An Evaluation of Agricultural Credit Utilization: A Case Study

Abstract

The modern agricultural production systems are capital intensive. Access to credit is regarded as one of the key elements in raising agricultural productivity. Government has implemented a range of credit programmes for agriculture and livestock sectors. It is evident that these credit programmes are failed without making valid improvements in the process of development. Therefore this study was conducted to review the awareness of the credit programmes and utilization of credit granted for agriculture and livestock sectors. Purposive sampling technique was used to select 50 credit borrowers who repaid and 50 borrowers who defaulted loans taken from the Regional Development Bank. Primary data were collected through questionnaire during July -December 2012 period in Buttala. The study revealed that credit issued for maize is successful in the area. Further, it revealed that high interest rates and high transport costs are the barriers of credit borrowing. Reasons for defaulting loans are drought, uldiya, wild animal attacks, and pests and diseases. However, credit schemes have reduced dependency on informal credit sources and traders. Further farmers tended to reduce pawning of assets. Personal harassments have also reduced. More importantly farmers could cultivate crops according to pre-planned schedule. Moreover, the study revealed that inability to pay regular field visits after lending, rigid sanctions, limited infrastructural facilities, lack of irrigation, storage and markets are the main reasons for the failures of the credit programmes