The Impact of Credit on Technical Efficiency Among Vegetable Farmers in Swaziland

Abstract

Access to credit is regarded as an important intervention for improving the incomes of the rural population, mainly by mobilizing resources to more productive uses. Production of vegetables by smallholder farmers in Swaziland is inconsistent and lower than the national demand, hence the gap is filled by imports from South Africa. The purpose of the study was to assess the influence of credit on technical efficiency of smallholder vegetable farmers in Swaziland. Data were collected in 2013 from farmers through a structured questionnaire, which was administered using personal interviews. A two-stage sampling procedure was used by stratifying the vegetable farmers in the Hhohho region according to the four Rural Development Areas (RDAs). This was followed by a simple random sampling technique used to select the number of vegetable farmers from each stratum. A sample size of 120 farmers was selected from a population of 289. The Stochastic Frontier production function was used to analyze the data using the STATA program (version 12). The results revealed that credit had a negative effect on technical efficiency of cabbage and green pepper farmers, while it had a positive effect on the technical efficiency of tomato, and beetroot farmers. The technical efficiency of tomatoes and cabbage farmers was affected by age, education level, farming experience and access to credit (p <0.01), while beetroot and green pepper was affected by farmer’s age, and off-farm income. (p<0.05). The study recommended that vegetable farmers should increase the amount of seeds, fertilizer and chemicals used in order to improve yields. The Government of Swaziland should subsidize farming inputs and financial institutions should make credit more available to agribusinesses in order to improve the efficient use of input resources.