Abstract:
Poultry enterprise is capital intensive; hence, most commercial poultry farmers rely on credit facilities to sustain their businesses. Previous studies established that access to credit enabled farmers’ participation in commercial poultry production. However, information on how the use of credit affects profitability of commercial poultry production is scanty. Therefore, the effect of credit utilisation on the profitability of poultry production in Southwestern Nigeria was investigated.
A four-stage sampling procedure was used. Ogun, Oyo and Ondo states were randomly selected; and three Local Government Areas (LGAs) in each state based on prevalence of commercial poultry entrepreneurs. Cluster sampling technique was used to select two communities where poultry enterprises huddled in the selected LGAs. Ten percent of the entire poultry farmers were selected to give a total of 250 respondents. Data were collected using interview schedule on respondents’ socio-economic and enterprise characteristics (age, education, occupation, type of enterprise and management practice), access to credit facilities, attitude towards use of credit and utilisation of credits, constraints to utilisation of credit and profitability of commercial poultry farming. The Benefit cost ratio was used to estimate profitability. Indices of credit accessibility (low: 0.00-4.37; high: 4.38-22.00), credit utilisation (low: 0.00-10.42; high: 10.43-19.00), attitude towards use of credit for poultry enterprise (unfavourable: 36.00-63.70; favourable: 63.80-84.00) and profitability (low; ₦3,818,278.29 - ₦12,550,288.00; high; ₦12,550,289.00-₦86,427,167.00) were generated. Data were analysed using descriptive statistics, Chi-square, Pearson product moment correlation and ANOVA at α0.05.
Most respondents were male (74.8%). Age and years of formal education were 42.56±9.84 and 17±9.26 years, respectively. More than half (52.8%) engaged in poultry production as their primary occupation, 54.4% combined egg and meat production and 63.6% used battery cage system. Credit was mostly accessed from cooperative societies (=1.19) and family/friends (=1.07). Sixty two percent of respondents had favourable attitude towards the use of credit in their enterprises while access to credit facilities (78.60%) and credit utilization (67.2%) were low among them. High interest rates and high risk associated with poultry enterprise ranked highest as constraints to use of credit in poultry enterprise. The net profit from poultry production was ₦1,766,230.95±809,396.46 and profitability was high among 67.8% of the respondents. Size of enterprise (r=0.15), years of farming experience (r=0.29), access to credit facilities (r=0.14), number of employees (r=0.31) and credit utilisation (r=0.085) correlated significantly to profitability of commercial poultry enterprise. Farmers differed significantly in their profitability depending on their level of credit utilisation, type of poultry enterprise and location. Profitability was significantly higher among high credit users (₦16,849,577.83±44,267,049.48) than low credit users (₦6,740,704.90±20,671,384.92). Combined Meat and egg producers had higher profitability (₦18,576,837.38±44,106,264.29) than meat only (₦15,639,874.67±47,308,877.27) and egg only producers (₦8,002,758.70±29,298,672.40). Profitability was higher in Ogun (₦18,792,463.78±23,062,122.53) than Oyo (₦15,564,957.58±46,957,103.9915) and Ondo (₦10,177,560.11±53,875,752.40) states.
Credit utilisation enhanced the profitability of commercial poultry enterprise in Southwestern Nigeria. Profitability was highest in Ogun state and among poultry farmers who combined egg and meat production in their enterprise.
