Can credit help small family farming? Evidence from Brazil
ISSN: 0002-1466
Article publication date: 10 December 2019
Issue publication date: 20 March 2020
Abstract
Purpose
The purpose of this paper is to evaluate the impact of a Brazilian rural credit program, The National Program for Strengthening Family Farming (PRONAF), on small family farming production.
Design/methodology/approach
The method is based on a quasi-experimental approach (propensity score matching) applied to 4.1m family farmers in Brazil.
Findings
Results show that farmers accessing PRONAF tended to be positively selected in terms of several observable characteristics, such as land size and agricultural practices. Moreover, PRONAF had positive and differentiated impacts on agricultural production. The impact was larger in the poorest region when compared to the regions characterized by intensive and commercial farming.
Research limitations/implications
The rural credit information was restricted to one crop year, making impossible to analyze the mid- and long-term impacts of the credit program on agricultural production.
Practical implications
The study provides some practical implications for policies of rural development. First, rural credit does matter for agricultural production of small family farmers. Nonetheless, since credit programs are large subsidized by the rest of the population, further studies are still needed the aggregate costs and benefits of these schemes. Results also revealed that PRONAF may have contributed to reduce regional inequalities, since the impact was larger in the poorest NE region.
Originality/value
This study provides a comprehensive analysis of how rural credit has impacted small-farm agricultural production, using large and representative data – the whole population of Brazilian family farmers.
Keywords
Acknowledgements
The authors thank the Brazilian Institute of Geography and Statistics for providing access to restricted microdata from the 2006 Agricultural Census (Process Number IBGE 03605.001122/2015-97).
Citation
Maia, A.G., Eusébio, G.d.S. and da Silveira, R.L.F. (2020), "Can credit help small family farming? Evidence from Brazil", Agricultural Finance Review, Vol. 80 No. 2, pp. 212-230. https://doi.org/10.1108/AFR-10-2018-0087
Publisher
:Emerald Publishing Limited
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