Proceedings of 4th Global Business and Finance Research Conference
25 - 27 May 2015, Marriott Hotel, Melbourne, Australia
ISBN: 978-1-922069-76-4
Effect of Microcredit Program on Input Use Pattern and
Output of Major Activities: A Historical Perspective
Yogendra Prasad Acharya and Uma Acharya
Small Farmer Development Program (SFDP) is a poverty reduction program managed by
Agricultural Development Bank, Nepal (ADBN) since 1975. The program emphasizes on
ameliorating socio-economic condition of rural populace by supplying seed money and
startup capital for seeds, fertilizers and rural appropriate technology. Since its inception,
Raviopi project has been continuously supporting small farmers in terms of disbursing loan
for buying chemical fertilizer [mainly for Urea, DAP (Di-Ammonium Phosphate) and
Complexal], improved seeds and seedlings and irrigation equipment like sprinkler. It was
assumed that farmers might change their agricultural practices from local to improved one
if accessibility of credit to the small farmers becomes easier.
An empirical case study was conducted using multi-strategy research methods with the
objective of assessing the effect of microcredit program on input use pattern and output of
the activities. The main research question in this study was – ‘Is it reasonable to believe
that the fertilizer has no effect on change of production?’ This case study presents the
evaluation of changes noticed in relation to input use and output production of major
activities after borrowing loans. The study tests the hypothesis that the chemical fertilizer
has no effect on change of production. The evidence collected from 12 small farmer
households in Nepal rejected this hypothesis.
In order to verify whether the use of chemical fertilizer increased the production, the past
production figures of 12 borrowers were obtained from the previous detailed household
survey report (1992) and the production figures of wheat after 10 years were compared
with the original one. After using the chemical fertilizer, the increments in the production
were recorded and quantitative method (t-test) was applied to test the hypothesis.
Likewise, individual interview and focus group discussion were used to triangulate the
validity of the results.
The study finds that the use of inputs increased among the borrowing farmers resulting in
increase in production and sales of Maize, Paddy and Wheat. The overall assessment of
the effects of the SFDP on borrowers shows the positive effect on economic well-being of
the beneficiary population.
Keywords: Input use, Small Farmers, Chemical fertilizer, Raviopi, Case study,
Microcredit, Kavrepalanchowk district, Small Farmer Development Program, Nepal
Track: Banking, Finance
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Dr Yogendra Prasad Acharya, School of Administrative Studies, York University, Keele Campus, 4700
Keele Street Toronto, ON, M3J 1P3, Canada, Email: yogen@yorku.ca
Dr. Uma Acharya, Department of Geography and Program in Planning, University of Toronto, St. George
Campus, Canada, Email: uma.acharya@utoronto.ca