Input loan plays a vital role on economic transformations to cotton farming households.
However, their acquisition and repayment are characterized by numerous challenges,
including high defaults among beneficiaries. This study intended to examine factors
contributing to low loan repayment on cotton inputs; and sought to improve its supply to
farmers in Bariadi district. Primary and secondary data were collected from farmers and
ginners respectively. A purposive and two stage stratified sampling was used to select
four wards which received input loans and get a total of 112 respondents, with 70
defaulter and 42 non-defaulter farmers depending on proportions of default for 2011/12
cropping season. Descriptive t- and chi-square statistics were used to describe
demographic, farming, socioeconomic, inputs credit requisition, use and repayment
characteristics. Results showed significant differences between defaulters and nondefaulters
with respect to age, marital status, education, family size, experience in
farming, land area under cotton, access to extension, input supplier company, sufficiency
of inputs, other sources of loan, perception, training and conditions imposed on loan
repayment. Probit model was adopted to determine confounding factors to low input loan
repayment among cotton farmers. Results showed that seed cotton harvested (-), type of
input (+), input supplier company (+), timeliness delivery of inputs (+), perception on
input loan (-), training on loan repayment (-), interval on loan collection (-) and
conditions on input loan repayment (-) were statistically significant at p<0.001, p<0.01
and p<0.1. To enhance loan recovery among cotton farmers’; policies efficient on
increasing productivity, reviewing beneficiary groups, effective training, close monitoring
and development of risk mitigation strategies on repayment conditions should be
advocated. However, further disbursement of loan should be targeted to farmers who are
more likely to moderate the desired levels for each significant variable to attain
sustainability on input supply.