Agricultural Credit And Paddy Rice Production

The rapid population growth and changing consumption preferences position rice as a strategic crop for food security in C（?）te d’Ivoire.In addition to providing food,rice production activities generate reliable employment and income for rural households operating in the rice value chain,thereby improving their livelihoods.However,in C（?）te d’Ivoire,local rice supply does not keep pace with demand.Local rice production is less than demand for domestic consumption.The economic impact and social unrest caused by the global food crisis of 2007-2008 have shown the importance of this food commodity for the country’s economy and in the household food basket.This food crisis has sounded like a wake-up call for the establishment of urgent policies aimed at ensuring food security and beyond ensuring food sovereignty in the country.In particular,financing policies of local rice production and increased financial support to rice farmers have returned and are widely promoted by both national and international policymakers.Like many countries in West Africa,in C（?）te d’Ivoire,policymakers very early understood the scope of agricultural financing,particularly the financing of local rice production.Since1960,the date of the country’s accession to independence,agricultural credit has been extensively used as a lever to develop rice production for rice self-sufficiency.However,the various agricultural credit policies adopted from the 1960s to date to both improve local paddy rice production and promote a rural credit market within reach of smallholder farmers have yielded inconsistent results.On the one hand,the productivity of paddy rice is low.And on the other hand,the adoption of modern agricultural inputs and technologies,as well as a sustainable rice farming system,is slow.Besides,the participation of smallholder farmers in the credit market remains broadly marginal.This thesis first empirically examines the determinants of rice farmers’participation in the credit market and then investigates the contribution of agricultural credit to paddy rice production.This doctoral thesis is a contribution to the decades-long efforts to increase rice production in C（?）te d’Ivoire.The study uses primary cross-sectional data collected from 600 rice farmers randomly sampled in seven rice production areas of the country.Both statistical and econometric methods are used to analyze the data.More specifically,an econometric model based on the Multinomial Conditional Logit model is first used to examine the determinants of rice farmers’participation in the credit market by considering the characteristics related to the use of different credit sources.Second,multidimensional statistical methods such as Multiple Classification Analysis and Agglomerative Hierarchical Clustering are used to classify rice farmers according to the financing strategy of production factors.Third,econometric methods based on IV-Tobit,IV-Probit,and Multivariate Probit models are used to analyze the influence of agricultural credit on rice farmers’decisions regarding the adoption of improved input and rice farming systems choice.Fourth,the Endogenous Stochastic Frontier Production model,the Propensity Score Matching,and the Quantile Regression are used to evaluate the impact of agricultural credit on rice production and technical efficiency（TE）levels by considering the heterogeneity among credit sources.With respect to the determinants of participation in the credit market,the results show that in addition to rice farmer-specific variables,credit source-specific variables are significant determinants of rice farmers’participation in the credit market.The agricultural credit conditions or requirements（saving plus collateral,kinship/friendship,membership,favored client,loan maturity）applied by each source of credit and the geographic location of the credit source significantly influence the behavior of rice farmers in choosing the source of credit.Regarding the classification of rice farmers,results show that the latter could be grouped into three typologies according to the source（origin）of funds for the financing of paddy rice production factors.The first typology regroups rice farmers who use agricultural credit to finance production factors.On the contrary,the second typology is composed of those who use their own funds to finance production factors.The third typology of rice farmers is considered as the combination or mixture of the two first typologies.With regard to the influence of agricultural credit on rice farmers’decisions,the conclusions are as follows.On the one hand,after dealing with the endogeneity problem,findings show that fertilizer intensification and access to agricultural credit reciprocally influence each other significantly and positively.Based on the results,an increase of credit in100 West African CFA Franc（XOF）increases the quantity of fertilizer used by 2.70 kilograms,ceteris paribus.On the other hand,though agricultural credit does not influence the choice of all rice production systems,it is a significant and positive determinant of irrigated rice farming choice,which is the most sustainable rice production system.Concerning the impact of agricultural credit on rice production and TE levels,findings reveal,on the one hand,a positive relationship between rice farmers’TE and agricultural credit after dealing with the endogeneity problem.Rice farmers who have access to agricultural credit have an average TE level of 77.4%,while their counterparts without credit have 69.9%.Based on the results of the Average Treatment Effect on the Treated,credit users have an average of5%increase in their TE compared to their counterparts who do not use credit,confirming the positive influence of credit on TE.On the other hand,the study provides evidence that the impact of credit on rice production and TE levels differs depending on the source of credit,with a more significant impact of credit from agricultural cooperatives.Credit from agricultural cooperatives significantly and positively influences TE and rice production at the 25^th,50^th,75^th,and 95^th quantile,and its effect increases with the rice production scale.First,this thesis has empirically demonstrated that in addition to the characteristics related to rice farmers,those related to the sources of credit are significant determinants of rice farmers’participation in the credit market.Second,it has empirically demonstrated that agricultural credit contributes to paddy rice production in C（?）te d’Ivoire:by enabling rice farmers to adopt agricultural technologies,intensify improved inputs such as fertilizer,and choose a sustainable rice production system,notably the irrigated rice farming system.Moreover,agricultural credit has a significant and positive impact on rice production and TE levels,with an impact that differs depending on the source of credit.Therefore,we argue that a well-designed agricultural credit can significantly contribute to increasing paddy rice productivity at the farm level and ultimately improve local rice production for rice self-sufficiency in C（?）te d’Ivoire.However,agricultural credit is not a panacea for improving paddy rice production.From this thesis,certain socio-economic/demographic factors of rice farmers,rice farms characteristics,and institutional factors explain the decisions of rice farmers and have a significant impact on rice production and TE levels.Based on the research findings,recommendations,including an agricultural credit model,are provided to:first,create an inclusive and adequate credit market for all rice farmers to increase their participation;second,accelerate the adoption of modern agricultural inputs and technologies,as well as a productive and sustainable rice production system;third,increase the productivity of paddy rice.Therefore,policymakers should pay attention to the recommendations of this thesis in establishing rice sector development policies.