Financial credit and cocoa productivity-enhancement agronomic practices in Ghana

Abstract

• Though a major obstacle, financial credit is key for agronomic practices. • We linked financial credit and cocoa productivity-enhancement agronomic practices. • We estimated three-stage least-squares and exponential mean model with endogenous regressors. • Financial credit and productivity-enhancement agronomic practices influence each other. • The chief determinants are farm age and size, labour, extension, occupation, and land ownership. Undertaking agronomic practices effectively requires capital, reiterating the essence of finance in boosting agricultural output. However, a major obstacle in cocoa production is poor access to financial credit. We compiled cross-sectional data from 125 cocoa farmers in Ghana to examine the relationships between access to financial credit and adoption of productivity-enhancement agronomic practices. Three-stage least-squares regression, exponential mean model with endogenous regressors, and seemingly unrelated bivariate probit were employed. We found that less than one-third of cocoa farmers obtained financial credit, with an average of U$154, mainly from informal sources. Productivity-enhancement agronomic practices undertaken are mulching, retention of trees, planting of shade trees and legumes, pruning, insecticides application, and weed control, with an average of five per farmer. Being a migrant, farm age, employing hired labour, farm size, and extension contacts boost cocoa farmers’ access to financial credit. Nonetheless, education reduces it. Also, education, being a migrant, living in farm settlements/farmsteads, farming as main occupation, experience, individual/leasehold/sharecropping land ownerships, and employing family labour enhance adoption of productivity-enhancement agronomic practices. Nevertheless, farm size lessens it. Moreover, financial credit amount and adoption of productivity-enhancement agronomic practices significantly and positively influence each other, indicating inter-causal connection and direct relationship between the two.