The Determinants of Access to Credit for Cash Crop Production in Ghana: A Case Study of the Cocoa Industry

Abstract

The study was conducted in order to ascertain the determinants of access to credit for cash crop production in Ghana with special reference to the Cocoa Industry. The study adopted a descriptive survey design. Simple random sampling technique was used to sample 150 respondents for the study. A binary probit model was used to estimate the probability of access to credit by farmers. The determinants of access to credit for the cocoa farmers were assessed with variables; saving level, belonging to lending group, knowledge of microfinance institution and association/trade group/farming body of respondents. A research question was formulated to guide the study. Factors that tend to improve the farmers’ literacy, savings and revenue result in pushing the farmers away from relying on credit from these financial institutions whereas factors that make farmers worse off leads them to go for more credit. Results from the regression analysis show that savings level of the farmer, revenue from sales, farm size and how long a farmer has been into farming significantly determine a farmer’s chance of having access to credit from formal and informal credit sources. It was recommended that extending credit to women will not only accelerate the growth of their micro-farms but also has tickle down effects on their entire households as income earned from their farms is mostly used to cater for their household.

Keywords: Cocoa, Access to Credit, Loans, Savings and Interest rates