Impact of associations in credit demand in small coffee farmers in Peru

Abstract

Credit demand in farmers has remained low despite the increase of credit allocations and bank offices in rural areas. Low productivity and profitability could be key determinants of this low demand due to a possible poverty trap generated. Productive associations could be the solution to this phenomenon because they help coffee farmers quit from it. Using a propensity score matching model and data from IV National Census of Agriculture the study demonstrates that small associated coffee farmers increase more than two times the odds of credit request compared to those that are not associated.