Assessment of the Effect of Formal Credit Access on the Level of Adoption of Modern Rice Technologies and Farm Income of Rice Farmers in Calauan, Laguna, 2023

Date

6-2024

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Ruby Jane C. Estadilla

Committee Member

Geny F. Lapiña, Maria Angeles O. Catelo

Abstract

Credit has a fundamental role in stimulating development in the agricultural sector by empowering capital-constrained rice farmers to have the ability to invest in productive inputs. The study primarily assessed the effect of formal credit access on the level of adoption of modern rice technologies and farm income of rice farmers in Calauan, Laguna. Specifically, the study sought to (1) establish the level of access to formal credit and level of adoption of modern rice technologies; (2) evaluate farmers’ perceptions of credit availment from formal financial institution; (3) determine the key factors affecting access to formal credit; (4) assess the effect of formal credit accessibility on the level of adoption of modern rice technology and farm income; and (5) recommend potential approaches and strategies to improve both credit accessibility and adoption of modern rice technologies. The cropping period covered in this study were the dry and wet seasons of 2023. Primary data were gathered using a pre-tested questionnaire. Seventy-one randomly selected rice farmers were interviewed from the three barangays in Calauan, Laguna: Bangyas, Dayap, and Masiit. The direct elicitation approach was used to classify the respondents into credit-constrained and credit-unconstrained. The level of technology adoption among the respondents was determined based on the scores they accumulated from adopting specific modern rice technologies. They were then categorized as high, moderate, low, or no adoption. The study found that about half of the respondents were credit-unconstrained. The remaining respondents faced credit constraints, primarily due to lack of collateral. Rice farmers primarily perceived the process of obtaining formal credit as too stringent and complex. However, they saw formal credit as a more secure option compared to informal sources. Binary logistic regression identified household size, collateral, borrowing procedures, choice of institutions, and bank proximity as key factors that influenced access to formal credit among rice farmers. Tobit regression results indicated that access to formal credit and education level significantly impact the adoption of modern rice technology. The cost and return analysis revealed that high-technology adopters had the highest costs but also had the highest yield, revenue, net return, and return on investment. Moreover, Fisher’s exact test indicated no significant relationship between formal credit utilization and farm productivity. However, there was a significant association between formal credit utilization and farm income, suggesting that utilizing credit to adopting technology impacts the level of farm income among rice farmers. Based on the results, the study recommended the following: (1) introduce alternative forms of collateral; (2) streamline the credit application process; (3) design financial products, services and programs catering the needs and capacities of farmers with large families; (4) introduce agent and digital banking services; (5) foster partnerships between formal financial institutions and farmers’ organization, and (6) create initiatives to improve financial literacy of farmers and their knowledge on modern rice technologies.

Language

English

LC Subject

Agriculture, Rice farmers, Farm income

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2024 A14 P33

Notes

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Document Type

Thesis

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