The impact of credit on agricultural productivity of Musaceae: evidence from Valle Del Cauca, Colombia

Abstract

This study evaluates the impact of agricultural credit on productivity of Musaceae (banana and plantain) in farmers from Valle del Cauca (Colombia) using data from National Agricultural Census of 2014. Additionally, the effect of credit on two productivity indices (PI1 y PI2) was evaluated, PI1 measured in tons of production per hectare and PI2 in ton of production per employee. To evaluate this impact, the counterfactual without treatment was estimated using the information of those farmers who obtained a credit and similar farmers who did not. Therefore, to control the selection bias, derived from the fact that the credits are not awarded randomly, this study uses the Propensity Score Matching (PSM) methodology applying the 4-nearest neighbor matching algorithm. In general, for banana producers, the results suggest that access to agricultural credit has positive and significant effects with an increase in productivity per hectare (PI1) of 8.4%; on the other hand, for PI2 the result was not statistically significant, however, it may be an indicator that the farmer is not using human resources efficiently to achieve the increase obtained in PI1 . Finally, this study suggests that access to agricultural credit may not be decisive in increasing the productivity of the plantain crop, given that the effect on the two indices evaluated was indeterminate.