Abstract:
The study ascertains empirically the effect of formal and informal credit
utilisation on cashew farmers’ productivity and examine the constraints to credit
utilization. The study goes further to determine factors that affect access to formal
and informal credit. The probit model was used to determine factors that affect
access to formal and informal credit while ordinary least square model was used
to ascertain the effect of credit utilisation on productivity. Kendall’s coefficient of
concordance was used to rank the constraints to credit utilization. The study finds
that access to formal credit is significantly influenced by FBO, farm size and
educational status, Sex influences access to informal credit and engaging in other
economic activity has a negative significant influence on access to informal credit
while savings account and assets ownership jointly influence access to both
formal and informal credit. Formal and informal credit utilization has a significant
effect on farmers’ productivity. Constraints ranking revealed that the most
pressing constraint to credit utilization faced by farmers is price fluctuation while
the least pressing constraints to credit utilization faced by farmers is marriage
activities. The study recommends that government must set up Cashew Board to
control and regulate the price of cashew and also, stakeholders in agricultural
industry such as MOFA, NGOs among others should educate and sensitize
farmers on the need to join farmer-based organizations.
