Profitability of banana cultivation under agricultural credit in Narsingdi district of Bangladesh

Abstract

Agricultural credit can play important role by providing the needed liquid- ity to farmers who do not have sufficient investable funds to exploit the opportunity. The present study analyses the adequacy, utilization patterns and repayment status of credit, the profitability and show the relationship between profitability and loan size of Banana cultivation in sadar upazila of Narsingdi district of Bangladesh. Primary data were collected from ran- domly selected 60 borrowers of the different NGOs who cultivate Banana in the study area. Data were collected through direct interviewing using pre-tested semi-structure interview schedule. Both tabular and econometric techniques were used to analyze the data. Average amount of loan received were Tk. 13750, 23100, 35100 for the small, medium, and large categories of borrowers, respectively. The overall average amount of loan received was 85.4% of applied amount. Most of the credit amount was utilized for farming purposes. Status shows that repayment rate was highly satisfactory. Multiple regression models indicate that amount of loan received and level of education of the respondents were significant factors affecting loan repay- ment. It was estimated that overall average annual total cost of production of Banana per hectare was about Tk. 557710 while gross return and net returns were about Tk. 931024 and Tk. 373313, respectively. The overall benefit-cost ratio of Banana cultivation was 1.67. The relationship between loan size and profitability of Banana cultivation indicated that medium size loan receiver farmers were more profitable compare to the small and large amount of loan receiver farmers. The findings of the study indicated that reasonable amount of credit ensures farmers to profitable farming activities. The findings of this study will be helpful for financial institutions officials and policy makers to formulate the loan disbursement policies related to agricultural credit in Bangladesh.