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Assessing the Impact of Credit on Rice Production and Food Security on Farm Households in Bangladesh

Muhammad Shahrukh Rahman
Scientific Officer, Bangladesh Agricultural Research Institute, Joydebpur, Gazipur, Bangladesh

Mashrufah Khatun
Lecturer, Bangladesh Agricultural University, Mymensingh, Bangladesh

Mohammad Ataur Rahman
Assistant Professor, Bangladesh Agricultural University, Mymensingh, Bangladesh

Md. Golam Azam
Scientific Officer, Bangladesh Agricultural Research Institute, Joydebpur, Gazipur, Bangladesh

Shifat Sultana
Scientific Officer, Bangladesh Agricultural Research Institute, Joydebpur, Gazipur, Bangladesh

Abstract/ Executive Summary:

This study examines the impact of agricultural credit on rice production and food security of the farm households in Bangladesh. A sample size of 50 households was selected purposively from two villages that were getting agricultural credit from Bangladesh Krishi Bank. Data were collected through field survey by using pre-designed and pre-tested questionnaire. Multiple regression analyses were carried out to determine the impact of credit on rice production calorie intake in household and individual levels. Cross-elasticity of demand technique was used to determine the impact of credit on inputs demand. It is revealed from the study that credit has a positive impact on the rice production. Elasticity of rice production with respect to agricultural credit was 0.85 which indicated that if credit was increased by 10% the rice production increased by 0.85%. The elasticity of fertilizer and irrigation demand with respect to agricultural credit was 0.89 and 0.82, respectively. About 50% of the respondents belonged to ultra poor whose per day calorie intake was 1541.39 kilo calorie. Twenty percent of the respondents had an average calorie intake 2021.08 kilo calorie. The rest 12% of the respondents were consumed above 2122.00 kilo calorie. The Bangladesh Krishi Bank has provided the loan only for rice production. But it was found that only 44.77% of the loan was used for rice production and 5.71% was used for food consumption. Credit was found to have positive impact on caloric intake. The elasticity of caloric intake with respect to agricultural credit was 0.09. Government & non-government organizations, donor agencies, specialized banks and private organizations should extend agricultural loans to increase rice production and food security of rural poor households in Bangladesh.

Keywords: Agricultural credit, Rice, Food security

Location: Sadar Upazila of Gazipur district

Start Date:

End Date:

Program Area: Socio-economic and Policy

Non-commodity: Credit

Objectives:

It was, therefore, felt essential to elaborate the production function and input demand function to construct a more rational model for measuring the impact of agricultural credit on food grain production.

Methodology:

Survey Area, Sampling and Data Collection: The study area was selected after conducting a preliminary survey in 4 villages under Sadar Upazila of Gazipur district to have an idea about the study. Based on preliminary information two villages namely Baniachala and Vabanipur were selected as the study area based on the following considerations.1. Availability of credited beneficiaries involved in paddy production. 2. Accessibility and good transportation system. 3. The high expected co-operation from thefarmers.Different categories of 50 households with different income groups were selected purposively. For this, 22 respondents from Baniachala village and 28 respondents from Vabanipur village from the credited beneficiaries list of Bangladesh Krishi Bank were selected. Field level primary data were collected from the selected respondents through direct interviews by the researcher himself. The respondents were interviewed separately. Before starting interview, each respondent was given a brief introduction about nature and purpose of the study. Analytical Technique In order to explore the effects of different inputs on paddy production, multiple linear regression function was chosen on the basis of theoretical background. A general specification of the production function was considered by assuming that area under paddy cultivation, seedlings, fertilizer, irrigation, manure and labour man days have impact on paddy production. When data was tested to check multi colinearity problem among the independent variables and the researcher found that the variables area under paddy cultivation and labour-man days significantly correlated with other variables. So, the researcher removed these variables from classical production function. On the basis of these assumed conditions, the multiple linear regression function was specified in order to examine the variation in production as a result of one unit variation in the functioning factors.

Source of Information: INTERNATIONAL JOURNAL OF INNOVATIVE RESEARCH & DEVELOPMENT June, 2014 Vol 3 Issue 6 ISSN 2278–0211 (Online)

Article Link (Online Journal): www.ijird.com

Funding Source:

1.

Budget:

Total Budget (Tk.) :

Achievement/Findings:

The present study covers the sample households of different ages. About 50 percent of them were above 50 years of old and 64 percent were 30-50 years of old. Educational level of the sample households was also good. About 32 percent of the sample households belong to above secondary education and 20 percent belongs to secondary education. Agriculture was the main occupation only 20 percent of the sample households and 30 percent of them were government and non government service holder. Day laborer and garment worker was 12 percent and 10 percent respectively. About 78 percent of the sample households were belongs to medium categories of family size which ranges from 4-6 members and 20 percent of them were belongs to small family (up to 3 members). Among the sample households under study 38 percent were under the high income categories (above Tk. 100000) and 36 percent were under the medium income categories (Tk. 60000 to Tk. 100000). All the sample households received 100 percent of the credit they demanded from the bank for paddy production. Repayment capacity of the sample households were about 65 percent. Although credit was provided to the sample household for paddy production but they used only 44.77 percent of the credit for it and 5.71 percent for food consumption. Capability to buy and use fertilizer in the paddy production was influenced by the amount of credit received and used. This was correctly identified from the table 10 where elasticity of demand for fertilizer with respect to price of fertilizer was 0.815 while with respect to bank credit was 0.889. The elasticity of irrigation demand with respect to price of irrigation and bank credit was 0.084 and 0.815 respectively indicates that availability and proper utilization of bank credit enhanced the uses of irrigation water. Paddy production is positively affected by the amount, availability and utilization of credit. EY.BC=0.85 refers the rigorous impact of credit of paddy production as 8.5 percent of the production can be increased by 10 percent of the credit. Level of calorie intake by the sample household was also significantly influenced by the utilization of bank credit in paddy production. Paddy production depends on various inputs of which cost of fertilizer an irrigation cost was very important. Availability of bank credit expands the demand for fertilizer and irrigation. This is attested by the table 12 which indicates that demand for fertilizer and irrigation will be increased 8.89percent and 8.2 percent respectively due to 10 percent increase in the amount of credit.

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