Analyzing the effect of financial literacy on the adoption of three improved robusta coffee varieties naro-kituza robusta 8 (kr8), naro-kituza robusta 9 (kr9) and naro-kituza robusta 10 (kr10) among farmers

Abstract

Coffee farming employs 42% of farming households in Uganda and contributes 30% to foreign exchange earnings. However, productivity remains low due to limited adoption of improved Robusta coffee varieties (KR8, KR9, KR10). These high-yielding, disease-resistant varieties require investment, which is often hindered by limited credit access and poor financial literacy. While previous research has explored credit and productivity, little is known about how financial literacy affects technology adoption in coffee farming. This study analyses the effect of financial literacy on the adoption of Robusta varieties among coffee farmers in Rwampara district, evaluates the level of financial literacy among Robusta coffee farmers, and characterizes Robusta coffee farmers in Rwampara District based on financial literacy levels. The study used primary data collected through a structured questionnaire from 91 coffee farmer respondents selected randomly. Data were analyzed using descriptive statistics and logistic regression analysis; The study revealed that for financially literate coffee farmers the odds of adoption of Robusta coffee varieties increase by 11.7% compared to those who are not financially literate, holding all other variables constant Though the effect of financial literacy was insignificant, thus other factors affected the adoption of these Robusta coffee technologies. Farm size significantly increases the likelihood of agricultural technology adoption, with larger farms exhibiting about 51% higher odds of adoption. Contrarily, greater farmer experience was associated with a 12% decrease in adoption odds, suggesting that more experienced farmers may be less inclined to adopt Robusta coffee technologies. Additionally, access to agricultural extension services more than doubled the odds of adoption, underscoring the critical role of extension in promoting technology uptake. In order to improve the technology adoption rates of Robusta coffee varieties, it is essential to strengthen agricultural extension services by enhancing their reach, quality, and use of digital platforms. Interventions should be tailored to support smaller farms and engage experienced farmers who may be resistant to change.