Borrowed capital and factors affecting its utilization among rice farmers in the Province of Albay, Philippines
Abstract
Agricultural credit programs provide opportunities for farmers to acquire the necessary farm inputs and apply appropriate technologies. However, it remains a challenge for farmers to use the credit for what it was intended for. This study aimed to measure the factors affecting the utilization of borrowed capital of 233 randomly selected rice farmers from the province of Albay using binary logit as its analytical procedure. The factors influencing the utilization of borrowed capital are the type of the optimization behavior of the farmers, sex, family size, and farm size. The output maximizers and the male farmers have a higher probability to use the borrowed capital for rice production. Farmers with a bigger family size and with larger farm size, however, are more inclined to use part of the borrowed capital for non-rice farming activities. Given the results, agricultural financial institutions may consider the production optimization behavior of farmers, and their sociodemographic and farm characteristics in crafting policies and intervention strategies to target and select appropriate farmer-borrowers for a specific credit product or service.
