Animal Production / ASSP / Credit / DFATD / East Africa / Ethiopia / ILRI / LIVES / Livestock / LIVESTOCK-FISH

Factors determining household allocation of credit to livestock production in Ethiopia

Access to credit is often viewed as a key to transforming semi-subsistence smallholder farmers into market-oriented producers. However, only a few studies have examined the factors that affect farmers’ decisions to allocate credit to farm activities in general and livestock production in particular.

This working paper employs a trivariate probit model with double selection to address the issue using data collected from smallholder farmers in Ethiopia. After using a two-step procedure to adjust for sample selection bias, gender of household head, land ownership and access to a livestock centred extension service are found to have a significant effect on farmers decision to use credit for livestock production.

The results showed female-headed households, farmers with a large plot of land and farmers that have access to livestock centred extension services are more likely to utilize credit for livestock production. However, since the effect of land ownership squared is negative, the effect of land ownership lessens for those who own a very large plot of land. The study highlights the fact that lending to female-household heads may lead to increased access to animal-sourced foods for rural households. Furthermore, the study shows that improving farmers’ access to credit should be supported by a focused extension service that addresses the special needs of female farmers.

Download the working paper:

Shiferaw, K., Gebremedhin, B. and Legesse, D. 2016. Factors determining household allocation of credit to livestock production in Ethiopia. LIVES Working Paper 21. Nairobi, Kenya: ILRI.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s