Determinants of credit access of cocoa farmers

Abstract

Access to credit is one of the critical areas that are of prime interest to development practitioners, agribusiness entrepreneurs and agricultural economists, mainly access to credit by farmers in order to increase their production and also reduce poverty. This study sought to analyze the determinants of credit access among cocoa farmers in the Asunafo North of the Ahafo Region of Ghana. The multistage sampling procedure was used to collect data from 100 cocoa farmers with the aid of a questionnaire. Sources of credit, factors influencing access to credit, and constraints to credit were analyzed with the aid of descriptive statistics, multiple linear regression, and Kendall’s coefficient of concordance respectively. The results of multiple linear regression revealed that, age, marital status, education, experience, and family size were significant factors that influenced access to credit. The constraints analysis with the aid of Kendall’s coefficient of concordance showed that, high interest rate was highly ranked with a mean score of 1.93 whilst the need for a guarantor was least ranked with a mean score of 7.40. Based on the results, the study recommended that a policy aimed at expanding formal and semi-formal financial institutions credit portfolio to embrace cocoa farmers by finding alternative to collaterals and also reducing the interest rate will improve credit access with a positive externality effect of poverty reduction among cocoa farmers in the study area.
 JEL Classification: Q14

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

“…This finding contrasts the work of Ref. [ 67 ], which stated that older farmers’ probability of securing credit is higher.…”

Determinants of credit access among rice farmers in rural Cameroon

“…Applying multiple linear regression analysis on data collected from 100 cocoa farmers in the Ahafo Region of Ghana, Mensah et al (2019) observed that farmers' age, marital status, educational level, farming experience, and family size significantly influenced access to credit. High-interest rates and the need for a guarantor were key negative determinants of access to credit.…”

“…Access to credit for farmers is an issue of interest to agribusiness entrepreneurs, agricultural economists, and development practitioners. This is no surprise, given the truism that access to credit can increase farm productivity, market integration, and poverty reduction (Mensah et al, 2019;Alhassan et al, 2020). Microfinance was originally conceived as a suitable alternative source of financial services for the poor (currently estimated at over 2 billion people), who lack adequate collateral to access similar services in formal financial institutions, such as Banks (Thunstrom, 2021).…”

“…Access to credit has been reported as a key lever for agricultural investment, productivity increases, technology adoption, market participation, and price transmission in many countries across Africa (Alhassan et al, 2020;Osabohien et al, 2020); with its absence impeding agricultural productivity (Assogba et al, 2017;Djoumessi et al, 2018;Mensah et al, 2019;Offor et al, 2021). Few studies have reported negative effects of access to agricultural credit in terms of increased loan delinquency and lower productivity, mainly resulting from unforeseen climate-related risks (e.g., floods and droughts), price volatility, and unstable socio-political environments (Tetteh et al, 2021;Maniriho et al, 2021).…”

Determinants and Constraints of Agro-based SMEs Access to Finance: Evidence from Ghana

“…This indicates an increase in size of family increases likelihood of a farmer getting access to finance. Mensah, et al (2019) concluded in the study that marital status, education, practice, age and family magnitude are the key aspects that prejudiced the farmer's capacity to admittance finance in the research in Asunafo North District, Ahafo Region.…”