Determinants of credit repayment and fertilizer use by cooperative members in Ada District, East Shoa Zone, Oromia Region

The major aim of this study is to empirically examine factors influencing timely credit repayment and input use (especially fertilizer) by smallholder farmers in Ada district of East Shoa zone. Data for this study were collected both from primary and secondary sources during 2009. A two-stage random sampling procedure was adopted to select five agricultural cooperatives and a total of 130 sample respondents from the district. Descriptive and inferential statistics were used to describe socio-economic and institutional characteristics of the respondents which revealed that there is significant mean difference regarding Age, family size, cultivated land size, number of livestock owned, on-farm income, amount of fertilizer used and saving habits. Tobit model was employed to identify factors influencing loan repayment performance of the households. The result of the model showed that family size, livestock ownership, on-farm income, non-farm income and saving habit were the statistically significant factors influencing timely loan repayment performance positively. On the other hand, multiple linear regression model was used to identify the variables that contributed to the amount of fertilizer use among respondents. From a total of 12 explanatory variables included in the model, education level, number of draught oxen owned, cultivated land size, family size and saving habit of the respondents were found to be the most significant variables contributing to the amount of fertilizer use positively, while age of the household head influences it significantly and negatively. Therefore, the study suggests that improving the livestock sector, educating households and their family member, giving attention in promoting non-farm activities in rural areas and promoting saving habit are some of the important priority areas for the success of future intervention strategies aimed at the promotion of production increasing technologies and sustainable credit facilities.