Impact of agricultural credit on farmer’s income: evidence from central Punjab, Pakistan

Article Information

Title: Impact of agricultural credit on farmer’s income: evidence from central Punjab, Pakistan

Authors: Iqbal Javed, Ghulam Yasen, Sana Rashid, Abdul Subhan, Shoaib Akhtar, Shahbaz Ahmed, Uzma Nisar, Sobia Majeed

Journal: International Journal of Agricultural Extension (IJAE)

HEC Recognition History

Category	From	To
Y	2024-10-01	2025-12-31
Y	2023-07-01	2024-09-30
Y	2021-07-01	2022-06-30
Y	2020-07-01	2021-06-30

Publisher: DATAPLUS (SMC- Private) Limited

Country: Pakistan

Year: 2023

Volume: 11

Issue: 3

Language: English

DOI: 10.33687/ijae.011.03.4896

Keywords: Agricultural creditIncomeDecisionDeterminantsMix-cropping zoneOLS

Abstract

Access to credit had a substantial influence on farmers decisions, their income and the long-term sustainability of agriculture. This study investigated the impact of agricultural credit on farmers' income in Central Punjab, Pakistan. A conveniently chosen sample of 200 farmers from the Sargodha district was interviewed face-to-face on a structured, validated and reliable questionnaire. To explore the effect of agricultural credit along with different factors among small farmers, the Ordinary least Square (OLS) method was used. According to the results of the study for each unit increase in credit utilization, the predicted value of the dependent variable increases by approximately 6.691 units. This relationship is statistically significant at the 0.05 significance level. Other variables of age, family members and land ownership has also positive and significant impacts on the farmers' income while the variable of experience has a negative and significant impact. Policies should encourage responsible credit usage due to its proven positive and statistically significant effect on farmers' income. Such initiatives may include promoting financial literacy programs and ensuring access to affordable credit options. Agricultural credit adoption is influenced by various socioeconomic factors, which have a direct bearing on farmers' income. For the advancement of sustainable and inclusive agricultural development, policymakers should take these findings into account and design policies that facilitate credit accessibility, provide tailored financial education, and address the specific needs of diverse farming communities.

Disclaimer: The following sections are produced through an intensive multi-stage analytical pipeline developed by DefinePK, utilizing advanced natural-language processing, domain-specific knowledge models, and automated cross-referencing systems. Despite the rigor and computational effort involved, the generated summary may still contain inaccuracies or incomplete interpretations. Users are strongly advised to verify all critical information against the original paper and its authoritative sources.

Research Objective

To investigate the impact of agricultural credit on farmers' income in Central Punjab, Pakistan, and to estimate the impact of agricultural credit along with other socio-economic factors influencing farmers' income.

Methodology

A quantitative study using a structured, validated, and reliable questionnaire administered to a conveniently chosen sample of 200 farmers from the Sargodha district. The Ordinary Least Square (OLS) method was used for data analysis.

Methodology Flowchart

                        graph TD
    A[Sample Selection: 200 Farmers, Sargodha District] --> B[Data Collection: Structured Questionnaire, Interviews]
    B --> C[Data Analysis: Ordinary Least Square - OLS]
    C --> D[Impact Assessment of Agricultural Credit on Farmer's Income]
    D --> E[Formulate Conclusions and Recommendations]

Discussion

The study highlights that agricultural credit plays a crucial role in enhancing farmers' income. Various socio-economic factors, including age, family size, and land ownership, are significant determinants of this impact. Responsible credit utilization is encouraged through financial literacy programs and affordable credit options.

Key Findings

For each unit increase in credit utilization, the predicted value of farmers' income increases by approximately 6.691 units, which is statistically significant at the 0.05 significance level. Age, family members, and land ownership also have positive and significant impacts on farmers' income, while experience has a negative and significant impact.

Conclusion

Agricultural credit adoption is influenced by various socioeconomic factors, which directly bear on farmers' income. Policymakers should consider these findings to design policies that facilitate credit accessibility, provide tailored financial education, and address the specific needs of diverse farming communities for sustainable and inclusive agricultural development.

Fact Check

1. A sample of 200 farmers was interviewed. (Confirmed in the Abstract and Methodology sections).
2. For each unit increase in credit utilization, the predicted value of income increases by approximately 6.691 units. (Confirmed in the Abstract and Results and Discussion sections).
3. The relationship between credit utilization and income is statistically significant at the 0.05 significance level. (Confirmed in the Abstract and Results and Discussion sections).

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