Determinants of Farmer’s Utilization of Agricultural Credit: Evidence from Central Punjab, Pakistan

Abstract

Agricultural productivity is limited due to the minimum application of institutional agricultural loans among small-scale farmholders. The objective of the study is to estimate the impact of different factors on the farmers' agricultural credit utilization in Central Punjab, Pakistan. A sample size of 200 was chosen for data gathering in this study. We employed a pretested questionnaire for data collection through direct interviews. Specifically, we focused on Sargodha District in central Punjab, Pakistan, utilizing a convenient sampling technique. We employed a binary logistic model to investigate the influence of various factors on the adoption of agricultural credit utilization among small-scale farmers. The results of the logistic regression model help us understand how various factors (education, experience, family size, income, land ownership, marital status, etc.) influence the likelihood of agricultural credit utilization. Some variables, like education, experience, family size, and land ownership, have statistically significant effects, while others do not. The model appears to have a reasonable fit to the data, explaining a moderate amount of variance in the outcome. Policies should be made to develop a multifaceted policy approach that prioritizes investments in education, skill development, and family engagement in economic activities to improve agricultural credit utilization. Concurrently, promote initiatives supporting agricultural practices, land ownership opportunities, and transitions from tenant to owner-occupier status.