Access To Agricultural Credit Research Articles

Can land inequality and land reforms affect agricultural credit access? Evidence from Mexico state-level data, 1940-1960

Can land inequality and land reforms affect agricultural credit access? Evidence from Mexico state-level data, 1940-1960

Health shocks and rural farmers credit access shifts in Sub-Saharan Africa: Evidence from the Kwahu Afram Plains South District, Ghana

In the extensive literature, farmers' credit access in SSA has been examined, albeit with limited evidence derived from health-related shocks (e.g. pandemics). While the Severe Acute Respiratory Syndrome Coronavirus 2 (SARS-CoV-2) "COVID-19″pandemic has exacerbated rural communities' economic downturn and financial challenges, there is still scant evidence on how this lethargy shaped farmers' credit access. Through 105 semi-structured household interviews and 10 key informant interviews in the Kwahu Afram Plains South District of Ghana, this research explores the variations and determinants of agricultural credit access in rural communities before and during the COVID-19 pandemic, using Analysis of Variance "ANOVA" and logistic regression. The findings revealed that while marital status, organizational membership and the size of household labour accounted for significant variations in agricultural credit access before the pandemic, variations during the pandemic were explained by income status, gender, and household labour. Furthermore, shifts in the determinants of agricultural credit access during the pandemic were reported as household labour size, marital status, and the interaction of motorbike ownership and organizational membership, which played crucial roles in predicting the likelihood of credit access before the pandemic. Conversely, during the pandemic, gender, savings, household labour size and livestock ownership significantly determined agricultural credit access in rural communities. Based on these empirical insights, the paper advocates that savings should be encouraged and social capital should be strengthened as pandemic resilience mechanisms. At the same time, policies and programs to improve agricultural credit access during health-related shocks should target vulnerable groups. This study contributes to the theoretical debate on rural farmers' credit access determinants, emphasizing the COVID-19 pandemic as a health shock.

Impact of credit access on farm performance: Does source of credit matter?

Access to credit is crucial to improve farm performance as it allows farmers to procure inputs and technology. However, on the empirical front, evidence of the impact of agricultural credit access remains scanty. This study examines how access to credit from formal and informal sources influences the productivity and technical efficiency of maize farming in ten major maize-producing provinces in Indonesia. Secondary Food Crops Survey data by Statistics Indonesia were employed and analyzed using a quasi-experimental approach, i.e., the propensity score matching (PSM). The estimation shows that agricultural credit access improves farm performance. In fact, the ability to obtain credit from institutions increased productivity and technical efficiency more effectively than from informal sources. This study suggests that agricultural credit access remains relevant in Indonesia and needs to be improved continuously.

Determinants of credit access among rice farmers in rural Cameroon

Inadequate access to credit remains a major constraint to agricultural production in Africa. However, not all farmers face this difficulty. This article assesses the determinants of agricultural credit access among rice farmers who are members of the Ngoketunjia Cooperative Credit Union in the Northwest Region of Cameroon. A structured pretested questionnaire was administered to 126 randomly selected credit beneficiaries and non-beneficiaries, all of whom are members of the study credit union. Binary logistic regression was performed, with the dependent variable (access to microcredit) being 1 (yes) if the respondent received a loan during the 2018/2019 farming season, and 0 (no) otherwise. 12 explanatory variables were used in the analysis, which adopted a 10% level of significance. Statistically significant relationships were observed between farm size, inputs, farm output, and access to loans, suggesting that access to microcredit has a positive impact on agricultural production. The three key factors facilitating access to microcredit were farming experience (B = 0.38, p = 0.06), the educational level of the farmer (B = 0.81, p = 0.06), and the diversion of loans to solve other problems (B = 1.64, p = 0.06). Based on these results, we recommend better financial inclusion of rice farmers in microcredit schemes to increase local rice production and reduce imports in Cameroon.

Determinants of institutional agricultural credit access and its linkage with farmer satisfaction in India: a moderated-mediation analysis

PurposeThe study assesses the relationship between institutional credit access and farmer satisfaction using contextual mediating and moderating variables. This study identifies various socioeconomic, service features and service quality determinants impacting institutional credit access.Design/methodology/approachThe authors used the stratified random sampling method and selected 512 farmers from 40 villages in Maharashtra, India. Initially, the study employed probit regression analysis to identify the credit adoption determinants. Subsequently, the relationship between institutional credit and farmer satisfaction is identified through moderated-mediation analysis using the Statistical Package for the Social Sciences and Analysis of a Moment Structures (SPSS - AMOS model).FindingsProbit model's results suggest that socioeconomic variables like education and bank distance; service quality variables like prompt service and employee behavior; and service characteristics variables like the interest rate, loan sanction time, repayment period, and documents for loan application significantly affect institutional credit adoption across the smallholders. Subsequently, the results of the moderating-mediation analysis show that working capital, perceived value and risk perception partially mediate the association between credit adoption and farmer satisfaction. The mediated effects are further moderated by farm advisory services and financial knowledge and skills.Research limitations/implicationsThe study is restricted in opportunity due to primary data, and it considers only farmers' perspectives to measure service quality and service features as constraints for institutional credit access.Practical implicationsThe government, nongovernment organizations, civil societies and private institutions should provide sufficient financial knowledge and training to the farmers via extension services to utilize the borrowed capital effectively to bring economic welfare and mental satisfaction.Originality/valueThe existing literature rarely considered banking service quality and service features (demand side) variables as determinants of credit access. Further, the study brings novelty in examining how the capital management cognitive factors of the formal credit adopters influence the relationship between credit access and satisfaction.

Access to Credit and Its Relationship with Information and Communication Technology Tools’ Adoption in Agricultural Extension among Peasants in Rangwe Sub-County, Kenya

Access to agricultural credit is one of the key factors that boost the adoption of technologies to improve agricultural production. Information and Communication Technology (ICT) tools have been referred to as essential channels in the dissemination of agricultural extension information. However, it has been observed that the majority of peasants were not using them to access the information. The aim of this study was to delineate the level of agricultural credit access, sources of the credit, amount of the credit accessed, and the correlation between access to the credit and the use of ICT tools in the extension services among peasants. A correlation research design was utilized in this study at Rangwe Sub-County, Kenya. Data were collected with the help of pretested structured questionnaire from 106 peasants who grow cassava in the Sub-County. The data obtained were analyzed using Spearman’s correlation and descriptive statistics with the aid of Statistical Package for Social Science (SPSS) Version 25. Descriptive results revealed that 68% of the peasants interviewed had no access to the credit, while 32% had access. The majority (70%) of those who had the access received it from Saving and Credit Co-Operative (SACCOs). The majority (68%) received the lowest amount of credit. Spearman’s correlation revealed that there was a moderate, positive correlation between access to credit and the use of the ICT tools. The correlation was statistically significant at 1% level of significance (R = +.646**, P = .000, R2 =0.417). Access to credit appears to provide a positive and moderate correlation with the use of the ICT tools as it predicts 42% of the use of the tools in cassava production. The positive correlation coefficient indicates that an increase in access to agricultural credits among the peasants translates to an increase in the adoption of ICT tools in agricultural extension.

Determinants of access to agricultural credit among smallholder rice and maize farmers in the eastern and western provinces of Rwanda

Agricultural credit is believed to play a catalytic role in enhancing agricultural productivity; however, its access is limited for smallholder farmers in Rwanda. To investigate this phenomenon, this study sought to identify and assess the determinants of access to agricultural credit among rice and maize smallholder farmers in Rwanda. The study was conducted in the eastern and western provinces of Rwanda using a cross-sectional survey design. Sample districts, sectors, and cells were obtained using stratified random sampling techniques. Convenient and purposive samplings were used to sample households and farmers, respectively. Data were collected using structured interviews and questionnaires, and were analyzed using a binary logistic regression model. Model results indicated that both individual and institutional factors determine access to agricultural credit among smallholder maize and rice farmers in eastern and western provinces of Rwanda. The individualfactors included: saving of money in commercial banks (Adjusted Odds Ratio (AOR) = 2.389), owning a size of land that is 0-0.1 ha (AOR = 0.127), and knowledge of the repayment terms of agricultural loans (AOR = 0.203), while the institutional factors included: having privately-owned finance institutions in the area (AOR = 0.287), offer of both long and short-term loans (AOR = 0.290), interest rate between 11-15% (AOR = 0.178), the process for obtaining agricultural credit not being too long (AOR = 2.026). Institutional factors were more important than the individual farmer characteristics in determining access to credit. Policy interventions aimed at bolstering agricultural credit access among the smallholder farmers should address institutional challenges such as information asymmetry and the lack of credit guarantees that hinder agricultural credit access.

Does credit access matter for household livelihood diversification in Ethiopia?

This study examines the effect of credit access on both agricultural and off-farm activities based on a household survey of 371 rural farmer respondents in Ethiopia.it was analyzed using a logistic regression model and statistical description. Findings demonstrated that the demographic factors; gender, age, level of education, and family size have a positive and significant effect on credit access. Agricultural credit access is impacted by each of the demographic variables as independent variables. On the other hand, the result indicated that the relationship between credit access and non-farm economic activities has a negative relationship. Credit access has a significant effect on agricultural intensification and specialization rather than diversification. Therefore, a comprehensive policy and strategy needs for credit access in both the agricultural and non-agricultural sectors. The Ethiopian government should follow the integration policy between both sectors and participate in livelihood diversification strategies and achieve sustainable development goals by 2030 at large.

Literature Review on Farmers’ Agricultural Credit Access in Ethiopia

Agriculture is one of the important sectors that contribute to the economy of a country. It contributes the largest portion of the Ethiopian Gross Domestic Product, followed by the industry and service sectors, respectively. Farmers’ access to credit is essential to increase agricultural productivity and modernize agriculture. The purpose of this study was to review the recent literature related to the access to credit of farmers in Ethiopia. The reviewed literatures were obtained from Google Scholar, Science Direct, Web of Science, FAO, and World Bank. According to reviewed literature, the variables of age, gender, education level, family size, land size, number of livestock owned, years of membership to a lending ınstitution, distance from the credit center, and income level of farmers were determined as affecting factors for farmers’ access to credit. The impact of access to credit on farm productivity was found to be positive and significant. The literature revealed that most of the farmers were credit constrained and had loan demand. If the constraints were removed and farmers could access enough credit, agricultural productivity would be increased and agricultural income would be improved. Therefore, the government has to support microfinance institutions in order to provide credit to farmers, and women empowerment should be ensured for fair credit access.

Improved Seeds Adoption Among Smallholder Rice Farmers in Togo: The Case of NERICA in the Savannah Region

The low adoption of new technologies, particularly improved seeds, remains a critical issue hampering the development of agriculture in many developing countries. The objective of this research is to identify the determinants of (i) the farmer’s knowledge,( ii) the adoption decision and (iii) the adoption intensity of NERICA rice varieties in the Togolese Savannah region. Probit and Tobit models were used to analyse data collected from 150 rice growers randomly selected. The results of the estimations showed that the knowledge, the adoption decision and the adoption intensity of NERICA are determined by socio-economic and institutional factors. The common factors affecting the knowledge, the adoption decision and the adoption intensity are credit access, extension service and gender. However, the adoption intensity is specifically affected by the rice income, the land ownership and the membership to a farmer’s base organization. These findings suggest the necessity to improve the agricultural credit access, the extension services access and to take gender into account in policies making in order to give men and women the same chances of access to innovations.

Financing Agribusiness: Potential Determinants of Financial Inclusion for Smallholder Rural Farming Communities in Kenya

The purpose of this article is to empirically examine and compare the factors or determinants of financial inclusion in commercial banking institutions, microfinance banks, mobile banking platforms and table banking groups (informal banking groups) in Kenya. The data used in the study were obtained from 631 small and micro-sized (SMS) farming enterprises in Kenya. We use probit model to empirically establish the factors that determine the probability of small and micro-sized farming enterprises in accessing agricultural credit from the four major lending institutions. Also, we apply Heckman selection model to establish the determinants of agricultural credit rationing. OLS model is used to investigate the determinants of agricultural credit delinquency rates in the lending institutions. The results show that female-owned SMS farming enterprises are likely to access less agricultural credit amount from table banking groups, own small farms with no title deed and own less valued assets compared to male-owned SMS farming enterprises which access agricultural credit from commercial banks and microfinance banks. Further results revealed that household dependency ratio was a significant determinant factor in agricultural credit access from mobile banks, commercial banks and table banking groups. Additionally, agricultural credit delinquency in mobile banking is significantly reduced by distance to the banking agent. The availability of mobile banking agencies within village centres would considerably enable agri-entrepreneurs to make credit repayment within the required period.

Impact of agricultural credit access on agricultural productivity among maize and rice smallholder farmers in Rwanda

This paper assesses the impact of access to agricultural credit on the agricultural productivity of 422 smallholder farmers that cultivate maize or rice in the Western and Eastern province of Rwanda. Stratified, simple random and convenience sampling techniques were used to sample districts, sectors, cells and households. Data were collected using structured interviews and analyzed using propensity score matching techniques. Results indicated that productivity was higher by 44% among the farmers who accessed credit implying that they harvested on average an extra 440 kilograms of maize or rice. According to a crop-specific analysis, agricultural credit access had a more significant impact on maize productivity, with a difference in proportion of 68% (p = 0.000) but had no impact on rice productivity (p = 0.149). The study concludes that agricultural credit was important for Rwanda’s agricultural productivity. Thus policy measures should aim at improving smallholder farmers’ access to agricultural credit and promoting the use of modern agricultural inputs, particularly among rice farmers in Rwanda

Characterization of smallholder farmers and agricultural credit institutions in Rwanda

The significance of access to agricultural credit in perpetuating agricultural productivity is unquestionable, because it is a means to achieving optimal productivity. The minimization of any barriers to agricultural credit access should,thus,be a global priority. One of the most significant and current barriers to agricultural credit access is information asymmetry which results into mutual distrust between lending institutions and borrowers in this case the smallholder farmers. To address information asymmetry, both the lending institutions and borrowers need to have definitive descriptive information about either party. Without the profiling of institutions and potential borrowers, an information gap persists, thereby increasing mutual distrust. This study addresses that gap, in the context of Rwanda by characterizing smallholder farmers and agricultural credit institutions. Across-sectional survey design was used in this study with smallholder farmers and staff in agricultural credit institutions in the Eastern, Western, and Central provinces of Rwanda as the units of analysis. A multistage sampling procedure was used,with stratified sampling of administrative levels spanning from province(stage 1) to districts (stage 2) and sectors(stage 3),followed by a simple random sampling of cells per sector, and the convenience sample of households. Staff in the financial institutions were purposively sampled. The data collected was analyzed using principal component analysis and cluster analysis with the K-means statistic(SPSS version 25). The largest cluster of smallholder farmers has the following characteristics: household size of1to 5 people, farmers with education, owning arable land not exceeding a hectare, with more than five years of farming experience,earning from other off-farm activities, with no dependents under five years of age, and renting less than an acre of land. As for agricultural credit institutions, the largest cluster has following compositions:have mechanisms or measures established for managing loan defaults with the majority using refinancing, rescheduling, and collateral release, with variable loan payback options, and provide targeted agricultural credit to farmers such as agricultural input premium.The research findings are particularly pertinent for maize-and rice-growing farmers,and how to reduce the information gap and the implications of broadening access to credit to smallholder farmers were discussed. This study emphasizes the need for characterization for both parties to be better informed about the characteristics and dynamics of each other, all in a bid to lessen asymmetric information and thus improve access to credit.

Effect of Agricultural Credit Access on Rice Productivity: Evidence from the Irrigated Area of Anambe Basin, Senegal

Rice is an important staple food in many developing countries, especially in Senegal. However, rice production in Senegal only meet 20% of the domestic demand largely due to the poor performance of rice farmers and low productivity. Access to agricultural credit has strong impacts on the technical efficiency of farmers and would promote inputs and new technology adoption. But that is not clear enough in previous studies. This study investigates the impact of agricultural credit access on rice productivity and technical efficiency with 260 random sampled rice farmers from Anambe basin in Senegal. The Stochastic Frontier Analysis (SFA) was adopted to estimate the technical efficiency. The results indicate that the inputs of rice production, including labor, pesticide, herbicides and fertilizer, have significant impacts on rice productivity. Furthermore, the results present that the average efficiency is of 0.813 and the inefficiency estimation model reveals that the influences of agricultural credit access, gender, education, ethnicity, use of improved seed and land tenure system on technical inefficiency of rice production are significant. Particularly, for the access to agricultural credit, rice farmers without agricultural credit would get 3.8% higher production inefficiency. The farmers with access to credit yield 37.32% higher rice production than their counterparts. Therefore, our study provides strong empirical evidence to promote agricultural credit in rice production.

Impact of Credit Demand on the Productivity of Rice Farmers in South West Nigeria

Employing cross-sectional data from 360 rice farmers selected from three states in South West Nigeria, the study analyzes the impact of credit demand on the productivity of rice farmers. An Endogenous Switching Regression Model (ESRM) that accounts for both heterogeneity and sample selection biases were used to estimate the impact of credit demand on rice productivity in South West Nigeria. In addition, a Tobit regression model was employed to measure the level of participation of rice farmers in the credit market. The result of the first stage (probit model) of the ESRM revealed that household assets, access to service, climate variables, regional variables, and transaction cost are statistically significant in influencing farmers’ credit demand decision. The results of the second stage of the ESRM indicate factors such as household assets and access to service were statistically significant in explaining variations in rice productivity among participants and non-participants in the credit market. Furthermore, the results of the Tobit model showed that the farmers’ location income from rice farming experience, interest rate, and distance to the source of credit are statistically significant determinants of the amount of credit received. These findings suggest that facilitating farmers’ access to credit will improve rice productivity. Therefore, it is imperative for government and development partner to work together in order to improve the conditions for suitable agricultural credit access to rice farmers, especially a review of interest rates. A necessary addition should be developed to the assistance already being provided under Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL) in the form of loan guarantees and other risk-sharing incentives, such as a regulatory environment that supports the modern contractual obligations that are characteristic of well-functioning agricultural financing. This would not only contribute to the intensification of rice production in Nigeria to meet its increasing rice demand, but also improve rice farmers’ productivity and their households’ incomes.

Modeling the impact of distance between offices and borrowers on agricultural loan volume

Purpose – Farm Credit is a major provider of credit to agricultural producers in Oklahoma and nationally. The decision to place a new Farm Credit office reduces borrower search and travel costs and should increase loan volume. The purpose of this paper is to model the new loan volume as function of distance from east central Oklahoma county centroids to Farm Credit offices. The model is then used to predict the impact of placing new offices in underserved areas. Design/methodology/approach – County aggregate new loan volume is regressed on distances to Farm Credit branch and field offices and other variables expected to impact agricultural loan volume. The estimated model is used to predict new loan volume impact of adding additional branch and field offices in counties that did not have these offices. Confidence intervals are used to measure the significance of predicted loan volumes. Findings – Distances from county centroids to both branch and field offices were found to significantly reduce new loan volume. The results were used to simulate the addition of new branch and field offices. The simulation predicted the added annual new loan volume associated with office additions. Practical implications – Using spatial models, Farm Credit of east central Oklahoma and other agricultural lenders can better plan for expansion (or consolidation). These models indicate counties where annual new loan volume will likely be higher (or lower for consolidation) than other nearby counties. The result can be improved borrower access and system financial performance. Originality/value – While spatial modeling has been utilized in other sectors, little has been done relative to agricultural credit access and impact on loan volume. The model here explicitly models the impact that distance to Farm Credit offices have on annual new loan volume.

Agricultural Credit Access by Grain Growers in Uasin-Gishu County, Kenya.

Generally in Kenya, lack of finances is one of the critical problems hindering growth, production, productivity and generation of income of farm income. Indeed inaccessibility to agricultural credit by grain growers in Uasin-Gishu County, has contributed to the low and declining use of farm inputs resulting in a fall in agricultural productivity leading to low outputs and depressed farmers income. The study examined factors influencing accessibility to agricultural credit. The study was conducted in Uasin-Gishu County, Kenya, using a survey design. The research examined 130 grain farmers, interviewed 1 K-Rep officer and 2 officers from Agricultural Finance Corporation (AFC). Interviews, structured questionnaires, observation and document analysis, were used to collect quantitative data from the sampled households. Descriptive and binary logit model were used to analyze quantitative and qualitative data. The results revealed that 47 (36.8 per cent) of the sampled grain farmers accessed agricultural credit, whereas the remaining 83 (63.8 per cent) did not access credit. It was also found that agricultural credit access by female farmers is still very limited. Generally, farmers’ age, education level, family size, household size, repayment period and applied loan were highly important in influencing access to agricultural credit. Therefore, a policy be adopted where extension officers from the ministry of Agriculture do an exhaustive database on socio-economic status of all grain farmers in the County.