CREDIT ACCESS, CROP OUTPUT ANDWELFARE OF WOMEN FARMERS IN THE NORTHER REGION OF GHANA

Abstract

Access to credit enhances productivity and quality standard of living by breaking the vicious cycle of poverty of smallholder farmers, especially women farmers. It is usually considered as an essential input to increasing agricultural productivity. This study examined the effect of credit access on welfare through crop output of women farmers in the Northern Region of Ghana. Based on this, semi-structured questionnaire was administered to 300 sampled women farmers selected through a multi-stage random sampling from two selected districts in the Northern Region. A multivariate probit model was used to examine the effect of the determinants of farmers’ choice of sources of credit. The Endogenous Switching Regression (ESR) model was used to estimate the impact of credit access on women farmers’ output controlling for all possible biases. The impact of credit on welfare through output was examined using CMP model. 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. Results of the CMP estimation showed that age, household size, extension access and member of FBO significantly influence farmers’ choice of source of credit. Results further showed that credit access, expenditure on inputs, years of farming, land size and member of FBO significantly impact on crop output. Also, the results revealed that crop output and off-farm income significantly influence welfare of women farmers. A pairwise correlation of the sources of credit revealed that VSLA and Susu sources are complementary indicating that farmers who accessed credit from VSLA also accessed credit from Susu. However, the correlation between Family and Friends and VSLA the two sources of credit are substitutes. This implies that farmers who accessed credit from family and friends did source credit from VSLA and the vice versa. Based on this, government and the commercial banks should provide credit facilities that take into consideration the needs of women farmers in terms of collateral demand for easy access to capital. This will enhance easy purchase of input to enhance output. Also, government and other stakeholders should put emphasis on the various forms of credit to enhance easy access and usage. This will reduce credit diversion and the default rates in the credit management.