EFFECT OF CREDIT ACCESS ON RICE PRODUCTION IN MAKURDI LOCAL GOVERNMENT AREA, BENUE STATE

Agriculture plays an important role in the economy of most developing countries. According to Otsuka (2013),agriculture provides 70% of full-time employment, 40% export earnings and also generates 35% national income in Africa. In Nigeria, agriculture is a privileged sector which employs half of the labor forces, yet contributes 14.8% of the GDP (Seck, 2019). This poor performance of agriculture sector in Senegal is partially caused by the lack of financial supports rendered to farmers and inadequate incentive programs dedicated to the productivity improvement. Rice is one of the most valuable cereal crops cultivated and consumed all over the world. It is a staple food in several African nations and constitutes a large portion of the diet on a regular basis (Silong and Gadanakis, 2019; Sennuga, et al., 2021). According to Mrindoko (2022), due to its significant contribution to the agricultural sector and the activities that occur along the distributionchainsfromproductionto consumption, rice is one of the cereal crops that has achieved cash crop status in Nigeria. This is because it provides up to 80% of the jobs in theproducingareasforthelocal population. Although rice consumption has risen steadily in recentyears,localsupplyhasnotyetkeptupwithpublic demand.Factors includingariseinpopulation,economic levels, and rural-urban movement are blamed for the rising demand for rice (Samson and Obademi, 2018; Jah, 2017). The trendindomesticproduction/supplyandconsumptionin Nigeria is very high. In 2016, the national supply of rice was predictedtobe2.3milliontonnes,comparedtothe6.3 million tonnes of demand (Nakano, et al. 2018; Jegede, et al. 2021). 2 Statisticsrevealthatriceisgrowninpracticallyallof Nigeria's ecological zones, but despite this, its contribution to human nourishment is still relatively minor due to the world's rising population. Rice has become a global staple crop in the areas of food security and food values around the world. The governmentshouldimplementpoliciesandconditionsthat offeropportunitiesfordevelopingthericesectorinthe country, including zero tariffs on agricultural machinery and equipment, a sizable domestic market for rice products, and government subsidies on fertilizer and agrochemicals among other things. These will increase the quantity and quality of rice produced in Nigeria (Chandio, et al.2020). The national demand/supply mismatch has been closed by importing foreign rice to supplement locally produced rice. Between 1981 and 2016, the amount of rice imported climbed from 600,000 tonnes to over 1 million tonnes, and in 2011, Nigeria was the greatest rice importer in the world, with an estimated 3.4 million tonnes imported (Chandio, et al.2020; Alam, et al., 2020).Scalinguplocalproduction using productivity-enhancing technology, such as the utilization of enhanced varieties, is one of the safest ways to close the gap inhomesupply(Egbodukuet al.2021;Lai-Solarinet al. 2021).The utilizationoffarminnovationstoincrease domestic riceproduction in Nigeria has thus been a topic that has dominated research and policy landscapes.However, it is worthytonotethatNigeriaisthelargestproducerofrice (paddy) in Africa with an average production volume of 8 million metric tons. As of2019, Nigeria ranked as the 14thlargest producer of rice in the world with China being the top producing country. Same 2019, Africa had a total production volumeof14.6million,Nigeriaproducedabout55%and Egyptproducedabout30%oftheproductionvolume (Samuel, 2020; Anaset al.2022). 3 Access to rural credit has the capacity to raise the level of the national income distribution of the country (Bahinipatim, 2020). It must be admitted that micro-credit has increased the financial choices of millions of rural smallholders who were perennially trapped by usurious loans from informal money lenders (Kiros and Meshesha, 2022). Smallholder farmers who have access to financing can buy new equipment, better seed fertilizer, and otheressentialinputstoincreasethesizeof production (Masaood andKeshav,2021).Similarly, Assogba, et al.(2017)assertsthatsmallholderfarmersareableto acquire the necessary storage facilities in addition to being abletobuyfarmequipment,agriculturalsupplies, contemporary technology, and irrigation creditgivesruralhouseholdsthechancetoimprovetheir systems. Access to socialwell being,particularlyintheareasofhealthand education, in addition to an increase in production and income (Abubakar,2019;Alfa et al.2022).Theexpansionof microcredithasalsoincreasedpredatoryfinancial capitalism's influence in rural areas at the same time (Aliero and Yusuf, 2017).With peasant agriculture's lengthy gestation period, extreme seasonality, dependence on the environment, andhighvolatility,thespecificaccumulationmodelof microcredit programs is incompatible. It is based on door-to-door loan delivery, flat weekly installments, relatively higher interest rates than conventional banks due to high transaction costs and small loan sizes, strict enforcement mechanisms to ensure timelyrepayment,andaninsatiabledesiretoenlist new members. Credit access is essential for farmers to invest in high-quality seeds, fertilizers, pesticides, and modern farming equipment. It also enables them to adopt improved agricultural practices and technologies, which can significantly enhance productivity and yield. Despite its importance, many rice farmers in Makurdi struggle to secure the necessary financial 4 resources due to various barriers, including stringent collateral requirements, high-interest rates, and limited information about available credit facilities.This study aims to explore the impact of credit access on rice production in Makurdi LGA, Benue State. By examining the relationship between credit availability and rice farming outcomes, the research seeks to uncover how financial support can enhance production and contribute to the overall development of the farming community. Understanding these dynamics is crucial for designing effective policies and programs that can bridge the gap between credit providers and rice farmers, ultimately fostering a more sustainable and prosperous agricultural sector. 1.2 Statement of the Problem Despite the recognized importance of credit in enhancing production, many rice farmers in Makurdi LGA face significant challenges in accessing financial resources. These challenges include lack of collateral, high-interest rates, cumbersome loan application processes, and limited awareness of available credit options. As a result, many farmers are unable to invest adequately in their farming activities, leading to suboptimal yields and economic hardships. Several works have analyzed the relationship between credit access and production in Nigeria. Most of these works analyzed these relationships at national, regional, and state levels, including Olagunju and Babatunde (2011) and Ojoet al. (2019) for South-West Region as well as Obilor (2013) for Nigeria. At the state level, Oche and Johnson (2015) made similar analysis for Benue State as well as Mgbebu and Achike (2017) and Ume et al. (2016) for Benue State. However, literature that ascertains this relationship for Benue State which is one of the most agrarian of all the states in Nigeria and rice production in particular is scanty. It is therefore on this premise that this study examines the extent to which, access 5 to credit improved the output of rice farmersin Makurdi local government area of Benue state. 1.3 Research Question The following questions were posed to guide the study: i. ii. iii. iv. 1.4 What are the socio economic characteristics of rice producers in the study area? What is the cost and returns of rice production by the farmers in the study area? What are the access to credit sources among the respondents? What are the constraints associated with credit access among rice farmers in the study area? Objectives of the Study The broad objectives of this study is to determine the impact of credit access on rice production in Makurdi local government area, Benue state. The specific objectives are to: i. ii. iii. iv. 1.5 describe the socio economic characteristics of rice producers in the study area; determine the cost and returns associated with rice production by the farmers in the study area; determine returns on investment of rice farmers; and identify the constraints associated with credit access among rice farmers in the study area. Hypotheses The following null hypotheses was tested. 6 H01 There is no significance relationship betweencost and returnson rice production in the study area. H02 Socio-economic factors do not significantly affect rice production in the study area. 1.6 Significance of the Study The findings of the study would be beneficial to all stakeholders in agricultureand the government. It will help the government in formulating right policy that will provide farmers with access to credit, that will allow farmers to purchase high-quality seeds, fertilizers, and other inputs necessary for improving rice yields. The study findings will also provide recommendations that will supports food security, economic growth, rural development, and effective policy implementation. Finally, the findings will be a useful source of reference material for students and researchers in agriculture wishing to conduct studies on rural-urban migration. 1.7 Scope of the Study The study is confined to Makurdi Local Government Area in Benue State, Nigeria.This area is selected due to its significant rice production activities and the presence of various credit facilities accessible to farmers.The study covers a periodone cropping year, to capture recent trends and changes in credit access and rice production.The study focuses on rice farmers in the Makurdi LGA.It includes smallholder farmers, medium-scale farmers, and large-scale farmers to capture a comprehensive view of the impact across different scales of operation. 1.8 Definition of Terms Credit Access: is the availability and ability of individuals or businesses to obtain financial resources or loans from financial institutions, lenders, or other credit providers. 7 Production: refers to the process of cultivating crops or raising livestock to generate goods for consumption, sale, or further processing. Cost: is the total expenditure incurred in the production process. Returns: refers to the revenue or income generated from the sale of agricultural produce after accounting for the production costs. Investment: refers to the allocation of financial resources into farming activities with the expectation of generating future returns. Rice: is a staple cereal crop grown primarily in tropical and subtropical regions. Farmers: refers to individuals engaged in agricultural activities, including the cultivation of crops and the raising of livestock. Constraints:refers to the limitations or challenges that hinder the optimal performance and productivity of farming activities.