This study has assessed the impact of credits on the productivity and welfare of farmers in Plateau state. The study found a positive but insignificant relationship between credit and farmers productivity and welfare. This objective was achieved through the use of Cobb-Douglas production function model which was adapted to fit the various inputs in the production model of borrowers and non borrowers. It was found that, only hired labour was significant in the borrowers production function, the rest of the variables tested insignificant to output. For non borrowers’ production function none of the variables was significant to output, in other words the contribution of all the inputs included in both production functions did not significantly impact output. The Gross margin of farmers who borrowed was higher than those that did not borrow. This is because the efficiency of borrowers was higher than that of non borrowers due to borrowers increase in inputs quality as a result of credit received from formal financial institutions. The study therefore concludes that though the contribution of inputs was insignificant for both borrowers and non borrowers with the exception of hired labour which tested significant to output in the borrowers production function. The higher gross margin and Net farm value in favour of credit users and an improvement in welfare indicators have shown further evidence of the benefit of credit to farmers in Plateau state. The test of hypothesis also shows that there is a significant difference between the production function of borrowers and that of non-borrowers, this is attributed to credit received.
In line with the above findings, the study recommends that government should help to enhance higher volume of credits to farmers through supervision and insistence on adherence of formal financial institution’s lending requirement to agriculture. Also, financial institutions are encouraged to intensify their lending efforts towards farmers, this way it is believed that farm output will significantly increase leading to increase in farmers’ welfare and improved availability of food for man and animals.