Impact of credit constraints on adoption of biofortified food crop among farming households in Nigeria

Abstract

The prevalence of credit constraints has a significant effect on the adoption of biofortified cassava; hence, low productivity on farms. This research, therefore, investigates the effect of credit constraints on the adoption of biofortified cassava (BC) among farming households. A multistage sampling procedure is employed to select 300 cassava farming households for this study. Data is analyzed using descriptive statistics, seemingly unrelated regression, and endogenous switching regression model. The results show that most of the household heads (78%) are not constrained by credit while 22% of respondents are constrained by credit. Out of the 22% that are constrained by credit, 7% are ‘quantity’ constrained (they receive partial credit) while 7.5% are both ‘risk’ (they choose not to submit their applications due to concerns about losing their collateral) and ‘price’ (they do not apply because of high interest rate) constrained. The seemingly unrelated regression model reveals that marital status, household size, years of education and farming experience significantly influenced quantity constraint status; while age, relationship with household head, farming experience and access to information are factors that contribute to the risk constraint status of farming households. The conditional treatment effect (ATT), which assesses the effect of credit constraints on the adoption of BC among farming households, is approximately -11.4 and is statistically significant at 1 %. The study finds that credit constraint has a negative impact on the adoption of BC among farming households in Nigeria after adjusting for both observable and unobserved factors. Therefore, the study recommends that innovative financing mechanisms should be leveraged to help promote the adoption of agricultural technologies such as BC. This will help to improve the nutrition, food security and income of farming households.