costs associated with the nonoptimal crops forced into the cropping pattern under the existing practices and explained, in part, the reason for the low farm incomes of food crop farmers.

Finally, (with effective constraints on land, operating capital, and institutional credit resources), labor, particularly male labor, was highly under-utilized in all periods and in all the models. The marginal value productivity of male labor in all the models and periods was zero. This implied that removal of one unit of male labor would not reduce farm output.

On the basis of the result of the study and evidence of limited credit facilities to the small farmers, some desirable features of an agricultural credit program for the state were suggested for effective distribution of credit to deserving and qualified farmers.

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