Factors Affecting Credit Decisions of Pineapple Farmers in Basud, Camarines Norte

Date

5-2024

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Arlene C. Gutierrez

Committee Member

Fitz D. Jimenez, Dia Noelle F. Velasco, Camille Anne E. Mendoza, Melodee Marciana E. De Castro

Abstract

The general objective of this study was to analyze the factors affecting the credit decisions of pineapple farmers in Basud, Camarines Norte. Specifically, this study aimed to (1) present the socio-demographic profile, farm profile, and credit profile of pineapple farmers in Basud, Camarines Norte; (2) discuss the pineapple farmers’ experiences in borrowing from formal and informal credit sources; (3) determine the perceptions of the farmers regarding accessibility and availability of formal and informal credit; (4) analyze the factors that affect the credit decision of pineapple farmers; (5) assess the profitability of farmers who borrowed from formal and informal credit sources; and (6) formulate recommendations to address the identified problems. Primary data were gathered through face-to-face interviews with 76 pineapple farmers in Basud, Camarines Norte, selected through snowball sampling, and interviewed one by one with the aid of a questionnaire. The study used a descriptive research design with binary logistic regression and cost and return analysis as the analytical tools used. The results of the study showed that farmers aged 51-60 years old comprised the largest percentage (36.8%). Majority of the respondents are women, married, high school graduates, and have an average of four children. Additionally, the number of children under 18 residing in the respondents' households ranges from 0 to 3 while the number of children over 18 residing in these households ranges from 0 to 6. The majority of respondents have other sources of income. Their average monthly income, excluding income from pineapple production, is Php 11,842. Meanwhile, the average monthly household expense is Php 10,611.4. The study's findings on the farm profile indicate that the average farm size is 3.68 hectares, and the average land area used for pineapple production is 0.74 hectares. Moreover, the largest farm size recorded is 20 hectares, with 3 hectares as the largest farm size dedicated to pineapple farming. Most of the 76 respondents also cultivate other crops, mainly coconut. Their farming experience ranges from 3 to 48 years, with an average of one family member involved in pineapple farming. The primary motivation of 7 the farmers for growing pineapples is the high-income potential. Additionally, about 53.95% of respondents own their land and all 76 farmers grow the Queen Formosa pineapple variety. Meanwhile, capital requirements range from Php 8,440 to Php 256,020, with most farmers relying on loans. Moreover, pricing is largely controlled by traders who also provide price information to farmers. Most farmers sell their produce to traders, with a small portion selling to retailers and wholesalers. Furthermore, only 23 respondents are cooperative members, and 19 of these have taken out loans. Regarding credit profiles, 88.16% of the 76 farmers have credit experience. The majority borrowed for farm operations, while the rest borrowed for other purposes. Farmers have an average borrowing experience of 10.11 years and 49 farmers currently have outstanding loans. The primary loan source is banks, with 49.38% of loans were used for pineapple farming. The average loan amount is Php 42,867.09, with an average nominal interest rate of 8.79% and an effective interest rate of 70.28%. Loans typically mature in 475.77 days, with a renewal period of 307.73 days. Weekly payments are required for 40.3% of loan accounts. Moreover, the interest rate is the primary consideration of farmers when choosing a loan source. Furthermore, most respondents keep loan payment records in a passbook, and the majority of those with outstanding loans have not missed payments. The 76 pineapple farmers in the study had varied experiences with accessing and obtaining credit. Most had positive experiences with formal credit sources, with fast processing times and easy application requirements, often through cooperatives and microfinance rural banks. However, some faced challenges like high interest rates and stricter requirements, typically from banks. Similarly, most farmers had favorable experiences with informal lenders, primarily friends or relatives, due to the absence of interest charges. Some, however, were compelled to sell their produce at lower prices to traders who lent them money, and others encountered high interest rates from private money lenders. Regarding problems in credit access, most farmers reported no significant issues with formal sources, though some experienced long processing times and difficulties with lump-sum repayments at maturity. Meanwhile, while most farmers had positive experiences with informal lenders, some faced challenges with repayment methods. On the other hand, in terms of accessibility and availability, both formal and 8 informal credit sources were generally considered available and accessible in various aspects, including physical, financial, administrative, social, and informational. Furthermore, the binary logistic regression analysis revealed two significant factors influencing credit availment among pineapple farmers: other income sources and the number of family members involved in farming. Farmers with additional income sources were less likely to borrow money. Conversely, households with more family members involved in pineapple farming were more likely to avail credit. In addition, using the same statistical analysis, it was found that pineapple farmers with other sources of income, higher net income from pineapple, and higher educational attainment prefer formal credit. Meanwhile, male and married farmers tend to choose informal credit sources. Lastly, the cost and return analysis showed that pineapple farmers who secured loans from formal sources had higher profit margins compared to those who borrowed from informal sources.

Language

English

LC Subject

Credit analysis, Pineapple industry

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2024 M17 V55

Notes

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Document Type

Thesis

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