Study on flow of institutional credit and its diversion by dairy farmers in Kerala

Institutional credits being diverted for non-productive purposes poses a significant concern in the realm of dairy farming in Kerala. Study conducted in two districts of Kerala observed that, majority of farmers fell within the range of 45 - 60 years of age and had completed at least secondary level of education. Most farmers had farming experiences varied from 11 to 20 years, constituted 40 percent in Palakkad and 58 percent in Wayanad for non-borrowers, and 54 percent in Palakkad and 44 percent in Wayanad for borrowers, respectively. Notably, borrowers in Wayanad diverted a higher percentage of credits compared to Palakkad. The average loan share in total investment was slightly higher in Wayanad (89.27%). Key factors influencing credit diversion included age, area under dairy farming, farming experience, number of family members, and monthly per capita consumption expenditure. The study emphasizes the impact of poor financial literacy and low education levels on hindering effective credit utilization among farmers.