Determinants of Credit Access Among Smallholder Dairy Farmers in Kinangop Sub-County, Kenya

Abstract

Dairy farming plays a major role in the Kenyan agricultural sector as it is dominated by smallholder farmers who contribute approximately 80 per cent of the total milk production. In Kinangop Sub County, there are many credit service providers however, not all smallholder dairy farmers have benefited from such services, instead smallholder dairy farmers have continued to experience challenges such as limited access to financial services. This study therefore analyzed the determinants of credit access among smallholder dairy farmers in Kinangop Sub-County using a binary logistic regression model. Following this, the marginal effects of the predictor variables on the likelihood of accessing credit were estimated. A total of 230 respondents were sampled from a population of 35,840 smallholder dairy farmers using both stratified and simple random sampling techniques and both structured and semi structured questionnaires were used to collect data. The study adopted descriptive survey research design. Descriptive analysis revealed that majority: 59.57% of smallholder dairy farmers were males, 69.57% were married and had a mean age of 39.4 years. The average household size was 4 members per household. Formal schooling was also attained by the respondents, majority having an average of about 8 years of schooling. On average farmers had 2 dairy cattle per household, produced 341litres of milk per month and had 11 years of farming. The binary logistic regression analysis and the marginal effect calculation revealed marital status, years of schooling, savings frequency, dairy farming, primary occupation, financial education, association membership and number of dairy cattle as the significant determinants of credit access. The study therefore concluded that there were significant determinants of credit access in the study area and recommended that formulating policies geared towards enhancing educational attainment of farmers would be vital in enhancing credit accessibility to farmers in the study area. There is also need for the Government and other stakeholders to encourage dairy farmers to join farmer based associations and eliminate stringent collateral barriers and bureaucracies that tend to discourage smallholder dairy farmers from accessing and participating in different credit schemes. KEY WORDS: Credit access, Determinants, smallholder dairy farmers, Kinangop Sub-County.

Determinants of credit access among rice farmers in rural Cameroon

“…In line with previous studies (Assogba et al, 2017;Ongwech et al, 2020), higher educational levels increased the likelihood of rice farmers having access to loans in this study. This is probably because farming households with more education are likely to have better knowledge of farming techniques, investments, and business management, which might (1) enhance the capacity to manage high levels of agricultural production (Alhassan et al, 2020), (2) increase asset accumulation, thereby reducing the effects of inadequate collateral (Adejoh and Adah, 2018), and (3) facilitate access to (paid) extension services that may be needed to accompany the farmer in successfully implementing larger agricultural investments after loan acquisition (Maniriho et al, 2021).…”

“…Based on these results, the study recommended policies supporting the expansion of formal and semi-formal financial credit portfolios that embrace cocoa farmers, deriving alternative funding opportunities that put less emphasis on collaterals on a reduced interest rate as central to improving credit access, and reducing poverty among cocoa farmers in the Ahafo Region of Ghana. Ongwech et al (2020) examined the determinants of credit access in Kinangop Sub County, where despite the presence of many credit service providers, many smallholder dairy farmers still experienced limited access to financial services. Applying a binary logistic regression analysis on data from 230 dairy farmers, it was observed that marital status, years of schooling, savings frequency, occupation, financial education, association membership, and numbers of dairy cattle were significant credit access determinants.…”

Determinants of microfinance credit uptake and the amount of credit by smallholder dairy cattle farmers in Maara sub-county, Tharaka Nithi County, Kenya

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Determinants of semi-formal credit participation among rural farm households in Kakamega County, Kenya

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