Republic of the Philippines

Cagayan State University

Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

FACTORS AFFECTING FARMERS IN THE ACQUISITION

OF LOAN AT ALCALA, CAGAYAN VALLEY

A Business Research
Presented to
Mrs. Ma.Victoria C. Gannaban
College of Business, Entrepreneurship and Accountancy
Cagayan State University
Andrews Campus

In Partial Fulfillment
Of the Requirements for the Degree
Bachelor of Science in Business Administration
Major in Financial Management

By;
Baloran, Mary Ann A.
Calabung, Cheril
Carlos, Kaye E.
Cayetano, Cheennee Y.
Cunanan, Angelo Andrei
Dante, Julie Anne C.
Duyao, Kate Nicole
Fieror, Gladys

October 2023
 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

CHAPTER I

INTRODUCTION

Background of the Study

Agriculture is considered the backbone of many economies around the world, providing food

security, employment opportunities and socioeconomic development. In the Philippines, the

agricultural sector plays a vital role, contributing significantly to the nation’s Gross Domestic

Product (GDP) and employing a large percentage of the society. Philippines is a beautiful country

with plots of fertility land covering beneath the wide skies. Farmers work hard in order to produce

the various grains and animal breeds for their own consumption as well as that the nation and other

countries worldwide. (stat of philipiness farmer).

Farmers face numerous challenges particularly in accessing financial resources to sustain and

expand their operations. In Alcala, a municipality located in the province of Cagayan where farmers

encounter specific obstacles in obtaining loans that are crucial for the growth and enhancement of

their agricultural practices. This study will entail discussing the Factors Affecting Framers in the

Acquisition of Loans in Alcala, Cagayan. Alcala is known to have 18, 720 hectares of land that

encompasses 25 barangays. Farming is their main occupation and the towns primary agricultural

crops includes peanuts, yellow corn, white corn, rice and tobacco that also serves as the main source

of living, like any farmers anywhere they need to take a loan to facilitate production. In this regard,

loans play a significant role in the acquisition of seeds, fertilizers and modern farm equipment

necessary for enhancing the productivity levels as successful implementation of and agriculture

venture. These local farmers have an uncommon system of factors that affect them to obtain the

needed finances, such as environmental circumstances, society structure and policies.

 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

This study aims to unveiling the determinants of access to loan by Alcala Cagayan-based

farmers. In this way we seek to educated local policy makers, financial organizations and other

interested parties about how farmers can overcome these challenges and improve access to financial

services. It also contributes toward the promotion of better economic prospects to improve food

safety and for the development of agro-industry and agri-preneur in Alcala. Moreover, this study will

also further answer the queries of what are the possible factors that will lead into the acquisition of

loan even if it is risky on their part knowing the responsibility and interest rate inclined.

Conceptual Framework
 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

The Study of Factors Affecting Farmers in the Acquisition of Loans can be influenced by

various variables, including dependent, independent, and moderating variables.

Several factors can influence farmers' ability to acquire loans. These factors can be classified

as independent variables that directly impact the dependent variable. Some prominent independent

variables in the context of farmers' acquisition of loans includes: Collateral, Credit History, Income

Level, Loan Purpose, and Loan Size. In addition to independent variables, certain moderating

variables can influence the relationship between the independent variables and the dependent

variable. These moderating variables alter the strength or direction of the effects produced by the

independent variables. These are the Government Policies, Economic Conditions, Financial

Institutions’ Requirements, Interest Rates and Loan Terms, and Access to Information and Financial

Literacy. The dependent variable in this theoretical framework is the ability of farmers to acquire

loans successfully. This variable represents the desired outcome and provides a measure of farmers'

access to financial resources necessary for agricultural activities. The dependent variable represents

the ultimate objective of the study and is influenced by independent and moderating variables.

Statement of the problem

The study wants to sought the answers to the following queries upon stating the problem:

1. What are the factors included in the decision of farmers upon acquiring loan?

2. What is the contribution of the local banking system in supporting loan acquisition by

individual farmers?

3. What difficulties do farmers face during borrowing loans?

 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

4. What are the determinants influencing the capability of farmers from Alcala, Cagayan to

acquire loan?

5. What are the changes in the life from borrowing a loan to farmers in the municipality of

Alcala, Cagayan?

6. Is there a significant relationship between the profile of the respondents and its

creditworthiness?

Hypothesis

HO: Farmers’ ability to acquire loans is not influenced by various factors including their

creditworthiness, access to financial institutions, level of education, farm size, previous loan

repayment history, and government policies supporting agricultural financing.

H1: Farmers’ ability to acquire loans is influenced by various factors including their creditworthiness,

access to financial institutions, level of education, farm size, previous loan repayment history, and

government policies supporting agricultural financing.

Assumption of the study

This researcher assumed that study will includes the following:

1. The researcher anticipated that the respondent would be informative and transparent source.

2. The researcher believed that the respondents would help willingly throughout all the stages

involved in the research study.

3. The researcher assumed that the findings of the study will enable the farmers to obtain loan

for their agricultural requirements.

4. The researcher took it for granted that this study will guide the farmers in choosing a better

financial service that supports their needs.

 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

5. This study assumed that there are factors involved in acquisition of loan by the farmers which

can help the local government to address their problems.

Significance of the study

The importance of this study is to define the factors in the acquisition of loan by farmers. In

addition, it gives a clear understanding or background on the possible reasons why they have to take

risk.

The result of this study is significant to the following:

Farmers. The result of this study will be beneficial to the farmers as they are about to be

educated on the different reasons why some of them want to acquire loan. It will also serve as their

background if they are interested to apply for financial services offered soon.

Parents. This study will not only benefit to farmers but to all parents at large knowing that

people rely in farmers hard work, even in a simple way they must be appreciated and understand

what they need.

Teachers. This study will help teachers to develop educational that teach students about

financial literacy, social inequality and the practical application of economic concepts that can help

their parents be educated also upon sharing what they know.

Government- The research finding will help the government to inform policy decisions that

address financial disparities and support economic development. It can also help in assessing what

farmers problems and can provide funds or projects that can assist their needs.

Future Researchers- The result of this study will serve as their guide and reference that will

regards on the factors why farmers acquired loan.

 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

Scope and Limitation/s of the Study

This study has been focusing on the factors affecting farmers and their ability to acquire

loans. The study may investigate variables such as income levels, employment status, credit history,

and access to financial institutions in Alcala, Cagayan. This study is limited to the farmers of 25

barangays in Alcala, Cagayan Valley.

The researchers aim to gather data and information through combination of questionnaires

and interview. Each barangay must have 5 respondents on the questionnaire and 5 interviewee for the

interview, a total of 250 respondents that represents the total population of Alcala, Cagayan Valley

farmers.

Definition of Terms

The following terms used in the study were defined operationally to give the readers a clearer

understanding about this study.

Acquisition - The peculiar methodologies or stratagems individuals utilize to enhance their

comprehension, assimilation, or recollection of fresh information.

Agriculture – Emphasizes the augmentation of efficacy in industrial fabrication and

agricultural cultivation, encompassing both botanical and zoological domains.

Agri-preneur – an industrious magnate whose commercial pursuits are intrinsically tied to

the agricultural or agro-industrial sphere.

 Republic of the Philippines
Cagayan State University
Andrews Campus
Caritan Sur, Tuguegarao City 3500, Cagayan

Agro-industry – A complex industrial enterprise specializing in the decontamination,

packaging, and warehousing of the residual substances derived from agricultural production.

Creditworthiness – A solvency assessment or determination regarding an individual's or

another entity's potential to meet obligations stipulated for the prompt settlement of

indebtedness.

Farmers - Individuals engaged in the cultivation of terrestrial expanses to foster the growth

and yield of zoological sustenance, comestible sustenance, or diverse consumer merchandise;

along with agro-entrepeneurs who underpin agricultural output.

Financial Institution – A pecuniary overseeing capital involutions, encompassing

investments, advances, and depositions.

Financial Services – The sundry provisions within the finance sector, encompassing

pecuniary governance and cybernetic bancology technology.

Loan - Obligatory indebtedness pursuant to the stipulated provisions of the loan agreement.