Are Technology Adoption and Collective Action Important in Accessing Credit? Evidence from Milk Producers in Tanzania

Abstract

One of the targets of Sustainable Development Goal 2 is to double agricultural productivity and incomes of small-scale food producers through, among other things, improving access to financial services including credit. However, designing appropriate mechanisms for increasing access to credit by poor households remains a challenge, especially in Sub-Saharan Africa. This paper argues that technology adoption and collective action could provide pathways to enhancing access to credit. Evidence from milk-producing households in Tanzania suggests that group membership increases the probability of borrowing and the amount of funds borrowed by households, while adoption of artificial insemination increases the amount of funds borrowed. Two major conclusions are that public policy for increasing rural households' access to credit should promote collective action, and that the likely increase in amount of funds demanded by households due to technology adoption and collective action will require policy to address issues pertaining to credit rationing of rural households. Résumé L'un des Objectifs du Développement Durable, l'objectif 2, est de doubler la productivité agricole ainsi que les revenus des petits producteurs de denrées alimentaires, notamment en améliorant l'accès aux services financiers, y compris les crédits. Toutefois, la conception de mécanismes appropriés pour accroître l'accès au crédit par les ménages pauvres demeure un défi, en particulier en Afrique subsaharienne. Cet article fait valoir que l'adoption de technologies et l'action collective pourraient fournir des pistes pour améliorer l'accès au crédit. Les données issues des ménages producteurs de lait en Tanzanie suggèrent que l'adhésion au groupe augmente la probabilité d'emprunt ainsi que le montant des fonds empruntés par les ménages, tandis que l'adoption de l'insémination artificielle augmente le montant des fonds empruntés. Deux grandes conclusions sont que la politique publique visant à accroître l'accès des ménages ruraux aux crédits devrait favoriser l'action collective, et l'augmentation probable des fonds réclamés par les ménages en raison de l'adoption de technologies et de l'action collective exigera des politiques pour résoudre les problèmes liés au rationnement du crédit des ménages ruraux.

Effect of agribusiness support services on choice of dairy cooperative market channel in Kenya

“…Dairy agripreneurs are, therefore, incentivised to sell to a market choice that cares for their production needs, which in this case were the cooperative market channels. This finding is similar to that of Twine et al (2018), who found that dairy agripreneurs opted to sell milk to cooperative due to availability of animal health services such as deworming and vaccination services. Therefore, access to deworming support service increases the likelihood of dairy agripreneurs selling milk to dairy cooperatives.…”

Factors Affecting Technology Adoption of Geoisolator on Solar Saltworks in East Java Province

“…Farmer membership in the group was used as an important aspect of access to geoisolator technology information. The important of farmer group membership in affecting adoption positively is also in agreement with several other studies, for example, Uaiene et al (2009) in Mozambique, Asmelash (2014) in Ethiopia, Aryal et al (2018) in India, (Twine et al (2018) in Tanzania and Murage et al (2019) in Kenya who reported that farmer in an agricultural organization will help a farmer to have access to credit, extension, and market.…”

An Analysis of Technical Efficiency in the Presence of Developments Toward Commercialization: Evidence from Tanzania’s Milk Producers

“…The effect on efficiency is confirmed in Table 2, which reveals that milk producers that are a member of a group or organization are technically more efficient than those who are not. This finding is in line with Twine et al (2019), which shows group membership increases the probability of borrowing and the number of funds borrowed by milk-producing households in Tanzania. The group membership variable is highly correlated with the commercialization index dummy variable; hence it was dropped in model 2.…”