THE EFFECT OF CREDITS ON SMALLSCALE FARMERS PERFORMANCE IN TANZANIA

Abstract

Access to credit is one of the important factors for enlightening agricultural production among small scale farmers in Tanzania. Despite this significance, it is inexact to some parts of the country if small scale farmers have realized this importance. This study, therefore, was conducted to assess the effects of credits on small-scale farmer’s performance in the Meru district and establish the linkages between access to credit and the effectiveness in which small-scale farmers utilize credit to increase their productivity, improve farm operation efficiency, increase income and expand their farm size.Through an organized survey, data were collected from 175 small-scale farmers selected randomly from various areas with agriculture production potential using miscellaneous questionnaires intended to entirely fit all groups of respondents. Probit model has been used to scrutinize how credits affected the increase of production capacity, increase the farmers’ income, improve farming operation efficiency and increase the farmer's farm size. The study results were found that small-scale farmers were positively affected by investing credits in agriculture, which enabled farmers on access to agriculture inputs, seeds, competent labor, tools and adopt to high technologies which all resulted in high agriculture productivity, effective operation efficiency of agriculture, increase of income and expansion of farm size to farmers. These study findings suggest the government and policy makers to make favorable laws and regulations that will boost the role played by the financial organization to be accessible by small-scale farmers for the sustainable improvement of agriculture.