Yam Price Variability and Loan Repayment Performance among Yam Farmers in Ogoja Local Government, Cross River State

Abstract

Agricultural loan is important for financing farm inputs and improving the productive capacity of not just yam-based farmers but all farmers. However, fluctuations in agricultural commodity prices can create substantial uncertainty in farm income and potentially affect farmers' ability to repay loans. This study investigates the relationship between yam price variability and loan repayment performance among yam farmers in Ogoja Local Government Area of Cross River State, Nigeria. Primary data were obtained from yam farmers who had accessed agricultural loans in the last two years in the study area, and there were 81 in all. Secondary data were also obtained from the lenders. Loan repayment performance was measured using the repayment rate. Yam price variability was also measured using the coefficient of variation. Descriptive statistics were used to characterize farmers and their credit experiences, while the probit regression technique was used to investigate the relationship between price variability and repayment outcomes.  In terms of factors that affect price variability, seasonality ranked the highest (37%). The probit results showed that yam price variability (0.4306, P<0.01), loan duration (0.0633, P<0.01), farm income and loan amount granted (0.1012, P<0.05) and (-0.2210, P<0.10), respectively, were the significant variables that affected loan repayment performance. The study, therefore, concludes that exposure to yam price risk significantly compromises farmers' ability to meet agricultural loan obligations, and as such recommends diversification to hedge this risk.