Determinants of Access to Agricultural Credit among Small holder Maize Farmers: The Case of Hababo Guduru District, Horro Guduru Wollega Zone, Ethiopia

Abstract

Access to agricultural credit remains a major challenge for smallholder farmers in Ethiopia. One of the reasons for very low agricultural productivity in developing countries and particularly in Ethiopia is that lack of access to agricultural credit. Hence, we intend to identify determinants of access to agricultural credit among smallholder maize farmers in Hababo Guduru District, Horro Guduru Wollega Zone, Ethiopia. The data were obtained from a total of 260 sample households, 120 who have access to credit and 140 who do not have access to credit via two stage random sampling technique. Descriptive statistics and probit model were used to analyze the data.The results of the probit model show that age, sex, education, number of livestock owned, year of membership for the credit institution, frequency of extension contact and distance from credit source were significant factors affecting farmers’ accessibility to agricultural credit in the study area. Therefore, government policy that intends to improve the smallholder farmer’s access to agricultural credit facilities should formulate well-functioning system of providing credit.