Agricultural credit guarantee scheme fund and food crop productivity in southern nigeria

Agriculture has the potential to accelerate the pace of economic growth in any country. Unfortunately, the contribution of agriculture most especially food crops to the Gross Domestic Product(GDP) of Nigeria has been on the decline since oil was discovered in commercial quantities in 1970s. To salvage the sector, the Federal Government of Nigeria established the Agricultural Credit Guarantee Scheme (ACGS) in 1977, with the purpose of increasing the level of bank credit to the agricultural sector through the provision of guarantee in respect of loans granted by any bank for agricultural purposes. This study conducted a 14 year impact analysis of this agricultural credit guarantee scheme fund on food crop production by smallholder farmers in Southern Nigeria. The study specified a model based on the Cobb-Douglas production function with three explanatory variables. Data were generated from the Central Bank of Nigeria Statistical bulletin and National Bureau of Statistics (NBS). The results were analyzed using fixed effects panel data analysis. The results revealed that agricultural credit guarantee has a positive significant impact on food crop production of smallholder farmers in Southern Nigeria.