Abstract:
The objective of this study was to evaluate the impact of rural credit on land and labor productivity for Brazilian family farmers and assess factors influencing the rural credit approval process. The study employs data contained in the 2006 Brazilian Municipality1 1 A “municipality” in Brazil would be considered a county in many other counties, as it contains both urban and rural areas. In this paper the term “municipality” will continue to be employed, but it can be considered to represent a county. Agricultural Census and a “trade index” (TI) specifically constructed to differentiate family farmers. The impact of credit on land and labor productivity was calculated by comparing the productivity of a group of family farmers that received credit with the productivity of a group of family farmers that were credit restricted. The groups were constructed with the aid of propensity score matching. When statistically significant, the average effect of credit was found to increase the recipient’s productivity of land and labor. It was also found that productivity increases due to the use of credit aligned with the level of the family farmer’s integration into the commercial market and, therefore, one credit policy does not fit for all Brazilian family farmers.
Keywords:
family farming; trade index; rural credit; propensity score matching