Farmers’ preferences for an agricultural loan product: A conjoint analysis

Abstract

This study investigated how farmers in Digos City, Davao del Sur, value key attributes of agricultural loan products so that lenders can craft farmer‑centered credit solutions. Using a full‑profile, fractional‑factorial conjoint experiment, 290 small‑holder farmers rated 29 orthogonally generated loan profiles that varied by terms and interest rate, mode of payment, collateral requirement and delinquency penalty. Part‑worth utilities were estimated with an additive model. Mode of payment emerged as the dominant driver of choice (≈33 %), with annual and semi‑annual schedules most preferred. Collateral stringency and loan tenor–interest combinations ranked next, whereas penalty timing exerted the least influence. Utility reconstruction identified the optimal package as a 10‑year loan at 2 % annual interest, secured only by a co‑maker, repayable annually, with penalties triggered after maturity. Packages requiring land titles plus vehicle papers, monthly instalments and early penalties produced the lowest utility. These findings underscore the importance of synchronizing repayment calendars with crop cash‑flow cycles and minimizing collateral barriers to expand formal credit uptake. Ultimately, tailored financing is pivotal for sustaining rural livelihoods and achieving local food‑security goals.