Access To Credit, Rice Productivity And Farmers’ Welfare In Ghana: A Conditional Mixed Process Approach

Abstract

Purpose – This paper assessed the impact of access to credit and associated productivity variations on rice farmers’ welfare in Ghana. Design/methodology/approach – The authors employed a quasi-experimental research design and the conditional mixed process (CMP) approach with micro-level secondary data from the Ghana Statistical Service (GSS) to jointly estimate the determinants of rice farmers’ access to credit, the impact of access to credit on rice productivity and the welfare effect of rice productivity. The joint estimation of these equations and the use of a recursive CMP approach rule out simultaneous feedback within the production cycle and correct for endogeneity while accounting for the mixed (binary and continuous) nature of the dependent variables. Findings – The model estimates show that access to credit increases rice productivity, which in turn improves rice farmers’ welfare. Specifically, access to credit positively impacted rice productivity, with an extra 958.270 kg/ha for credit users. In turn, a unit increase in productivity increased rice producers’ welfare by GHC 2.98. Factors influencing access to credit include age, education, marital status, rice output and ownership of mobile phones and bank accounts. While male farmers demonstrated higher productivity, female farmers were associated with superior welfare impacts. Research limitations/implications – A study is required to understand how changes in productivity arising from access to credit influence farmers’ assets and wealth. Practical implications – Pursuit of policies for improving farmers’ access to agricultural credit can improve farm productivity and rice farmers’ welfare. Originality/value – This study incorporates farmer welfare as a function of productivity in the access to credit productivity model, creating a tri-variate model to understand the farmer welfare effect of rice productivity dynamics in Ghana.