Smallholder farmers contribute more to food security and poverty reduction in Rwanda. However, lack of agricultural finance is one of numerous challenges they face for improving productivity and increasing income along the value chain. The objectives of this paper were to determine the factors influencing the farmers’ decision to participate and use agricultural value chain financing in Rwanda and to analyse the constraints hindering smallholder farmers’ decision to participate and use agricultural value chain financing in Rwanda. Cross-sectional data were collected from a random sample of 585 smallholder potato farmers in Musanze and Nyabihu Districts. Results of probit model revealed that sex, age, marital status, education, farming experience, membership to farming associations, household income and distance to market significantly influence the farmers’ decision to participate and use of agricultural value chain financing. The study also found that financing agricultural activities remain a key challenge for smallholder potato farmers. Fear of borrowing, lack of financial literacy, lack of skills in budgeting and unexpected production, interest rate and others loans charges, lack of collaterals, short repayment period and lack of financial literacy have been found to be the main factors constraining potato farmers’ participation and use of agricultural value chain financing. Nevertheless, potato productivity will always result from the interaction between all potato value chain actors. The study recommended the government and value chain stakeholders to formulate integrated policies that facilitate smallholder farmers to access to convenient financing products in order to improve productivity and to meet the customer demands.
Agricultural value chain financing, smallholder potato farmers, Musanze and Nyabihu districts, Probit model
International Journal of Trend in Scientific Research and Development - IJTSRD having
online ISSN 2456-6470. IJTSRD is a leading Open Access, Peer-Reviewed International
Journal which provides rapid publication of your research articles and aims to promote
the theory and practice along with knowledge sharing between researchers, developers,
engineers, students, and practitioners working in and around the world in many areas
like Sciences, Technology, Innovation, Engineering, Agriculture, Management and
many more and it is recommended by all Universities, review articles and short communications
in all subjects. IJTSRD running an International Journal who are proving quality
publication of peer reviewed and refereed international journals from diverse fields
that emphasizes new research, development and their applications. IJTSRD provides
an online access to exchange your research work, technical notes & surveying results
among professionals throughout the world in e-journals. IJTSRD is a fastest growing
and dynamic professional organization. The aim of this organization is to provide
access not only to world class research resources, but through its professionals
aim to bring in a significant transformation in the real of open access journals
and online publishing.