Figure 1 - uploaded by Gopal B. Thapa
Content may be subject to copyright.
Source publication
This study attempts to estimate credit fungibility (CF) and analyses its factors, using the primary data of 208 smallholders from Punjab province of Pakistan. Findings revealed that smallholders used a significant proportion of obtained credit on non-agricultural purposes. Among three groups of smallholders compared, that is, lower smallholders (⩽1...
Context in source publication
Context 1
... study is based on a field survey carried out in Toba Tek Singh district of Punjab province, Pakistan ( Figure 1). Covering an area of 3259 km 2 , this district is a plain area with a population of about 1.8 million in 2004 (Pakistan Statistics Division, 2006;DOIP, 2009). Farmers with landholdings up to 12.5 acres account for 89 per cent of all farm households. Notably, 56 per cent of households have landholdings up to 5 acres or about 2 ha only (Table 1). Agricultural lands are fertile with loamy and silt-loamy soils. Owing to high soil fertility and availability of irrigation water, 80 per cent of the total 327 000 ha of cultivable land in the district is under cultivation (PCO, 1998). Sugarcane, wheat, cotton, maize and assorted types of fruit are the major crops. Toba Tek Singh is the second largest producer of citrus in Pakistan after Sargodha district ( Hussain et al, 2014;GOP-DOA, 2009). In addition to crops, the district produces poultry, eggs, beef and milk in surplus and is known as one of the leading districts in poultry production. This district was selected as the study area for two main reasons. First, it is characterized by diverse agricultural systems including food and cash crop farming, orchards, poultry farming and livestock husbandry. Therefore, a vast variety of farming practices was expected among smallholders. Second, the SBP has identified the district as one of the prime target areas for provision of credit for smallholders because of its diverse agricultural systems. During the fiscal year 2008/2009, SBP provided credit to 41 per cent of designated smallholders in the district through Zarai Traqiati Bank Limited, commercial banks and cooperatives. The annual average amount of credit provided was about Rs. 1 110 000/household (SBP, ...
Similar publications
Climatic changes occurring worldwide are a great threat to biodiversity and species richness of many groups of organisms thus affecting agriculture and food security. Present study deals with the butterfly populations of the coniferous forests of Murree Hills and adjacent areas of Pakistan. Inter comparisons have also been made of the current datas...
A variety of methods have been used to study the water, energy and food nexus (WEFN), but application of Complex Adaptive Systems (CAS) approaches are limited. A CAS lens focuses on temporality including interactions and adaptations. Using key concepts of CAS, resource security is presented as an emergent property resulting from component interacti...
Citations
... Hussain and Thapa (2016), analysing the fungibility of agricultural credit for smallholders in Pakistan, found the same results. Illiteracy positively and significantly affects credit applications in areas where most of the population is illiterate.21 ...
High land inequality can lead to lower access to credit in rural populations, as they lack a collateral. In the case of Mexico, the concentration of land and a shortage of agricultural credit caused the rural population to seem less creditworthy; the Mexican agrarian reform was designed to resolve this inequality and lack of resources. Using the Mexican’s original agricultural censuses, a new dataset on land inequality and the flow of agricultural credit is provided for each Mexican state. With this unique data set, this article analyses if the agrarian reform was successful in its early years, by helping to reduce land inequality, and if access to credit was improved by reducing land inequality. The results show that, although harmful, land inequality did not affect credit access. Access to credit probably depended on political factors instead.
... Also, according to the IISD, (2015), for a country to move from subsistence to commercial agricultural production, there is the need to pay attention to finance which will boost growth in the sector. Hussain and Thapa (2015) also affirmed that one of the significant challenges facing smallholder farmers, especially those in developing countries in their day-to-day farming activities is access to credit. However, in developing countries where the majority depend on agriculture, financing for investment is scarce (IFC, 2013). ...
This study examined the effect of credit access on women farmers' welfare through crop output in the Northern Region of Ghana. The impact of credit on welfare through output was examined using the conditional mixed process (CMP) model on 300 women farmers. Credit access, welfare, and output were estimated individually and also within a conditional mixed process (CMP) system for choice of appropriate estimation due to endogeneity. Age, household size, extension access, and membership of farmer-based organization (FBO) significantly influence farmers' choice of credit source while credit access, expenditure on inputs, years of farming, land size, and membership of FBO significantly impacts on crop output. Crop output and off-farm income significantly influence welfare of women farmers. Pairwise correlation of credit sources revealed that Village Savings and Loans Association (VSLA) and Susu sources are complementary, and farmers who accessed credit from VSLA also accessed credit from Susu (rotating savings and credit associations).
... generation. Accessibility to NFA and credit increases the likelihood that a household's income will increase (Argaw et al., 2017;Hussain & Thapa, 2016). Thus, households can establish off-farm work and also be able to consume organic food should income increase. ...
This study uses evidence gathered from survey responses from 572 rural households in Ghana to examine the link between organic expenditure and off-farm income. To solve the endogeneity problem related to off-farm income, we use the instrumental variable Tobit model. The findings showed that expenditure on organic food was strongly and favorably connected to off-farm income. According to the disaggre-gated findings, female off-farm income is significantly more positively correlated with organic food expenditure than male off-farm income. The results provide practical implications for facilitating organic food consumption and eliminating food and nutrition insecurity among rural dwellers.
... However, studies have also shown that agricultural credit may not be effectively used [79]. Instead, it is used to purchase consumer Fig. 3. Distribution of estimated propensity scores across treatment (credit access from informal sources) and control groups before and after matching. ...
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.
... Agricultural credit is key among the uncountable factors that determines the performance of the agricultural sector in Ghana (Nunoo and Acheampong, 2014;Sulemana and Adjei, 2015;Siaw et al. 2020). In developing countries like Ghana, smallholder farmers are confronted with serious credit scarcities for farming activities (Hussain and Thapa, 2016;Nkegbe, 2018). Credit scarcity is mainly as a result of nonexistence of or absence of collateral security, particularly property and steady employment (Ahmad, 2011;Rahman et al., 2014;FAO, 2015;Saqib et al., 2018). ...
This study examined access to credit and income diversification by smallholder tomato farmers in the Offinso North District of Ghana. Primary data was gathered from 311 tomato farmers. Descriptive statistics, binary logistic regression, Heckman two-step model, and propensity score matching were employed. About 30% of smallholder tomato farmers had access to credit while majority diversified through non-farm (59%) and on-farm (82%) incomes. Access to credit was significantly and positively influenced by dependency ratio, farm size, extension contacts, and membership in FBOs. The determinants of income diversification by smallholder tomato farmers are gender, age, education, household size, distance to district capital, farming experience and extension visits. Credit accessibility increases income diversification and productivity. There is the need for tomato farmers to diversify into other income generating activities to supplement their income. Government and private agencies should strengthen the provision of extension services to smallholder tomato farmers, and tomato farmers should be encouraged to join farmer groups.
... Most NGOs into agriculture in northern that the number of farmers that have access to credit for production becomes a good plan to assess the success of credit. Outgrower businesses/schemes help to improve credit repayment and establish a win-win situation between nucleus farmers and out-growers (Hussain et al., 2016). ...
Gouhaballe Agriculture and Business Ventures (GAB) is a private agribusiness company that supports maize farmers in the Sissala West District in Upper West Region of Ghana with input credit and training services in the form of contract farming (outgrower farming scheme). This study examined maize farmers’ access to input credit and training, and effects on technology adoption, productivity and income of beneficiaries and non-beneficiaries of GAB in the Sissala West District of Ghana. Primary data was obtained from 300 maize farmers and propensity score matching approach was employed. Beneficiaries of GAB had higher access to input credit and training services for maize production than non-beneficiaries. Production technologies mainly adopted by maize farmers in the study area are improved seeds, chemical fertilizers, planting in rows, weedicides and insecticides. Beneficiaries of GAB adopted more technologies than non-beneficiaries. Access to input credit and training services increase technology adoption, productivity and income of maize farmers. Thus, participation in contract farming (outgrower farming schemes) like GAB enhance access to input credit and training services, technology adoption, productivity and income of maize farmers. Other input credit institutions should replicate the scheme in other farming communities to increase farmers’ access to inputs, and subsequently improve productivity and income.
... Households with access to credit and NFA are likely to improve household income (Argaw et al. 2017;Hussain and Thapa 2016). Also, households trade or save their NFA in financial institutions while most credits are secured from the bank. ...
... The coefficient of access to NFA variable is positive and statistically significant. The finding suggests that access to NFA increases household income, a result confirmed by previous studies (Hussain and Thapa 2016;Leng et al. 2020;Siaw et al. 2020). The farm size variable exerts a positive and significant impact on household income. ...
This study examines the determinants of access to financial services and its impact on household income, using household data collected from rural Ghana. An endogenous treatment regression model is utilized to address the selection bias issue. The results reveal that access to financial services is affected by household heads' age, gender, education, off-farm work participation, farming experience, and access to non-fixed assets. Access to financial services exerts a positive and statistically significant impact on household income. Moreover, we find that access to financial services has a larger income impact for households with no member with chronic disease and male-headed households, relative to their counterparts. Our findings highlight the importance of financial services patronization in improving rural household welfare.
... According to Adams and Von Pischke [11] and Atakora [14], the negative impact of credit on rural households' livelihoods is associated with the misappropriation of funds due to financial literacy. The cause of the inverse relationship between agriculture credit and farm productivity can also be attributed to agriculture CF practices among farmers [15,16]. ...
... CF, as discussed previously, has a detrimental effect on agriculture production because credit for agriculture inputs (e.g., seeds or fertilizers), equipment, and land preparation to increase productivity are diverted for other non-agriculture purposes [17,18]. Previous researchers have revealed that substantial amounts of agriculture credit are used for other purposes such as festival celebrations [15,17], purchases for households' needs [19], and repayment of other loan defaults [20]. Based on previous studies, this study assumes that improvements in household income may reduce agriculture CF. ...
... In contrast, real expenditure substitution occurs when borrowers use credit for agricultural purposes to accomplish alternative objectives; the latter is the concern of this study. Following Saqib et al. [16] and Hussain and Thapa [15], agriculture CF was analyzed as: ...
This study examined the impact of off-farm employment on rural household agriculture credit fungibility (CF) using survey data collected from four regions in Ghana; however, the study paid more attention to agriculture credit received from different sources. By employing the endogenous switching regression (ESR) model, we solved the endogenous issue of off-farm employment. The econometrics model result revealed that off-farm employment negatively influences the house-hold's probability of practicing agriculture CF. Our results discovered the importance of off-farm employment on agriculture CF and recommended policy implications capable of alleviating agriculture CF.
... In addition, a low-income household may not have sufficient funds to acquire required inputs and technologies, which may be a disadvantage to their farm's economic performance Hussain & Thapa, 2016). However, we argue that low-income earners with access to financial services may improve farm performance because of the series of incentives attached to accessing financial services. ...
This study assesses the factors influencing of access to financial services (AFS) and its impact on fish farm economic performance by employing a multiple-stage random sampling approach to sample 131 fish farms from two regions in Ghana. We accounted for the selection bias issue using the endogenous treatment regression model. The results reveal that factors such asgender, education, fish farm size, asset ownership, off-farm work, and distance influence farmers' access to financial services. The result also showed that AFS improves fish farm economic performance. Moreover, we observe that female farmers and high-income households with access to financial services have higher fish yields and net returns than their counterparts. The study's findings have provided evidence that AFS can be a transmission route in the efforts to enhance aquaculture development in the nation. Our results serve as a call to the government and policy-makers to provide strategies and methods to make financial services accessibility easy and straightforward.
... Farm profit had mixed results on loan repayment (Okorie 2004;Ololade et al. 2018;Johnson and Morehart 2006), whereas farms with higher productivity are less credit constrained (Nielsen et al. 2020), and small farmers are highly dependent on credit than prominent farmer (Hussain and Thapa 2015). Khatun et al. (2014) and Chirwa (1997) found that farm size is positively associated with the loan repayment status. ...
... Similarly, an increase in earning members can lead the farmer to repay the loan by 10%. In this case, findings from Hussain and Thapa (2015) are in line with our results (Table 7). Findings showed that farmers who could repay the loan were 12.2% more likely to repay the loan. ...
... In this current study, we found that the majority (56%) of the farmers do not have any secondary source of income, whereas almost 86% of families have only one earning member. Socio-economically, the farmers are poor and vulnerable, making them highly dependent on credit (Hussain and Thapa 2015). However, fish farming is a capital-intensive business (Amjath-Babu et al. 2020), so farmers take loans from different sources simultaneously, affecting credit repayment performance (Charles and Mori 2017;Vogelgesang 2003). ...
In this study, we attempted to identify both the direct and indirect influences of different socioeconomic and demographic factors for the reluctance towards agricultural loan repayment of fish farmers in Bangladesh. A field survey was carried out with 250 fish farmers, followed by a purposive sampling technique in this connection. Study findings showed that the respondents’ average age was 45.42 years, with an average loan amount of USD 4673.10 for fish farmers. The binomial logistic model showed that secondary sources of income, number of earning members, farm size, and training on sustainable fish farming and loan management had a direct positive and significant effect. In contrast, the ability to repay was considered a negative and vital factor in the agricultural loan repayment system's reluctance. However, to explore the indirect influencing factors towards loan repayment status, an additional binomial logistic regression was performed, considering ability to repay as a dependent variable, and findings suggested that farm size, the number of earning members, training, and farming experience are increasing, whereas loans taken from other sources are decreasing the ability to repay. Moreover, based on the research findings, the following recommendations can be drawn: (a) training on diversified income-generating activities besides fish farming should be introduced; (b) proper loan management should be followed, and pre- and post-loan disbursement should be monitored timely.
