Factors Affecting Agricultural Credit Access to Farmers in The South Punjab Region Of Pakistan

Abstract

Agricultural credit is an essential financial assistance for farmers, enabling them to purchase essential farming inputs such as pesticides, agricultural engineering equipment, seeds, and many more. These farming inputs enable farmers to improve the quality and quantity of yields, leading to financial stability. This study investigates the factors influencing farmers' access to agricultural credit in Pakistan, particularly in the southern Punjab region. For that purpose, a quantitative methodology was used, and a survey-based questionnaire was administered to a sample of 265 farmers. The Key household and farm parameters included are age, education, farming experience, off-farm income, distance to the nearest city, farm size, revenue, and mechanization levels. The data were evaluated using probit and ordinary least squares (OLS) regression models to identify the determinants of credit access. Findings reveal that all variables, except farming experience, significantly impact the likelihood of obtaining credit. Education,
financial literacy, proximity to urban areas, and larger farm sizes positively influence access, while age and off-farm income present negative correlations. The analysis highlights the need for targeted interventions to improve farmers' financial literacy, streamline credit processes, and enhance institutional outreach. Strengthening agricultural credit access can drive higher agricultural productivity and improve farmers' economic well-being. This research provides valuable insights for policymakers and financial institutions aiming to address barriers to credit accessibility and develop inclusive financial frameworks for smallholder farmers in South Punjab.

Keywords: Agricultural Credit; Financial Literacy; Smallholders; Farm Management; South
Punjab