THE CONTRIBUTION OF INVENTORY CREDIT TO LIVELIHOOD OF ONION FARMERS IN THE UPPER EAST REGION OF GHANA

Abstract

The challenge facing onion farmers in Ghana is how to meet their immediate cash needs after harvesting while they store their produce against increased prices during the lean season. To address this challenge, Technoserve and Ministry of Food and Agriculture introduced farmers to inventory credit. Despite the popularity of the concept, its contribution to livelihood is not well known. This study was conducted to assess the contribution of inventory credit to livelihoods of onion farmers in the Upper East Region of Ghana. The study compared improvements in livelihood of beneficiary farmers before and after the inventory credit intervention, and improvements in livelihood of farmers ‘with’ and ‘without’ the inventory credit support. Data was collected from 160 randomly selected onion farmers in three of the highest onion producing districts of the Upper East region and the facilitation NGO and financial institutions. The study revealed that farmer group formation, provision of improved storage facilities, training, credit and market sources were services provided as part of the inventory credit. Group membership, availability of onions as collateral, gender, savings, and high interest rate were factors that influenced onion farmers’ access to inventory credit. A Benefit Cost ratio analysis showed that inventory credit is profitable to the beneficiary farmers. The inventory credit contributed positively to livelihood of onion farmers through improved education, housing, health, income, savings and performance of social responsibilities. It was concluded that inventory credit contributed significantly to livelihoods of beneficiary onion farmers. It was recommended that NGOs should focus on farmer’s capacity building in areas of credit management and post harvest handling of produce and MFIs should design credit facilities with low interest and less bureaucracy to increase farmer’s access to credit.