Impact of agricultural credit on profitability and efficiency of onion cultivation in a selected area of Bangladesh

Abstract

Onion is one of the most important commercial spice crops in Bangladesh, grown and consumed almost all over the country. The purpose of this study was to look at the socioeconomic factors, loan profile, profitability and efficiency, as well as the effect of credit on onion production in Bangladesh's Pabna district. Stochastic production frontier method and profitability analysis was used in this study. Primary data were collected through a field survey of 120 onion farmers using a semi-structured interview schedule. The major findings of this study revealed that the majority of the sample farmers were between the ages of 30 and 64; the average family size and annual household income were 5.36 persons and Tk. 264,450 (US$ 2409.57). About 85 percent of the loan money was used for onion cultivation in the study area. Onion production was profitable in the study area. Per hectare, total cost, total return, gross margin, net return, and benefit-cost ratio (BCR) were Tk. 384090.5 (US$ 3499.69), 973657 (US$ 8871.59), 671957.5 (US$ 6122.62), 589566.5 (US$ 5371.90), and 2.53, respectively, for the credit group and Tk. 378412 (US$ 3447.95), 895920 (US$ 8163.28), 599761 (US$ 5464.79), 517508 (US$ 4715.33), and 2.37, respectively, for the non-credit group. The mean farmer's technical efficiency was 94 percent. The impact of credit on onion cultivation was positive. The coefficient value was 0.081. Thus, the study area has tremendous potential for onion production; relevant authorities need to ensure the smooth, timely, and hassle-free flow of sufficient credit to the onion farmers.