Role of Agricultural Credits in Rice Productivity in Bangladesh - A Stochastic Frontier Approach

Abstract

Agriculture sector in Bangladesh is the largest contributor to income and employment. About 77 percent of the total population and 78 percent of rural labour force are located m rural areas. Agriculture sector provides 63.2 percent of employment opportunities and 72 percent of rural employment. Moreover, 23.31 percent of country's GDP comes from agriculture. The production and employment opportunities either in agriculture or outside of it are circled around rice productivity. This thesis is a study of role of agricultural credits in rice productivity in Bangladesh by using stochastic frontier approach. The data used in the study are based on a survey of 200 rice cultivators from two villages, Kaur and Barigaon, which respectively represent agriculturally advanced in Bagmara Upazila of Rajshahi district. The villages were selected purposively, while the rice cultivators were selected by adopting stratified random · sampling design. The selected cultivators in each villages were classified into seven size categories. The role of credit, the supply of credit, the share of different agencies, the utilization patterns, the interest rates and the existing credit gaps were studied and compared between the villages and among the size categories. It has been observed that farms adopting superior techniques of cultivation reported substantially higher credit requirements per household and per bigha. The analysis shows that 31 percent cultivators completely and 69 percent cultivators partly depend on credit. In both Kaur and Barigaon, cultivators belonging to the larger size categories received larger proportion of their loans at 15 percent interest rates from the institutional sources while smaller cultivators paid about 30 percent interest rate for larger parts of their total loans from the NGOs.