In Nigeria, agricultural credit has long been identified as a major input in the development of the agricultural sector. Thus, the study was carried out in order to examine the effects of credit rationing on the returns of poultry farmers in Ogun state, Nigeria. In the study, primary data obtained from 120 farmers through the use of questionnaires were used. The data were analysed using descriptive statistics, multinomial logit model and gross margin analysis. The result revealed that 59.22% of the sampled farmers obtained their capital from personal savings while 18.45% and 14.56% of them sourced theirs from cooperative organisations and banks, respectively. The study also affirmed that many of the farmers who source for credit outside their personal savings preferred getting credit from cooperative associations/savings associations because the source was less collateral-demanding, charges relatively lower interest rates, required bearable procedures and conditions for borrowing credit. The multinomial logit analysis showed that interest rate was significant at 5%level under cooperative/savings association sources. This implied that interest rate was a determining factor for sourcing credit from cooperative associations. The regression result also showed that interest rate on credit and distance of the farm households from credit source, contributed negatively, while gender and collateral contributed positively to the returns of poultry farmers. The result of the gross margin analysis showed that the total variable cost incurred by the farmers increased as the amount of credit/loan received increased. Hence, the informal finance providers were the backbone of small scale farmers. It is therefore recommended that the bureaucratic procedures for obtaining credit, from formal sources, should bemade flexible enough to accommodate small scale farmers.
Credit-Rationing Behavior of Agricultural Lenders: The Iron Law of Interest-Rate Restrictions
