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Impact of subsidized inputs credits on land allocation and market-oriented agriculture in rural households in Mali

By Moussa Keita


The worldwide increases in food prices during 2007-2008 period has led many countries to set up fund to support agricultural producers through credits and subsidies systems. The government of Mali, since 2008, has adopted a strategy focused on inputs supply to facilitate farmers’ access to fertilizers and pesticides to ensure food security in rural area. The aim of this study is to analyze the link between access to these credits, land allocation behavior and the degree of commercialization of rural farmers in Mali. We adopt an instrumental variable method to test the effect of credit access on land allocation for different types of crops namely: food crops, semi-commercial crops and purely commercial crops. We also examine the impact of credit on cash earning from the sales of agricultural products. This amount cash earning being moreover considered as a good indicator of degree of commercialization or degree of market participation. Our estimations results show that access to credit strongly encourages the development of cash crops. Beyond simple access, we find that the amount of credit has a nonlinear effect on land allocation. We also find that credit appears as a factor of increase in the degree of commercialization of agricultural products.

Topics: C12 - Hypothesis Testing: General, C51 - Model Construction and Estimation, D13 - Household Production and Intrahousehold Allocation, Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets, Q18 - Agricultural Policy; Food Policy
Year: 2012
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