Agricultural Financing and Farm Output among Smallholder Farmers in Ebonyi State: The Role of Commercial Banks and Cooperative Societies

Agricultural financing remains a structural challenge in Ebonyi State, where the majority of farming households are smallholders with limited access to formal credit, constraining farm output and contributing to persistent rural food insecurity. This study examines the relationship between agricultural financing sources and farm output among smallholder farmers in Ebonyi State, with particular focus on the roles of commercial banks and cooperative societies. The study is anchored on the Loanable Funds Theory, which explains the determination of interest rates and credit allocation in markets where lenders and borrowers interact to maximise productive outcomes. A survey research design was adopted. The population comprised 1,840 registered smallholder farmers across three agricultural zones in Ebonyi State. Using multi-stage random sampling, a sample of 320 respondents was selected. Data were gathered through structured interviews and questionnaires, then analysed using multiple regression and descriptive statistics. Findings reveal that cooperative credit significantly and positively predicts farm output growth, with cooperative borrowers recording 42 percent higher crop yields compared to self-funded farmers. Commercial bank credit, while available in smaller proportions, generates equally positive output effects when accessed by farmers with documented land titles and formal business records. The study further finds that loan tenure adequacy and interest rate affordability are the most significant determinants of credit utilisation effectiveness. It is concluded that cooperative societies represent the most accessible and effective agricultural financing channel for smallholders in Ebonyi State. The study recommends that state government authorities strengthen cooperative governance frameworks and establish an agricultural credit guarantee scheme to de-risk bank lending to the sector.

Keywords: Agricultural financing, farm output, smallholder farmers, cooperative societies, Ebonyi State