Abstract
Access to credit is essential for sustainable agricultural development. This paper evaluates the impact of formal and informal agricultural credit, access to extension services, and different combinations of agricultural credit and extension services on the economic outcomes of farming households in Afghanistan. This study applies a quasi-experimental approach (propensity score matching) and inverse-probability-weighted regression adjustment (IPWRA) analysis. The data comes from a survey of 277 randomly selected farming households in the three districts of rural Afghanistan. The results show that having access to formal agricultural credit has a positive and differentiated impact on the farming costs and net revenue of farming households. However, the effects increase when a farming household has access to both formal credit and extension services. The results also reveal that credit constraints affect farming costs and net revenue. The study provides some practical implications for agricultural development policymakers. First, formal agricultural credit affects farm revenue in rural Afghanistan. Second, the impact of credit bundled with agricultural extension services on farm revenue is higher than the impact of the provision of each service separately. Therefore, a more sustainable agricultural credit arrangement should be supplemented by extension services for farmers in Afghanistan.
Highlights
Afghanistan’s agriculture sector is marked by low productivity, mainly due to the limited application of improved inputs [1], subsistence farming, and low income [2].Inadequate access to capital and a lack of farming skills are regarded as the primary causes of agricultural backwardness in the country [3]
By using data from an agricultural household survey in rural Afghanistan, this study analyzes the impact of access to formal and informal agricultural credit, extension services, and their synergetic effects on farmers’ net revenue and costs
The data used in this study were collected through a household survey of farmers who participated in formal and informal agricultural credit programs and farmers who did not utilize any type of credit
Summary
Afghanistan’s agriculture sector is marked by low productivity, mainly due to the limited application of improved inputs [1], subsistence farming, and low income [2]. Agriculture extension is the means available to provide up-to-date information to farmers because the services aim to improve farmland use, rural livelihoods, and well-being by enhancing information exchange This formal services arrangement may lead to sustainable agricultural development [10]. By using data from an agricultural household survey in rural Afghanistan, this study analyzes the impact of access to formal and informal agricultural credit, extension services, and their synergetic effects on farmers’ net revenue and costs. According to Masaood and Maharjan [15], considering the coverage of formal agricultural credit and its short history, Afghanistan is less experienced in formal agricultural credit provision It has not yet been established whether agricultural credit, its synergy with agricultural extension services, and credit constraints affect farmers’ costs and farm revenue in the context of Afghanistan.
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