ISSN: 2319-9857 RRJAAS | Volume 2 | Issue 2 | April – June, 2013 28 Research and Reviews: Journal of Agriculture and Allied Sciences Rural Credit Use and Comparative Allocative Efficiency among Yam Based Farmers in Abia State, Nigeria CN Eze 1 , KC Obike 1 *, CI Ezeh 1 , and JA Mbanasor 2 1 Department of Agricultural Economics and Extension, Abia State University Uturu, Umuahia Campus, PMB 7010, Umuahia, Abia State, Nigeria. 2 College of Agri- Business and Financial Management, Michael Okpara University of Agriculture, Umudike, PMB 7267 Umuahia, Abia State, Nigeria. Research Article Received: 09/01/2013 Revised: 12/04/2013 Accepted: 14/04/2013 *For Correspondence: Department of Agricultural Economics and Extension Abia State University Uturu, Umuahia Campus,P.M.B 7010, Umuahia, Abia State, Nigeria. Keywords: Credit, Productivity, Yam and Allocative Efficiency ABSTRACT This study evaluated the Rural Credit use and comparative Allocative Efficiency among Yam based farmers in Abia state, Nigeria. Cost route approach using two sets of structured questionnaires were administered to a purposively sampled 120 yam based farmers (six credit users and six non credit users from ten major yam producing villages in the state) constituting 60 credit users and 60 non credit users. Data analysis consisted of statistical and econometric tools. The result revealed that farmers within the age range of 46- 74 and above were engage in yam production in the area of study with majority (80.0%) of the non credit users and (80.0%) credit user. A good number (86% for non credit users and 83% for credit users) of them had formal education with large household size of 5 – 15 family members. The two groups of farmers operated under the same existing technology; both farmers were factor biased or non – neutral in their production function i.e the two groups of farmers differ significantly in more than one slope coefficient. Credit users were found to use labour intensively in line with apriori expectations. For Allocative efficiency , the linear form fitted the data(R 2 = 0.66) for credit users, the value of output of credit users were significantly influenced by labour, farm size and other production inputs, while farm size, value of fertilizer and depreciated asset were significant at 5% probability level for non credit users. A comparative Allocative efficiency revealed that both groups of farmers may not have achieved optimum or absolute Allocative efficiency in their production period. It is therefore important that government agricultural policy should encourage the increase of credit supply to yam base farmers to encourage yam production in the state. INTRODUCTION Inadequate credit facilities have been identified as one of the major constraints to agricultural production in Nigeria [14] . Currently, a number of Agricultural policy measures have been adopted in an effort to provide credit facilities to farmers. These government policies emphasize the need to make credit available to farmers through formal and non- formal credit institutions so as to boost agricultural production. Prominent among these policies are: Agricultural Credit Guarantee Scheme (ACGS) (1977), Nigerian Agricultural and Co-operative Bank (NACB) (1973), Agricultural Development Projects (ADP) (1976), Directorate of Food, Road and Rural Infrastructure (DFRRI).More so, Decree 4, of 1987, gave right to the establishment of Rural Banking Programmes (Community Banks), the raising of bank loans and advances to agricultural sector from 6% to 8% in 1980 and the establishment of Nigerian Agricultural and Rural Development Bank in 2001 amongst others. The rural banking programme according to Ojo and Adewunmi [15] is one of the measures adopted by the Central Bank of Nigeria to assist in the transformation of the rural economy including agriculture. The effect of the non – establishment of rural bank branches in the country was the consequent lack of access to credit by the rural dwellers where a larger proportion(70.0%) of Nigerian population reside. In fact the rural dwellers keep their stock of money in