Determinants of Coffee Farmers Cooperatives’ Demand for Institutional Credit: Empirical Evidence from Ethiopia

Negussie Efa, Catherine Ndinda, Charles Agwanda

CAB International, Addis Ababa, Ethiopia

Human Science Research Council, affiliate University of South Africa, Pretoria, South Africa

CAB International, Nairobi, Kenya

Accepted 22 January 2018

Citation: Efa N, Ndinda C, Agwanda C (2018). Determinants of Coffee Farmers Cooperatives’ Demand for Institutional Credit: Empirical Evidence from Ethiopia. Journal of Agricultural Economics and Rural Development, 4(1): 344-356.

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Copyright: © 2018 Efa et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are cited.

Abstract

This study explored determinants of coffee farmer cooperatives’ demand for institutional credit under the Ethiopian context. The data was collected from 100 farmers primary cooperatives and analysed using descriptive statistics and Heckman two-step selection econometric model. The study reveals that the vast majority of the study cooperatives have potential demand for credit, while the revealed demand was found to be relatively low. Different sets of variables were found to influence cooperatives’ potential and actual demand for institutional credit in different ways. In order to address constraints preventing farmer cooperatives from effectively demanding and accessing institutional credit, recommendations are made in relation to the borrower cooperatives, lending banks and government policy.

Key words: Credit, credit demand, farmer cooperatives, determinants of credit demand, Ethiopia