Analyzing the effect of agricultural credit access on coffee production among coffee farmers in Kigezi Sub Region Southwestern Uganda

Abstract

Coffee is a vital cash crop for Uganda, especially in the Kigezi region, contributing significantly to the economy and rural livelihoods. However, coffee productivity remains low due to limited access to agricultural credit, which restricts farmers’ ability to invest in essential inputs like fertilizers and improved seedlings. Smallholder farmers face barriers such as a lack of collateral, high interest rates, and limited financial literacy. This study examines the impact of agricultural credit access on coffee productivity in Kigezi, aiming to provide evidence that informs policies and interventions. This research was based on secondary data, which was collected by the UNPS 2020. It involved a two-visit approach, with each household interviewed twice, approximately six months apart, to capture agricultural outcomes across the country’s two cropping seasons. Data collection occurred from March 30, 2019, to February 29, 2020. Six questionnaires were administered, covering Household, Woman, Agriculture & Livestock, Fisheries, Community, and Market topics, along with a biological data collection module. Data was gathered using Computer-Assisted Personal Interviews (CAPI) with CWEST and Survey-Be software on Ultra-Mobile PCs (UMPCs). Data was analyzed using Stata 14 software to understand the research findings. Descriptive statistics and cross-tabulations were used to show the number and percentage of farmers accessing agricultural credit from each source. The findings indicated that coffee farmers who had access to agricultural credit had a higher coffee yield compared to those who did not have access to agricultural credit. This is because access to agricultural credit may improve farmers' ability to acquire and adopt improved inputs such as high-yielding coffee seedlings, irrigation systems, and appropriate fertilizers. Additionally, limited agricultural credit restricts farmers' capacity to hire productive labor, further negatively impacting coffee production.