ISSN 2375-0693
African Journal of Agricultural Economics and Rural Development ISSN: 2375-0693 Vol. 11 (7), pp. 001-013, July, 2023. © International Scholars Journals
Full Length Research Paper
The nNexus between access to credit and farm income: A propensity score matching approach for smallholder dairy farmers in Central Kenya
James Sidika1*, Martin Muriuki2Christopher Obel Gor2, Yusuf Tande3 Otiende Millicent Adhiambo3, Ogweno Peter Oyier4
1Department of Agricultural Bio systems, Economics and Horticulture, University of Kabianga, Kericho, Kenya.
2Department of Agriculture and Environmental studies Rongo University.
3Department of Agricultural Economics and Agribusiness Management, Jaramogi Oginga Odinga University of Science and Technology,Bondo, Kenya
4Department of Agriculture and Environmental Studies, Rongo University, Rongo, Kenya.
Accepted 27 February, 2023
Abstract
In this contemporary economic system characterized by rapid population increase, more food is required to encounter the ever growing food demand. Adequate credit accessibility and utilization therefore becomes necessary to achieve a sustained level of production and income. In view of this, we examined the link between access to credit and farm Income in Kinangop Sub-County in the Central Highlands of Kenya. Descriptive survey research design was employed on a target population of 35,840 dairy farm households. Similarly, The study utilized cross-sectional data was collected from a sample of 230 smallholder farmers dairy farm households using both stratified and simple random sampling techniques. DDescriptive analysis involved running a t test and chi square tests to compare the means and frequency distribution of different variables respectively while inferential statistical methods involved application of the propensity score matching technique to determine the average treatment effects of the intervention on the outcome. Descriptive methods analysisrevealed significant differences in respondents gender, ownership status, financial education status, association membership status and value addition practice between credit users and credit non-users. Significant differences in income characterized by gender, financial education status, association membership status and value addition practice were also observed. In addition, milk output, off-farm income, on-farm income; (p≤0.01), land size, land under forage production; (p≤0.05) and number of associations;(p≤0.01) were significantly higher for credit users relative to credit non-users. Estimation of the Average Treatment Effect revealed a positive and significant effect of credit access on farm income with credit users having their income increased by between KES 6,307.5 and KES 7,358.5. The study therefore, therefore, concluded that Enhancing credit accessibility is therefore would be vital in increasing farm income returns of dairy farmers.
Keywords: Agricultural credit, farm income, smallholder dairy farmers, propensity score matching, kinangop.