The purpose of this paper is to determine the impact of microcredit on smallholder poultry production and its subsequent role on domestic protein and food supply.
Cross-sectional farm-level data from 61 farmers with at least two years of microcredit access and 39 farmers without microcredit access in the Dormaa Municipality of Ghana collected in 2016 via semi-structured questionnaire were used. Using the propensity score matching, PSM, and data envelopment analyses approaches, the authors analysed the propensity of farmers’ taking microcredit and its effect on beneficiaries’ technical efficiency, productivity, profitability and domestic production of chicken and eggs, farm performance. The authors addressed selection biases with the PSM and answered the research question of whether farmers with microcredit access perform better than non-microcredit farmers.
Farmers with high years of education, farming experience, technology and machinery as well as micro-savings and female farmers are more likely to take microcredit whereas large farm size reduces farmers’ propensity to take microcredit. Furthermore, farms with microcredit access were more technically efficient, productive and profitable than they would have been in the absence of microcredit.
The paper can be useful to policymakers and microcredit institutions since it provides evidence of microeconomic impacts of microcredit on agricultural production and the determinants of farmers’ participation in microcredit.
The study helps to understand how access to credit can improve smallholders’ technology adoption, production efficiency and productivity and output thereby enhancing domestic food supply.
