Smallholder Commercialization and Urban-Rural Linkages: Effect of Interest-Free Agriculture Credit on Market Participation of Rice Growers in Pakistan

Ali Sher, Saman Mazhar, Hossein Azadi and Guanghua Lin
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Ali Sher: College of Economics and Management, China Centre for Food Security Studies, Nanjing Agricultural University, Nanjing 210095, Jiangsu, China
Saman Mazhar: College of Economics and Management, China Centre for Food Security Studies, Nanjing Agricultural University, Nanjing 210095, Jiangsu, China
Hossein Azadi: Department of Geography, Ghent University, 9000 Ghent, Belgium
Guanghua Lin: College of Economics and Management, China Centre for Food Security Studies, Nanjing Agricultural University, Nanjing 210095, Jiangsu, China

Land, 2020, vol. 10, issue 1, 1-24

Abstract: This study estimates the effect of interest-free agriculture credit on the market participation and urban-rural linkages of rice growers in Pakistan. A survey was conducted to collect primary data using purposive and simple random sampling techniques from Punjab, Pakistan. This study applied the Instrument Variable (IV) approach and Ordinary Least Square (OLS) to evaluate the impact of interest-free credit on market participation and income. The results show a mixed influence of interest-free credit on rice growers’ market participation and urban-rural linkages. In general, the effect is negative when farmers obtained credit for six months. However, it shows a positive impact when farmers’ received credit for the next consecutive crop. Our findings suggest that the provision of interest-free credit for one year served a better purpose as it significantly attempted to alleviate budget constraints and endorsed farmers to increase land size under rice cultivation and improve productivity, market participation, and urban-rural linkages. The study provides three valid instruments and, therefore, a superior estimate of effect is achieved which can be leveraged to better support coherent agri-food policymaking.

Keywords: market participation; urban-rural linkages; commercialization; subsistence systems; interest-free credit; food policies (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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