Is Debt Financing a Burden or a Boost to the Growth of Small Scale Poultry Farms? Evidence From Nigeria

Authors : Felix ACHOJA, Nwamaka NWOKOLO

Pages : 179-186

Doi:10.33462/jotaf.665710

View : 16 | Download : 7

Publication Date : 2021-05-01

Article Type : Research Paper

Abstract :The growth of poultry industry is very relevant to the economy of Nigeria. Poultry farm growth may respond to debt financing positively over time up to a threshold, beyond which it becomes a burden to the business. The debt threshold of poultry farms is still not significantly understood by stakeholders in the industry. Therefore this study derives its significance by examining the asymmetric relationship between debt financing and the growth of small scale poultry farms in Nigeria. Multi-stage procedure for selection of sample was employed to involve two hundred and forty insert ignore into journalissuearticles values(240); poultry farmers in the survey. Primary data collected with structured questionnaire were analyzed using descriptive statistical tools insert ignore into journalissuearticles values(mean, percentage, standard deviation);. Inferential statistical formula insert ignore into journalissuearticles values(Ordinary Least Square technique of multiple regression model); was employed for data analysis. Result indicates that 6% of total asset was financed by debt while 94% was financed by owner’s equity insert ignore into journalissuearticles values(personal fund);. This indicates that debt threshold of 50% was neither attained nor exceeded. Further result shows that the growth indicators namely stock size, revenue and poultry owners’ equity responded positively to debt financing status but to a small extent. Significant determinants of debt financing status of poultry farms identified in the study were: farm age, farm size, terms of loan, loan duration, loan sources and owners’ equity. Debt financing positively impacted poultry farm growth. This implies that surveyed poultry farms are in the tolerable debt level where owners equity is higher than total debt owed. The study has established a positive causal relationship between debt financing and the growth of poultry farms in Delta State, Nigeria. The study has further accentuated the centrality of credit financing as a catalyst in the growth and development of the poultry industry. There is sufficient evidence to advocate for more loans to support the growth of small scale poultry farms. More access to external debt financing is recommended to boost small scale poultry farms’ growth in Nigeria. A more efficient credit market will serve as an incentive to the credit seeking behaviour of borrowers insert ignore into journalissuearticles values(small scale poultry farmers); in Nigeria.
Keywords : Debt financing, asymmetric relationship, burden, boost, poultry farms growth