The impact of credit on the technical efficiency of food crop producing smallholder farmers in Ethiopia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Melkamu Girma Koricho ◽  
Musa Hasen Ahmed
Keyword(s):  
Technical Efficiency ◽  
Smallholder Farmers ◽  
Stochastic Frontier ◽  
Content Type ◽  
Access To Credit ◽  
Matching Technique ◽  
Single Production ◽  
Nationally Representative ◽  
The Impact ◽  
Production Characteristics

PurposeThis study examines the impact of access to credit on the technical efficiency (TE) of maize-producing smallholder farmers in Ethiopia and explores factors determining credit utilization.Design/methodology/approachThe study relies on nationally representative data collected in 2015/2016. The data are analyzed by combining the Propensity Score Matching technique with a stochastic frontier model that corrects selectivity bias arising from unobserved variables.FindingsThe result shows that credit service improves TE and helps smallholder farmers to achieve the maximum possible output level from a given set of inputs used.Originality/valueTo the best of author’s knowledge, no study has yet measured the impact of access to credit on TE by controlling for both observed and unobserved heterogeneities. Existing research relied on a single production frontier model, assuming that credit users and non-users have similar production characteristics or ignored selection bias due to observable and unobservable characteristics.

The impact of credit on the technical efficiency of maize-producing households in Northern Ghana

2019 ◽  
Vol 79 (3) ◽  
pp. 304-322 ◽  
Author(s):  
Edward Martey ◽  
Alexander N. Wiredu ◽  
Prince M. Etwire ◽  
John K.M. Kuwornu
Keyword(s):  
Technical Efficiency ◽  
Smallholder Farmers ◽  
Stochastic Frontier ◽  
Northern Ghana ◽  
Efficiency Gains ◽  
Cross Sectional ◽  
Content Type ◽  
Land Fragmentation ◽  
Credit Programs ◽  
The Impact

Purpose Production credit is essential for enhancing the technical efficiency (TE) and the welfare of smallholder farmers in Africa. The purpose of this paper is to examine the impact of credit on smallholders’ TE using cross-sectional data from 223 maize-producing households in Northern Ghana. Design/methodology/approach Due to the exogenous assignment of credit and assumption of homogeneity in farm technologies, the propensity score matching (PSM) analysis was used to compare the average difference in TE between farmers that had received credit and those that had not. Findings The results revealed that production credit impacts positively on smallholder farmers’ TE. Access to production credit is significantly influenced by access to markets and extension services, distance to market, asset index and land fragmentation. The provision of credit enhances the timely purchase and efficient allocation of farming inputs to produce the maximum possible output. Per capita income and land fragmentation also play important roles in reducing smallholders’ TE. Practical implications To increase efficiency gains, credit programs for agricultural interventions should target resource-poor smallholder farmers. The efficiency gains can be sustained through stronger partnerships with financial institutions. Policy interventions aimed at increasing smallholder farmers’ access to production credit (e.g. through the creation of a conducive investment environment that lowers the lending rate and collateral requirements) must be vigorously pursued. Originality/value To the best of authors’ knowledge, this is one of the only recent studies to examine the impact of credit on the TE of farming households by applying the translog stochastic frontier production function and the PSM approaches.

scholarly journals The Impact of Credit on Technical Efficiency Among Vegetable Farmers in Swaziland

2014 ◽  
Vol 4 (1) ◽  
pp. 114 ◽  
Author(s):  
Micah B. Masuku ◽  
M. O. Raufu ◽  
Nokwanda G. Malinga
Keyword(s):  
Technical Efficiency ◽  
Smallholder Farmers ◽  
Stochastic Frontier ◽  
Sampling Technique ◽  
Farm Income ◽  
Green Pepper ◽  
Access To Credit ◽  
Vegetable Farmers ◽  
The Government ◽  
The Impact

<p>Access to credit is regarded as an important intervention for improving the incomes of the rural population, mainly by mobilizing resources to more productive uses. Production of vegetables by smallholder farmers in Swaziland is inconsistent and lower than the national demand, hence the gap is filled by imports from South Africa. The purpose of the study was to assess the influence of credit on technical efficiency of smallholder vegetable farmers in Swaziland. Data were collected in 2013 from farmers through a structured questionnaire, which was administered using personal interviews. A two-stage sampling procedure was used by stratifying the vegetable farmers in the Hhohho region according to the four Rural Development Areas (RDAs). This was followed by a simple random sampling technique used to select the number of vegetable farmers from each stratum. A sample size of 120 farmers was selected from a population of 289. The Stochastic Frontier production function was used to analyze the data using the STATA program (version 12). The results revealed that credit had a negative effect on technical efficiency of cabbage and green pepper farmers, while it had a positive effect on the technical efficiency of tomato, and beetroot farmers. The technical efficiency of tomatoes and cabbage farmers was affected by age, education level, farming experience and access to credit (p &lt;0.01), while beetroot and green pepper was affected by farmer’s age, and off-farm income. (p&lt;0.05). The study recommended that vegetable farmers should increase the amount of seeds, fertilizer and chemicals used in order to improve yields. The Government of Swaziland should subsidize farming inputs and financial institutions should make credit more available to agribusinesses in order to improve the efficient use of input resources.</p>

Does cooperative membership impact the yield and efficiency of smallholder farmers? Evidence from potato farmers in Mongolia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samuel Ahado ◽  
Jiří Hejkrlík ◽  
Anudari Enkhtur ◽  
Tserendavaa Tseren ◽  
Tomáš Ratinger
Keyword(s):  
Technical Efficiency ◽  
Smallholder Farmers ◽  
Irrigation Management ◽  
Potato Production ◽  
Transfer Of Knowledge ◽  
Content Type ◽  
Farm Work ◽  
Agricultural Cooperative ◽  
Education Participation ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of agricultural cooperative membership on potato production and technical efficiency.Design/methodology/approachA combination of propensity score matching technique and sample selection stochastic frontier framework that addresses potential selection bias due to observable and unobservable attributes is used to estimate the effect of participation between cooperative members and non-members. Using a stochastic meta-frontier approach, the technical efficiency of farmers was estimated and compared.FindingsThe empirical results show that the effect of participation in agricultural cooperatives is associated with increased yield and technical efficiency. A comparison of group-specific frontiers indicates that cooperative members perform better than non-members. Cooperative membership decisions is significantly associated with household and farm characteristics (e.g. education, participation in off-farm work, total farmland, distance to market and geographic location).Practical implicationsThe findings of this study demonstrate that cooperative organisations can be an important tool to enhance the productivity and efficiency of smallholder farmers. Successful cooperative models together with training programs designed to enlighten farmers on the importance and tangible benefits of collective action should be used to enlarge participation in cooperative organisations. In addition, governments and development agencies should implement targeted investment and capacity building programs related to irrigation management, gender-sensitive awareness and development of the internal institutional mechanisms in cooperatives for the transfer of knowledge and mutual learning so that all members benefit from cooperatives.Originality/valueDespite the pervasive evidence of the impact of cooperatives on productivity and technical efficiency in the Asian region, this study is probably the first attempt in the crop sector in Mongolia. It provides a rigorous empirical analysis of the impact of agricultural cooperative membership on potato production and technical efficiency through a counterfactual design.

The Covid-19 pandemic and technical efficiency of Russian firms: a stochastic frontier production function approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Parul Singh ◽  
Kashika Arora ◽  
Areej Aftab Siddiqui
Keyword(s):  
Technical Efficiency ◽  
Production Function ◽  
Market Competition ◽  
Stochastic Frontier ◽  
Innovation Activity ◽  
Peak Period ◽  
Role Of Government ◽  
Content Type ◽  
External Assistance ◽  
The Impact

Purpose This paper aims to undertake the efficiency analysis in the form of stochastic frontier to estimate a Cobb–Douglas production function by controlling for the heterogeneity across Russian firms by including firm size, ownership, age, innovation activity and market competition. Design/methodology/approach During the peak period of Covid-19, certain firms witnessed either a decrease or increase in sales. Using this segregation of firms from World Bank’s Covid-19 impact surveys follow-up to the Enterprise Survey for Russia, this study empirically investigates the determinants of technical efficiency of these firms focusing on the role of government assistance. Findings The findings suggest that by segregating firms in terms of sales, different internal factors can enable in steering through pandemic situation besides just depending on external assistance. Originality/value One of the few papers to analyse the impact of the pandemic on Russian firms by considering World Bank Covid Survey.

Evaluating the effect of subsidies for rural development on agri-food and forestry firms

2019 ◽  
Vol 27 (80) ◽  
pp. 150-167
Author(s):  
José A. Pérez-Méndez ◽  
María Pérez-Urdiales ◽  
David Roibas
Keyword(s):  
Rural Development ◽  
Technical Efficiency ◽  
Technical Progress ◽  
Stochastic Frontier ◽  
Content Type ◽  
Factors Affecting ◽  
Forestry Industry ◽  
The One ◽  
The Impact ◽  
Positive Effect

Purpose This paper aims to evaluate the impact of the subsidies established by Measure 123 of the Rural Development Policy on the productivity of a sample of agri-food and forestry companies in the region of Asturias over the period 2006-2009. Design/methodology/approach The authors estimate a stochastic frontier function which allows subsidies to be considered as affecting both the level of technical efficiency and technical progress. Findings The results show that while subsidies have a positive effect on the technical progress of companies in the agri-food industry, for the forestry industry, the effect materializes as an improvement in technical efficiency. Additionally, other factors affecting either, technical progress and technical efficiency were identified. Originality/value This study adopts a model that allows the separate identification of the effect of subsidies on the level of efficiency, on the one hand, and on the technical progress, on the other.

The ripple effect of credit accessibility on the technical efficiency of maize farmers in Ghana

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anthony Siaw ◽  
Yuansheng Jiang ◽  
Martinson Ankrah Twumasi ◽  
Wonder Agbenyo ◽  
Gideon Ntim-Amo ◽  
...  
Keyword(s):  
Technical Efficiency ◽  
Farm Size ◽  
Farm Income ◽  
Agricultural Credit ◽  
Maize Production ◽  
Content Type ◽  
Frontier Analysis ◽  
Access To Credit ◽  
Variable Approach ◽  
The Impact

PurposeThe purpose of this study is to examine the impact of access to credit on technical efficiency (TE) of maize farmers in a developing country, Ghana.Design/methodology/approachThe study employed an instrumental variable approach and the stochastic frontier analysis (SFA) method for the estimation of the results.FindingsThe study found that farmers who have access to agricultural credit stand the chance of increasing TE by a margin of 8%, which also influences the maize production than those who did not have access to credit. The average TE score of the farmers was 74%. The study also found out that factors like membership, gender, farmers' access to credit, age and social network determine farmers' possibility of accessing agricultural credit. The study finds out that returns to size are increasing among the maize farmers and that significant improvement in efficiency can be realized by increasing the level of input used in production. Also, factors such as farm size, labor, seeds and fertilizer are the essential determinants of maize production output. Also, gender, extension, age, off-farm income, access to credit and membership were significant factors influencing technical inefficiency (TI).Originality/valueThe paper contributes to the existing literature on agricultural credit on rural agricultural development. The problem of endogeneity associated with access to credit, which has been considered by other researchers, is dealt with this study. This paper also provides information to government policymakers, practitioners and all other stakeholders in the maize sub-sectors and also will benefit small farmers outside the study area.

Agricultural credit and technical efficiency in Ghana: is there a nexus?

2016 ◽  
Vol 76 (2) ◽  
pp. 309-324 ◽  
Author(s):  
Abdul-Hanan Abdallah
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier ◽  
Allocative Efficiency ◽  
Probit Model ◽  
Estimation Procedure ◽  
Farm Size ◽  
Agricultural Credit ◽  
Content Type ◽  
The Impact ◽  
Unique Dataset

Purpose – The purpose of this paper is to examine the impact of agricultural credit on technical efficiency of Ghanaian maize farmers using a unique dataset drawn from the database of Sub-Saharan Africa’s intensification of food crops agriculture (Afrint II) in 2008 period. Design/methodology/approach – In this study, a two-stage estimation procedure is employed to determine impact of agricultural credit on technical efficiency of Ghanaian maize farmers. The first stage utilized probit model while the second stage utilized stochastic frontier approach to estimate impact of credit on technical efficiency of Ghanaian maize farmers. Findings – The study found that farmers are producing below the frontier with average technical efficiency of 47 percent. Policy variables such as credit access; education, extension access and farm size played a stronger role in technical efficiency. Agricultural credit in particular increased technical efficiency by 3.8 percent. Research limitations/implications – The results should not be extended to the impact of agricultural credit on economic efficiency since the allocative efficiency component is not considered in this study. Also, caution should be taken in the interpretation of these results because the data could not permit the incorporation of all variables that might affect technical efficiency. Originality/value – The originality of the paper and its contribution to existing literature largely lies from the use of a unique dataset to find evidence of the impact of credit on efficiency in Ghana.

The Effects of Improved Cassava Variety Adoption on Farmers’ Technical Efficiency in Indonesia

2021 ◽  
Vol 11 (4) ◽  
pp. 269-278
Author(s):  
Syafrial ◽  
Hery Toiba ◽  
Moh Shadiqur Rahman ◽  
Dwi Retnoningsih
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Probit Regression ◽  
Cross Sectional ◽  
Factors Affecting ◽  
Frontier Analysis ◽  
Access To Credit ◽  
Farm Work ◽  
The Impact

The adoption of technological innovations, such as an improved variety, has been widely promoted worldwide to improve agricultural productivity. This study aimed to examine factors affecting farmers’ decision to adopt a new improved cassava varieties (NICV), and to estimate the effects of NICV adoption on farmers’ technical efficiency. This research used cross-sectional data from 300 cassava farmers in East Java, Indonesia. Furthermore, the data were analyzed by probit regression to examine factors affecting farmers’ decision to adopt NICV. Propensity score matching (PSM) procedures and stochastic frontier analysis were applied to evaluate the impact of NICV adoption on farmers’ technical efficiency. The results indicated that adoption was highly influenced by cooperative membership, access to credit, internet access, certified land, and off-farm work. The stochastic frontier analysis, by controlling the matched sample using PSM procedures, demonstrated that NICV adoption positively and significantly impacted farmers’ technical efficiency. Those who adopted NICV showed a higher technical efficiency level than those who did not. This finding implies that improved varieties could be further promoted to increase productivity. The research suggests that there is a need to improve NICV adoption to increase the levels of technical efficiency and productivity.

The impact of credit on productivity of smallholder farmers in Ghana

2019 ◽  
Vol 80 (1) ◽  
pp. 91-109 ◽  
Author(s):  
Ralph Essem Nordjo ◽  
Charles K.D. Adjasi
Keyword(s):  
Value Chain ◽  
Smallholder Farmers ◽  
Northern Region ◽  
Average Treatment Effect ◽  
Control Group ◽  
Policy Debate ◽  
Treatment Variable ◽  
Content Type ◽  
Access To Credit ◽  
The Impact

Purpose The purpose of this paper is to evaluate the impact of access to production credit on the productivity of smallholder farmers. Design/methodology/approach Data for the study were drawn from the Agricultural Value Chain Facility (AVCF), which was implemented in the Northern Region of Ghana. This paper uses the Propensity Score Matching (PSM) to estimate the average treatment effect of access to production credit on the productivity of smallholder farmers. The rationale for the choice of this estimation technique is to control for selection bias since the treatment variable (access to production credit) was not randomised. The authors also test for the effect of hidden bias using “Rosenbaum bounds” sensitivity analysis. The study uses two control groups to examine the net effect of credit on productivity. Findings The results reveal that smallholder farmers with access to production credit increased productivity through investment in farm inputs. For the impact of credit on productivity using control Group 1, the result shows that farmers with access to credit increased their productivity by 0.170 metric tonnes per hectare and for control Group 2, the result shows an increase of 0.252 metric tonnes per hectare more than farmers who are without access to production credit. Practical implications The evidence as provided by this paper is that access to production credit is significant to meet the credit needs of smallholder farmers and therefore contributes to the policy debate on whether access to credit has impact on the productivity of smallholder farmers. Originality/value The paper shows the importance of production credit in augmenting the production function of smallholder farmers.

The role of savings mobilization on access to credit: a case study of smallholder farmers in Ghana

2019 ◽  
Vol 80 (2) ◽  
pp. 275-290 ◽  
Author(s):  
Martinson Ankrah Twumasi ◽  
Yuansheng Jiang ◽  
Frank Osei Danquah ◽  
Abbas Ali Chandio ◽  
Wonder Agbenyo
Keyword(s):  
Financial Market ◽  
Financial Management ◽  
Smallholder Farmers ◽  
Farm Size ◽  
Eastern Region ◽  
Unique Contribution ◽  
Data Set ◽  
Content Type ◽  
Access To Credit ◽  
The Impact

Purpose The purpose of this paper is to examine the effect of savings mobilization on access to credit among smallholder farmers’ in the Birim central municipality of Ghana. Design/methodology/approach A cross-sectional primary data set was used to estimate the factors influencing smallholder farmers’ access to credit and size of loan to be borrowed using the IV-Probit and IV-Tobit model. Findings The results of the study revealed that savings mobilization has a positive significant impact on access to credit and the total amount of credit one can borrow as well. Other control variables such as transaction cost and farm size depicted a negative significant impact on access to credit. Land ownership, member of an association, household size, years of farming experience and education also showed a positive significant impact on access to credit. Research limitations/implications The paper only examined the savings effect on credit accessibility among smallholder farmers in one of the municipality’s in the Eastern region of Ghana. Future research should consider all or many municipality for an informed generalization of findings. Practical implications This paper provides evidence that smallholder farmers knowledge on the financial market is poor and it would require the policymakers or NGOs to organize financial management training programs so that the farmers high ignorance of the financial market will significantly reduce. Originality/value Although existing studies have examined smallholder farmers’ access to credit, the unique contribution of this paper is the analysis of the impact of saving mobilization on credit accessibility in Ghana, a major access to credit determinant in the financial market. In addition, those researchers who factored in savings as an access to credit determinant did not also consider the casual relationship between these two variables, thus, the present of endogeneity of which this paper does.

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