Does Credit Influence Fertilizer Intensification in Rice Farming? Empirical Evidence from Côte D’Ivoire

Abstract

In Côte d’Ivoire, the use of fertilizers in rice farming still remains low. Credit constraints have been frequently reported as the main reason hampering rice farmers from reversing this situation. However, there is no empirical evidence on the link between rice farmers’ access to credit (AC) and fertilizer intensification (FI). This article examines this issue by using a sample of 600 rice farmers randomly selected in seven rice areas. Data are analyzed by the IV-Probit and IV-Tobit models. The results reveal that FI and AC reciprocally influence each other, implying that they are endogenous. An increase of credit by XOF 100 could increase the quantity of fertilizer used by 2.70 kg, all other things being equal. Moreover, FI and AC are strongly influenced by some socio-economic, rice farm, and institutional factors. Policymakers should take actions to facilitate rice farmers’ access to credit and subsidized fertilizers. Other relevant explanatory variables should be considered in rice farming development policies. By providing empirical evidence of the link between rice farmers’ access to credit and fertilizer intensification in Côte d’Ivoire, this paper contributes to the agricultural finance literature.

What Influences Rice Farmers’ Choices of Credit Sources in Côte d’Ivoire? An Econometric Analysis using the Multinomial Conditional Logit Model

“…Regarding the rice farming system, a high proportion (71%) of rice farmers using their own funds grow rainfed upland rice, and very few (7%) of them produce irrigated rice. even though rainfed upland rice plots tend to be larger, this rice farming system is considered to be less input and capital intensive compared to irrigated rice farming (Ouattara et al, 2020a). a high proportion of borrowers grow irrigated rice, with irrigated rice growers accounting for most borrowers from agricultural cooperatives (80%), MFIs (77%) and paddy rice buyers/ processors (74%) as well as nearly half of borrowers taking loans from relatives and friends (47%).…”

“…149-173 a significant barrier to accessing and adopting new agricultural technologies and adequate inputs. Moreover, the majority of rice farmers who use modern inputs, such as high-yielding varieties (HYVs) and fertilizers, seldom adhere to recommended agronomic practices (Ouattara et al, 2020a;Saito et al, 2019). adopting new agricultural technologies often requires higher investment and increases farm operational costs, creating a need for credit for smallholder farmers.…”

“…adopting new agricultural technologies often requires higher investment and increases farm operational costs, creating a need for credit for smallholder farmers. The importance of credit in promoting the uptake of improved farm technologies, especially for smallholder farmers with limited production resources, is well recognized (Carrer et al, 2020;Mohamed & Temu, 2008;Nakano & Magezi, 2020;Ouattara et al, 2020a;Porgo et al, 2018). Smallholders in rural areas need more capital than they save to sustainably invest in productive activities.…”

“…Therefore, there is an urgent need to improve the understanding of smallholder farmers' decisions regarding their participation and preferences in the credit market in Côte d'Ivoire. The determinants of rice farmers' participation in credit markets remain poorly understood even though there is a recognition of the considerable importance of agricultural credit in rice farming in Côte d'Ivoire (Ouattara et al, 2020a), and the coexistence of formal and informal credit institutions in the rural credit market (Youan Bi, 2016). Therefore, this study contributes to this gap by empirically examining the key determinants of rice farmers' participation in the credit market and their choices among credit sources in Côte d'Ivoire.…”

Consumption and Production Patterns for Agricultural Sustainable Development

“…In this regard, a very interesting study by Ouattara et al [12] on rice farmers of Côte d'Ivoire has analyzed how the difficulty in accessing credit represents one of the main problems for introducing improved agricultural technologies. This causes low yield and high production costs, with a negative impact on economic and social sustainability in rice production areas where a policy aimed at reducing financial constraints could be promoted.…”