The Role of Agricultural Input Credit on Production of Maize: A Case Study in Shebedneo District, Sidama Region, Ethiopia

Abstract

: Smallholder farmers’ inability to procure agricultural input is one of the main causes of low agricultural productivity and production. But in recent years, the government and NGOs have tried their level best to access credits to farmers both in cash and agricultural inputs, especially fertilizers. In this study, an attempt is made to examine the role of agricultural input credit on the production of maize from a single-visit survey of the case study in Shebedino District, Sidama Region, Ethiopia. More than ever, the study tried to find out the sources of input credit for rural farmers. The major problems that hinder the use, repayment, provision, and collection of input credit for farmers and from farmers. The importance of input credit on maize production and the trends in input credit provision and repayment in Shebedino District. Hence, primary data was collected from 91 farm households drawn from three kebeles using purposive and simple random sampling. Secondary data was collected from the Shebedino District agricultural and OMO microfinance offices and different written documents. The data was analyzed using both the descriptive and econometric analysis methods. OLS models were employed to examine the role of agricultural input credit in the production of maize. The survey findings showed that there is a direct relationship between agricultural input credit and maize output performance. Loan provision in Shebedino District was increasing but the rate was not regular through the years and the repayment rate in the district was decreasing through the years. The finding also showed that educational level and savings have a positive or direct relationship with the usage and repayment of input credit among the farmers. As the findings revealed, the problems that can affect the provision and collection of agricultural inputs credit or taking and repaying the loan are low agricultural productivity, low infrastructural faculties, and low extension service. low saving and attitude of rural farmers towards the input credit service for these, providing more extensional services and infrastructural facilities side by side with credit service to rural farmers is better for increasing their productivity and it is also better if more educated people invest in agricultural activity and increase saving behavior among rural farmers to increase their income and country development.