CHEMICAL FERTILIZER UTILIZATION AND LOAN REPAYMENT PERFORMANCE: THE CASE OF SMALLHOLDER FARMERS IN

Abstract

The focus of this study was to identify factors affecting chemical fertilizer utilization and loan repayment performance of smallholder farmers in Gamo Zone. A multistage sampling technique was adopted to select sampled respondents. Gamo Zone was selected purposively and three selected woredas were taken by stratification based on the performance of loan repayment. Then, a total of 400 sample respondents were selected by a systematic sampling technique based on sample proportion to size. Data for this study were collected both from primary and secondary sources. Descriptive and econometric statistics were used to analyze data that were collected from respective sources. The study used multiple linear regression model results indicated that the age of farmers, number of oxen owned, off-farm activity, access to credit, access to extension service, and saving status positively and significantly affecting chemical fertilizer utilization of the smallholder farmers. On the other hand, the result of the Tobit regression model indicated that the level of education, number of oxen owned, sex, Woina-Dega agroecology zone, off-farm income, access to extension service, and saving status are positively and significantly influencing while the amount of chemical fertilizer used, family size, land size, and Dega agro-ecology zone are negatively and significantly influencing loan repayment performance of the smallholder farmers. Therefore, based on the findings of the study, the Gamo Zone government should improve the farmersextension agent ratio, advance the extension service through by providing training for farmers on agronomic practices, encourage farmers used clustering agriculture approaches to enhance productivity, farmer to farmer experience sharing program across agro-ecology and adult education to enhance farmers knowledge, skill and attitude on the utilization of chemical fertilizer and loan repay in the study area. The government should properly implement a family planning program, diversifying income like fattening and engaging farmers to off-farm to improve the purchasing power of chemical fertilizer and loan repayment performance of smallholder farmers. Finally, the government should maintain the collaboration and cooperation of rural institutions; Omo Microfinance, Cooperative, agriculture office, and rural development stockholders to minimize the loan burden from farmers and maintain a legal framework for crop failure insurance in case of unexpected natural risks and uncertainties of farmers.