CREDIT CONSTRAINT AND PEPPER YIELD OF FARMERS IN BONGO DISTRICT IN THE UPPER EAST REGION

Abstract

Credit access is regarded as a key input in agricultural production. Farmers are highly constrained with credit access, which is a barrier to higher productivity. Thus, this study seeks to investigate the effects of credit constraint on pepper yields in Bongo District, by identifying the sources of credit for pepper farmers, identifying the constraints faced in accessing credit for pepper production, and determining the effect of credit constraint on pepper productivity in Bongo District. The study used questionnaires and interviewed 327 pepper farmers from the Bongo District. A multi-stage sampling technique was used. Data were analyzed using descriptive statistics, Kendall’s coefficient of concordance, and Cobb-Douglas stochastic model. The results show that 222 respondents had credit access, and 105 respondents did not have access to credit for pepper farming. The dominant credit sources for pepper farmers were friends/relatives, banks, and Farmer-Based Organization. The three major constraints affecting credit access were high interest rates, high collateral requirements, and cumbersome application procedures. The Cobb-Douglas model revealed that total machinery service hours, quantity of pepper seeds utilized, credit constraint levels, farming years’ experience, education, and type of seed were the significant input variables affecting pepper productivity. The credit constraint levels (low, moderate, and high) were negatively affecting pepper productivity compared to no credit constraint effect, and the others affected pepper yield positively and negatively. The results recommended that the government, in collaboration with credit providers, should address credit access constraints such as high interest rates, high collateral requirements, and cumbersome application procedures. Also, the government should introduce more agricultural programs that will support pepper farmers with key inputs like fertilizer, certified seeds, and cash.