ANALYSIS OF RICE FARMERS' ACCESS TO AGRICULTURAL CREDIT AND PROFITABILITY IN SOUTH TOGO

Abstract

Purpose- Access to suitable production means is required for producers to improve their profitability. As a result, agricultural financing appears to be a critical tool for attaining this goal. Various programs and donors have been attempting for decades to put together initiatives that would make it easier for the most disadvantaged populations, including the primarily agricultural rural world, to access sources of financing. Due to poor performance, the majority of these programs have failed. This study aims to investigate the determinants of credit access and how loans affect rice farm profitability. Methodology - Data for this study were collected from 102 producers living in the two biggest paddy production zones in southern Togo. The treatment effect model was used to examine the data collected through the survey investigation. Findings- Gender, asset type, producer experience, access to credit information, primary occupation, and land ownership status of the producer are all factors in determining rice growers' access to credit. Gender, producer experience, access to credit information, and land ownership status all have a beneficial impact on credit availability. However, asset type and the producer's main occupation have a negative impact. It also demonstrates that whether rice farms have access to loans has little bearing on their profitability. On the other hand, the average treatment impact of credit access is statistically significant. It also shows that the farmer's degree of education, expertise in the field, and lastly, the size of rice field farmed are the most important elements affecting the profitability of rice fields. Conclusion- The findings have policy implications, increasing the channels for disseminating credible information about funding sources, access procedures and the institutions in charge of these funding sources. Integrating the enhancement of farmers' educational levels into rural support initiatives, and the extension of major agricultural landscaping works undertaken by the government to other areas suitable for rice cultivation.

Keywords

• Agricultural credit
• rice production
• Probit-2SLS model
• Togo

References

1. Abdallah, A. H., Ayamga, M., & Awuni, J. A. (2019). Impact of agricultural credit on farm income under the Savanna and Transitional zones of Ghana. Agricultural Finance Review, 79(1), 60‑84. https://doi.org/10.1108/AFR-02-2018-0009
2. Abdul-Jalil, M.-A. (2015). Determinants Of Access To Credit And Its Impact On Household Food Security In Karaga District Of The Northern Region Of Ghana [Msc Thesis]. Kwame Nkrumah University.
3. Adessou, S. K., Bodora, H. E., Mackiewicz-Houngue, M., Detchinli, K. S., Fouquet, B., & Assogba, J. (2017). Faciliter l’accès au crédit pour les petits producteurs de céréales à travers un partenariat OP-IMF-ONG : enseignements, défis et perspectives d’une expérience développée au Togo.
4. Agbodji, A. E., & Johnson, A. A. (2021). Agricultural credit and its impact on the productivity of certain cereals in Togo. Emerging Markets Finance and Trade, 57(12), 3320‑3333. https://doi.org/10.1080/1540496X.2019.1602038
5. Agyemang, S. A., Ratinger, T., & Ahado, S. (2020). Has microcredit boosted poultry production in Ghana? Agricultural Finance Review, 80(2), 135‑152. https://doi.org/10.1108/AFR-03-2019-0030
6. Akpan, S. B., Patrick, I. V., Udoka, S. J., Offiong, E. A., & Okon, U. E. (2013). Determinants of credit access and demand among poultry farmers in Akwa Ibom State, Nigeria. American Journal of Experimental Agriculture, 3(2), 293‑307.
7. Ali, E., & Awade, N. E. (2019). Credit constraints and soybeanfarmers’ welfare in sub-sistence agriculture in Togo. https://doi.org/10.1016/j.heliyon.2019.e01550
8. Anderson, Sweeney, Williams, Camm, J. D., & Cochran, J. J. (2013). Quantitative Methods for Business 12th Edition. 12 edn. Cengage Learning, Mason, 1‑910.

9. Ankrah Twumasi, M., Jiang, Y., Ntiamoah, E. B., Akaba, S., Darfor, K. N., & Boateng, L. K. (2021). Access to credit and farmland abandonment nexus : The case of rural Ghana. 1‑18. https://doi.org/10.1111/1477-8947.12233
10. Avocevou, C. M. A. (2003). Determinants Socio-Economiques De L’acces Au Micro Credit En Milieu Rural : Cas De La Commune De Zogbodomey. Universite d’Abomey-Calavi, Benin, 129.
11. Awotide, B. A., Abdoulaye, T., Alene, A., & Manyong, V. M. (2015). Impact of Access to Credit on Agricultural Productivity: Evidence from Smallholder Cassava Farmers in Nigeria A contributed paper prepared for oral presentation at the International Conference of Agricultural Economists (ICAE)”, International Conference of Agricultural Economists, IAAE, Milan, pp. 1-34. Research In Agricultural & Applied Economics.
12. Ayaz, S., & Hussain, Z. (2011). Impact of institutional credit on production efficiency of farming sector a case study of district Faisalabad. Pakistan Economic and Social Review, 49(02), 149‑162.
13. Baiyegunhi, L.-J. S. (2008). Access To Credit And The Effect Of Credit Constraints On Household Welfare In The Eastern Cape Province, South Africa [PhD Thesis]. University of Fort Hare, 282p.
14. Bomda, J. (1998). Déterminants de l’épargne et du crédit, et leurs implications pour le développement du système financier rural du Cameroun. Development Economics and Policy, Ed. by Franz Heidhues., 215.
15. Certo, S. T., Busenbark, J. R., Woo, H.-S., & Semadeni, M. (2016). Sample selection bias and heckman models in strategic management research. Strategic Management Journal, 37, 2639–2657. https://doi.org/10.1002/smj.2475
16. Cerulli, G. (2014). Ivtreatreg : A command for fitting binary treatment models with heterogeneous response to treatment and unobservable selection. The STATA Journal, 14(3), 453‑480.
17. Chenaa, T. A., Maria, A. G., & Teno, M. N. (2018). Determinants of access to credit and performance of smallholder farmers in kumba municipality, south west region of Cameroon. Asian Journal of Agricultural Extension, Economics & Sociology, 25(1), 1‑12.
18. Diagne, A. (1999). Determinants of household access to and participation in formal and informal credit markets in Malawi FCND Discussion Paper No. 67. Washington, DC, International Food Policy Research Institute, 68.
19. Djagni, K. K. (2002). L’agriculture togolaise face à des mutations environnementales multiples : Nécessité d’un ensemble d’innovations techniques et organisationnelles cohérente. ITRA/CRASH, In Actes du colloque, Garoua, Cameroun. Prasac, N’Djamena, Tchad - Cirad, Montpellier, France., 9.
20. Dong, F., Lu, J., & Featherstone, A. M. (2010). Effects of Credit Constraints on Productivity and Rural Household Income in China Working Paper 10-WP 516. Center for Agricultural and Rural Development Iowa State University Ames, Iowa 50011-1070 www.card.iastate.edu.
21. Ekwere, & Edem, G. E. & I. D. (2014). Evaluation of agricultural credit facility in agricultural production and rural development. Global Journal of HUMAN-SOCIAL SCIENCE: B Geography, Geo-Sciences, Environmental Disaster Management, 14(3), 1‑9.
22. Feder, G., Lau, L., Lin, J., & Luo, X. (1990). The relationship between credit and productivity in Chinese agriculture: a microeconomic model of disequilibrium. American Journal of Agricultural Economics, 72(5), 1151‑1157.
23. Field, E., & Torero, M. (2006). Do Property Titles Increase Credit Access Among the Urban Poor ? Evidence from a Nationwide Titling Program. Harvard University and Group ofDevelopment Analysis, and International Food Policy Research Institute, WashingtonD.C.: Working Paper.
24. Finscoop. (2016). Présentation des Résultats de l’Enquête Consommateur Finscope Togo 2016 sur l’Inclusion financière. Consulté le 08/06/2021. https://fnfi.tg/presentation-des-resultats-de-lenquete-consommateur-finscope-togo-2016-sur-linclusion-financiere/.
25. Galang, I. M. R. (2020). Land Tenure, Access to Credit, and Agricultural Performance of ARBs, Farmer Beneficiaries, and Other Rural Workers PIDS Discussion Paper Series, No. 2020-44. Philippine Institute for Development Studies (PIDS), Quezon City.
26. Gujarati, D. N., & Porter, D. C. (2009). Basic Econometrics (Fifth Edition). The McGraw-Hill Companies.
27. Hamilton, B., & Nickerson, J. (2003). Correcting for endogeneity in strategic management research. Strategic Organization, 1(1), 51‑71. https://doi.org/10.1177/1476127003001001218
28. Hernando., de S. (2000). The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.
29. Julien, H. E., Kossi, A., & Aklésso, E. Y. G. (2021). Analysis of factors influencing access to credit for vegetable farmers in the gulf prefecture of Togo. merican Journal of Industrial and Business Management, 11, 392‑415. https://doi.org/DOI: 10.4236/ajibm.2021.115026
30. Kiplimo, Joyce. C., Ngenoh, E., & Bett, J. K. (2015). Evaluation of factors influencing access to credit financial services: evidence from smallholder farmers in eastern region of Kenya. Journal of Economics and Sustainable Development, 6(17), 97‑106.
31. Knox, A., Louis, E., & Linkow, B. (2021). Leveraging Formal Land Rights For Credit Access. USAID Communications, Evidence, and Learning (CEL) Project – Land and Resource Governance.
32. Kodjo, M. K. Z., Abiassi, E. H., & Allagba, M. C. (2003). Le financement de l’agriculture béninoise dans un contexte de libéralisation : Contribution de la micro finance. Cahier de Recherche ELIFID 03-5. FSA Université d’Abomey Calavi, Cotonou,Benin, 1‑51.
33. Lakhan, G. R., Chann, S. A., Mags, H., Koondher, M. A., Wang, J., & Channa, N. A. (2020). Credit constraints and rural farmers’ welfare in an agrarian economy. Heliyon, 6. https://doi.org/10.1016/j.heliyon.2020.e05252
34. Mackiewicz-Houngue, M., Renaudin, M., Valleur, R., Tokpa, A., & Amona, N. (2014). Crédit intrant et crédit warrantage au Togo : Quels enseignements ? Réflexion concernant les différentes modalités de crédit proposées dans le cadre du projet d’appui au développement de la filière céréalière au Togo : Atouts, contraintes et pistes d’amélioration. AVSF INADES-Formation Togo.
35. MAEP-FAO. (2013). Aperçu de l’agriculture togolaise à travers le pré-recensement 2012 Recensement National De L’agriculture 2011-2014 (TCP/TOG/3303- Assistance préparatoire au Recensement National de l’Agriculture.122p. Secretariat General Direction Des Statistiques Agricoles, De L’informatique Et De La Documentation.
36. Mashile, D. (2014). Challenges Facing Smallholder Farmers In Accessing Credit In Gauteng Province : South Africa [Msc Thesis]. Nelson Mandela Metropolitan University 62p.
37. Mghenyi, E. W. (2015). The impact of agricultural credit on demand for factors of production, farm output, and profitability in Kenya [PhD Thesis]. Michigan State University.
38. Mwambi, M. M., Oduol, J., Mshenga, P., & Saidi, M. (2014). Does contract farming improve smallholder income ? The case of avocado farmers in Kenya. Journal of Agribusiness in Developing and Emerging Economies, 6(1), 2‑20. https://doi.org/10.1108/JADEE-05-2013-0019
39. Nwaru, J. C., Essien, U. A., & Onuoha, R. E. (2011). Determinants of informal credit demand and supply among food crop farmers in Akwa Ibom State Nigeria. Journal of rural and community development. ournal of Rural and Community Developmen, 6(1), 129‑139.
40. Nzomo, M., & Muturi, W. (2014). The effect of types of agricultural credit programmes on productivity of small scale farming businesses in Kenya : A Survey of Kimilili Bungoma Sub County. Journal of Economics and Sustainable Development, 5(23), 150‑160.
41. Ogunleye, A. S. (2018). Effect of access to microcredit on productivity and Profitability of cassava farming in osun state, Nigeria. Journal of Tropical Agriculture, Food, Environment and Extension, 17(02), 51‑57.
42. Ojo, S. O. (2003). Productivity and technical efficiency of poultry egg production in Nigeria. International Journal of Poultry Science, 2(6), 459‑464.
43. Oke, J. T. O., Kehinde, A. D., & Akindele, A. J. (2019). Determinants Of Access To Credit By Cocoa Farmers In Osun State, Nigeria. International Journal of Agricultural Research, Innovation and Technology (IJARIT), 9(2), 57‑61. https://doi.org/DOI: https://doi.org/10.3329/ijarit.v9i2.45411
44. Omolade, O. K., & Adepoju, A. O. (2019). Credit constraints and agricultural productivity of rural households in Nigeria. Journal for the Advancement of Developing Economies, 8(1). https://doi.org/doi 10.32873/unl.dc.jade811
45. Phan, D. K. (2012). An Empirical Analysis of Accessibility and Impact of Microcredit : The Rural Credit Market in the Mekong River Delta, Vietnam [PhD Thesis]. Lincoln University.
46. Pradhan, D., & Ranjan, R. (2016). Achieving sustainability and development through collective action? An empirical analysis of the impact of the bore pool sharing program on farm incomes and crop choices. World Development, 28, 152‑174.
47. Rahman, S. ur, Hussain, A., & Taqi, M. (2014). Impact of agricultural credit on agricultural productivity in Pakistan: an empirical analysis. International Journal of Advanced Research in Management and Social Sciences, 3(4), 125‑139.
48. Rasheed, R., Xia, L. C., Ishaq, M. N., Mukhtar, M., & Waseem, M. (2016). Determinants influencing the demand of microfinance in agriculture production and estimation of constraint factors : A case from south Region of Punjab Province, Pakistan. International Journal of Agricultural Extension and Rural Development Studies, 3(4), 45‑58.
49. Rosenbaum, P. R., & Rubin, D. B. (1983). The central role of propensity score in observational studies for casual effects. Biometrika, 70(1), 41‑55.
50. Rugube, L. M., Nsibande, S. P., Masarirambi, M. T., & Musi, P. J. (2019). Factors affecting profitability of smallholder vegetable farmers in the shiselweni region, Kingdom of Eswatini (Swaziland). Sustainable Agriculture Research, 8(1), 1‑12. https://doi.org/10.5539/sar.v8n1p104
51. Sarfo, B. (2018). Credit Use And Its Effect On Profitability Among Smallholder Maize Farmers In The Brong Ahafo Region Of Ghana [Msc Thesis]. University of Legon.
52. Sekyi, S. (2017). Rural households’ credit access and loan amount in Wa Municipality, Ghana. International Journal of Economics and Financial Issues, 7(1), 506‑514.
53. Sekyi, S., Abu, B. M., & Nkegbe, P. K. (2017). Farm credit access, credit constraint and productivity in Ghana: Empirical evidence from Northern Savannah ecological zone. Agricultural Finance Review, 77(4), 446‑462. https://doi.org/10.1108/AFR-10-2016-0078
54. Siaw, A., Jiang, Y., Ankrah Twumasi, M., Agbenyo, W., Ntim-Amo, G., Osei Danquah, F., & Ankrah, E. K. (2021). The ripple effect of credit accessibility on the technical efficiency of maize farmers in Ghana. Agricultural Finance Review, 81(2), 189‑203. https://doi.org/10.1108/AFR-05-2020-0068
55. Sossou, C. H., Dogot, T., Adjovi, G., Lebailly, P., & Coulibaly, O. (2017). Analyse des déterminants de l’accès au crédit des exploitations agricoles au Bénin [Analysis of the Determinants of Access to Credit for Farms in Benin]. Bulletin de la Recherche Agronomique du Bénin (BRAB) Numéro spécial Technologie Alimentaire & Sécurité Alimentaire (TA&SA), 14, 27‑35.
56. Tetteh Anang, B., Sipiläinen, T., Bäckman, S., & Kola, J. (2015). Factors influencing smallholder farmers’ access to agricultural microcredit in Northern Ghana. African Journal of Agricultural Research, 10(24), 2460‑2469. https://doi.org/10.5897/AJAR2015.9536
57. Tijani, Adewale, I., & Aromolaran, A. B. (2009). Micro-credit and technical efficiency in food crops production: a stochastic frontier approach. Advances in Natural and Applied Sciences, 3(2), 156‑165.
58. Ullah, A., Mahmood, N., Zeb, A., & Kächele, H. (2020). Factors determining farmers’ access to and sources of credit : evidence from the rain-fed zone of Pakistan. Agriculture, 10(586). https://doi.org/doi:10.3390/agriculture10120586
59. Ume, Ezeano, Obiekwe, & Gbughemobi. (2018). Socio economic determinant factors to access to credit by livestock farmers in Ivo Local Government Area of Ebonyi State, Nigeria. Case Studies Journal, 7(5), 43‑52.
60. Zeller, M. (2000). Product Innovation for the poor: The role of micro finance. Policy Brief. Research Program on Rural Financial Policies for food securities of the poor. IFPRI, Washington DC.
61. Zeller, M., Braun, J. V., Johm, K., & Puetz, D. (1994). Sources and terms of credit for the rural poor in the Gambia. African Review of Money Finance and Banking, 1(2), 167‑186.
62. Zeller, M., Diagne, A., & Mataya, C. (1998). Market access by smallholder farmers in Malawi: Implications for technology adoption, agricultural productivity and crop income. 19(1), 219‑229. https://doi.org/10.1111/j.1574-0862.1998.tb00528.x
63. Zeller, M., Schrieder, G., von Braun, J., & Heidhues, F. (1997). Rural Finance for Food Security for the Poor: Implications for Research and Policy. Food Policy Review No. 4. Washington, D. C.: International Food Policy Research Institute.