The Nexus between agricultural credit and coffee productivity

The Government of Kenya established Commodity Fund in 2006 to provide viable, inexpensive agricultural credit to coffee farmers to boost coffee productivity by facilitating the acquisition of inputs and support of overhead operations. This is against the notion of experts who previously hypothesized that agricultural credit does not have any impact on agricultural productivity since yield is stochastic. Therefore over the years, there has been little – if any – in-depth analysis that has been dedicated to establishing the impact of agricultural credit on coffee productivity to either prove or disapprove this supposition. As a result, this study surveyed 174 smallholder coffee farmers (participants and non-participants in the credit program) in Kiambu County in Kenya between 2017 and 2019 to determine the impact of agricultural credit on coffee productivity. The paper espouses the DEA Malmquist index to estimate the efficiency of coffee productivity for participating (PF) and non-participating (NPF) coffee farmers in the credit program. The empirical results disclose that PF had the highest geomean for productivity change (152%), efficiency change (40.5%), technical change (53.2%) and scale efficiency (40.5%). Further, the growth in technical change (TC) and efficiency change (EC) from 2017 to 2019 was higher for PF than NPF. These insights can be used to guide policy directions in terms of agricultural lending and crafting policies aimed at enhancing the efficiency of coffee productivity. Keywords: Agricultural credit, coffee productivity, DEA Malmquist index, efficiency change, Kenya, productivity change, scale efficiency