An Assessment of the Credit Constraint Status of Rice Farmers in Guimba, Nueva Ecija, 2023

Date

6-2023

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Christian Paul L. Fang

Committee Member

Julieta A. Delos Reyes, Agham C. Cuevas

Abstract

The study assessed the credit constraints status of rice farmers with banks in Guimba City, Nueva Ecija. Specifically, the study: (1) categorized the rice farmers based on their credit constraints status; (2) described the profile of rice farmers based on their credit constraints status; (3) determined the factors affecting the credit constraint status of rice farmers; and (4) drew recommendations on improving the credit constrained farmers' access to credit.

The study used a two-stage stratified random sampling technique to select 97 rice farmer-respondents, computed using Yamane's sampling formula, out of the population of rice farmers in the study area. The study used a pre-tested interview schedule to gather primary data from the respondents. The Direct Elicitation Methos (DEM) was used to categorize the rice farmers into their respective credit constraint categories: unconstrained, supply-side constrained, and demand-side constrained. Descriptive analysis was used to describe to socio-demographic, farming, and credit-specific characteristics of the rice farmers. Thematic analysis was used to derive themes from rice farmer-respondents' lived experiences in accessing credit from banks. Lastly, the multinomial logit model was employed in identifying the factors that could affect the credit constraint status of rice farmers.

Results of the study showed that the majority of rice farmers in Guimba City are credit constrained. They found the loan application process of banks difficult due to excessive requirements; lack of experience, and sources of knowledge and instruction; untimely loan approval and loan release; and physical/cognitive inabilities. The rice farmer-borrowers preferred to source agricultural credit from informal financial institutions because they considered transaction costs more than the interest payments when making borrowing decisions. Finally, farmers with higher farm income and farming experience are more likely to be supply-side constrained, while farmers with longer farming experience and less working members relative to their household size are more likely to be demand-side constrained.

Based on the results, the study provided three sets of recommendations. Firstly, for the supply-side constrained: (1) educational seminars focusing on topics related to collateral should be established; (2) banks should explore collateral substitutes for agricultural loans; and (3) banks should research more on the financial capital needs of rice farmers and modify their loanable limits accordingly. Secondly, for the demand-side constrained rice farmers: (1) extension service providers should conduct seminars focusing on addressing the information asymmetry between rice farmers and bank to reduce transaction costs and ease perception of risks associated with borrowing credit from banks; (2) specialized programs aimed at assisting farmers facing physical and cognitive challenges should be implemented to ease the loan application process; and (3) banks should streamline the loan application process, loan approval, and loan release. Lastly, other researchers may further conduct assessment studies on the factors affecting the credit constraint status of rice farmers to decrease the research gap in existing literature.

Language

English

LC Subject

Rice farmers, Credit analysis

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993.5 2023 A14 C33

Notes

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Document Type

Thesis

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