MFI and Rural Development: Analysis of micro-credit on agricultural production in Cambodia

B.Sc. Touch Khiev

Master's thesis

Abstract:

The absence of capital and access to credit is one of the key financial challenges for Cambodian rice farmers who mainly depend on rainfed lowland rice production as their source of livelihood. In the context of developing countries, sources of credit have clearly been identified as a tool to contribute significantly for improving agricultural production. The main objective of the study was to evaluate the impact of microcredit on rainfed lowland rice production in Battambang province, Cambodia. A sample size of 120 farmers out of which 60 farmers each were borrowers and non-borrowers of credit based on purposive sampling method. Afterward, the snowballing method was employed during the interviews through structured questionnaire, while focus group discussion was also conducted. The gross margin analysis was applied to compare the average gross margin of rice farmers, while t-test was used to investigate the impact of microcredit on rice production. The study showed that microfinance institutions were the common source of credit for rice farmers in the region, while the next source was moneylender. Most of the rice farmers used credit for agricultural production purpose, and the rest of the credit often used for debt-servicing and household consumption during the offseason or fallow period. Women were the main actor within the households with respect to the loan initiative proposal for working capital and loan keeping. Furthermore, women played a major role in jointly making decision together with their spouse for using agricultural credit. Finding revealed that credit borrowers obtained higher gross margin and hence were more profitable (136.34 US$/ha) than non-borrowers (87.67 US$/ha). The t-test result showed that there was a significant difference in input usage and output among the borrowers and non-borrowers. This is partly because rice farmers who had access to credit have high ability to purchase farm inputs and improve their rice productivity. In addition, borrowers recorded higher yield than their counterparts due to the intensive use of farm inputs. The study recommends that there is a need to be improved the credit system and should be made accessible to smallholder farming in order to increase output and income.

Keywords

Microfinance, Rice production, Battambang, Cambodia, Microcredit

Language used: English

Date on which the thesis was submitted / produced: 27. 4. 2017

Thesis defence

• Supervisor: Ing. Petra Chaloupková, Ph.D.

Czech University of Life Sciences Prague

Faculty of Tropical AgriSciences

Master programme / field:
Tropical Agriculture / International Development and Agricultural Economics