Analysis of the borrowing preference of rice farmers in accessing credit, Magsaysay, Occidental Mindoro, 2010

Date

4-2011

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

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Abstract

This study was conducted to analyze the borrowing preference of rice farmer- members of Barangay Purnaga Farmers Association in accessing credit in Magsaysay,

Occidental Mindoro. Specifically this study sought to, (1) identify the different formal and informal sources of credit of rice farmer-members; (2) estimate the cost of borrowing, specifically the interest paid and the transaction costs incurred of rice farmer- members in accessing credit; (3) determine the factors that affect the preference of rice farmer-members in availing credit;and (4) identify the problems encountered by the rice farmer-members in availing credit. The study used stratified random sampling in selecting the 55 farmer-respondents using the source of credit as the basis of the stratification. This study used descriptive analysis, t-test of two means and logistic regression analysis. The result of the study showed that there were several formal and informal credit providers in the area. Formal sources included the Barangay Purnaga Farmers Association, Land Bank of the Philippines and CARD Bank while the informal sources were composed of friend, relatives, “5-6” lenders and an input dealer. Among the 55 farmer-respondents, 30 of them preferred to access credit from the formal sources while 25 accessed from the informal sources. Rice production was the major source of income of the farmer-respondents and majority of them availed credit to sustain their agricultural activities. Study also showed that there was significant difference in the transactions costs and interest paid by the farmer-respondents. However, the borrowing cost of the farmer- respondents in accessing credit from formal and informal sources was not significantly different. Farmer-respondents that availed credit from the informal sources paid higher interest but with lower transaction costs. On the other hand, farmer-respondents that accessed credit from the formal sources incurred higher transaction costs but paid lower interest. Results also showed that farmer-respondents with larger household size preferred to access credit from the informal sources since they have higher loan ceiling while farmer-respondents with larger farms chose to access credit from the formal sources since they could provide collateral. This study recommends farmers associations, and other organizations that are financially viable to become conduits of institutional sources of credit such as the Land Bank of the Philippines. Moreover, flexible loan amount that is based on the production cost of agricultural enterprise should be offered by formal sources.

Language

English

Location

UPLB College of Economics and Management (CEM)

Document Type

Thesis

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