Credit Constraint and Its Implication on Small Holder Farmers Technology Adoption in South Ethiopia: In Case of Gedeo Zone

Abstract

The study is conducted using a primary data which is collected from 252 randomly selected households found in two woredas of gedeo zone with the objective of analyzing determinants of small holder farmers’ demand for and access to credit and its implication on agricultural technology adoption and intensity of adoption.  Probit and double hurdle models are employed to analyze the data. Being young, number of oxen and distance to credit market found to reduce the probability of being credit constrained. Age, number of oxen, family size and technology adoption found to increase credit demand while land size, tropical livestock unit and distance to credit market found with negative (unexpected) signs. In the double Hurdle model estimation while credit market participation, being literate, being young and livestock holdings found to determine the probability of technology adoption positively having oxen, being credit constrained and far from input market affected probability of technology adoption negatively. In the last estimation education, land size, and livestock holdings turned to affect intensity of adoption positively while number of oxen and distance to input market found to reduce expenditure farm technology.

Keywords: credit, technology adoption, intensity of adoption, probit and double hurdle model, gedeo zone, Ethiopia.