Impacts of credit constraint on small holder farmer’s technology adoption in Ethiopia

Abstract

The study is conducted using a primary data which was collected from 252 randomly selected households found in two woredas (districts) of Gedeo zone with the objective of analysing determinants of smallholder farmers’ participation in the credit market from both demand and supply sides and its implication on agricultural technology adoption and intensity of adoption. Probit and double-hurdle models are employed to analyse the data. Being young, number of oxen and distance to credit market are found to reduce the probability of being credit constrained. Age, number of oxen, family size and technology adoption are found to increase credit demand while land size, tropical livestock unit and distance to credit market have negative (unexpected) signs. In the double-hurdle model estimation while credit market participation, being literate, being young and livestock holdings are 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 out to affect intensity of adoption positively while number of oxen and distance to input market are found to reduce expenditure of farm technology.