Factors Influencing Agriculture Loan Repayment by Small Farmers (A Case Study of Farta Woreda,SouthGondar Ethiopia)

Abstract

Credit is one of the most important instruments for changing the cultivation practices of small farmers. Credit brings change in their ability to improve and utilization of knowledge and application of technologies like improved seeds, fertilizers, pesticides, with small size of the holdings, repayment of credit has come a challenging for almost all the farmers in Ethiopia. Based on the samples, this study is aimed to analyze the factors influencing the repayment of credit and its performance in selected farmer’s multi-purpose service cooperatives of Farat district Amhara regional state of Ethiopia. For this study primary data was collected from 120 borrowers randomly selected by personal interview using pre tested schedules. In addition, secondary data were also collected from different concerned institutions from the relevant documents. The Log it model was used to analyze the factors influencing credit repayment among small farmer’s in the Farta district. The influencing variables include natural calamities, annual farm income in production and distance from Multi-Purpose Cooperative Institutions, utilization of credit by household head, Off/non-farm income, age of the household and income from rented land. Considering these factors as vital which provides information it would enable us to undertake effective measures with the aim of improving credit repayment in the zone. It would also enable lenders and policy makers to have information so as to where and how to channelize the efforts in order to minimize the defaulters in loan repayment.