Credit margin of investment in the agricultural sector and credit fungibility: the case of smallholders of district Shikarpur, Sindh, Pakistan

BackgroundThis study examines the access to credit, credit investment, and credit fungibility for small-holder farmers and medium- and large-scale farmers in the agricultural sector of the Shikarpur District of Sindh, Pakistan.MethodsA standardized questionnaire was used to collect data from 87 farmers in the Shikarpur District. We investigated the availability of credit and the use of credit fungibility by farmers with small-, medium-, and large-scale holdings by applying a credit fungibility ratio and an ANOVA technique. The factors that influence the farmers' access to agricultural credit were analyzed using a probit regression model.ResultsThe results revealed that farmers in both study groups used some amount of their agricultural credit for non-agricultural activities. Further, the results of the probit regression analysis showed that formal education, farming experience, household size, and farm size had a positive and significant influence on the farmers' access to agricultural credit.ConclusionBased on these findings, our study suggests that a strong monitoring of farmers is needed in the study area.