TITLE:
Impact of Agricultural Credit on Cereal Productivity: Case Study of District Sargodha, Punjab Pakistan
AUTHORS:
Maria Shabir, Kashif Amin, Awis Muhammad, Junaid Ahmad
KEYWORDS:
Agricultural Credit, Cobb Douglas Production Function, Crop Productivity, Cereal
JOURNAL NAME:
Theoretical Economics Letters,
Vol.10 No.3,
May
22,
2020
ABSTRACT: Agriculture is a major sector of Pakistan’s
economy, as it contributes significantly to Pakistan’s economy by providing
GDP, jobs, and export income. In recent decades, the financing needs of farmers
have increased rapidly due to a restructuring of the agricultural sector.
Credit is seen as an important factor in raising farmers’ production and
profits. The current study seeks to examine the impact of credit on the
productivity of cereal in the Sargodha District. In addition, the study
examines farmers’ objective to receive loans and major credit sources in the
Sargodha district. This study is based on the primary data from the 8 villages
in Sargodha-Punjab district, Pakistan collected in 2018. The area was divided
into four zones, and from each zone, two villages were chosen. The same number
of beneficiaries, i.e. ten each, from each village was selected. The sample
size, therefore, referred to 160 farmers. The data were analyzed using the Cobb
Douglas Production Function (CDPF). The results of the study show that credit
has a positive effect on the productivity of wheat. Research has shown that
only 30% of the credit users use loan to buy seeds and fertilizers and 70% use
loan for other purposes, such as marriages and ceremonies and farmland and
tractor buying, among others. Similarly, Zarai Tarqiati Bank Limited (ZTBL)
loans 80 percent of credit customers. It is recommended that the financial
institution expands the credit facilities exclusively for agricultural farmers.
Credit restrictions should also be reduced plausibly so that smallholders can
easily obtain loans.