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Effects of credit and non-credit support program on rural households in Thailand: An empirical analysis of agricultural cooperatives : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Seneerattanaprayul, Jumtip
Date
2019
Type
Thesis
Fields of Research
ANZSRC::140201 Agricultural Economics , ANZSRC::140219 Welfare Economics , ANZSRC::140202 Economic Development and Growth
Abstract
Several studies have found that microcredit is unsuccessful in increasing rural household’s socioeconomic welfare. To improve the effectiveness of credit, researchers suggest that non-credit support services should be provided alongside financial support. Despite Thailand agricultural cooperatives (ACs) offering such services, Thailand poverty rates remain high, particularly in rural areas. Low participation rates may explain why ACs have been largely ineffective in improving rural household welfare. This study investigates the reasons behind low AC member participation rates to increase their effectiveness, improve rural Thai households’ socioeconomic welfare, and ultimately decrease Thailand’s poverty levels. We used rural household survey data from the Nakhonratchasima province, in Northeast Thailand. Data was collected from AC members and non-members in 2017 using a two-stage stratified sampling technique. Our study used the probit model to estimate the probability of AC participation and the Heckman selection model to examine determinants influencing AC service participation and participation levels. Using the Endogenous Switching Regression and Endogenous Switching Probit models, this study evaluated the effects of AC credit and non-credit support services on rural Thai households’ socioeconomic welfare. Our results reveal that social networks play a significant role in motivating households to join ACs credit and support services. Households residing in an AC village are more likely to become AC members and participate in AC services due to easy access and low travel costs. ACs assist largely middle-class households in accessing credit and markets; poor households still have difficulties accessing credit services. Lastly, perceptions of agricultural risks and the expected benefits of membership impact on households’ decisions to participate in ACs. Members who believe that ACs can help them obtain credit are more likely to join. Households use marketing services because they believe ACs provide quality inputs and farm products at reasonable prices. The ESR and ESP model results reveal that AC service participation plays an important role in improving household socioeconomic welfare. AC credit has a significant positive effect on household and farm income, and household consumption. In contrast, AC marketing service participation increases household and farm income, but not consumption. AC credit and marketing services do not improve educational expenditure and school enrolment rates. While AC credit considerably increases the adoption of improved farm technologies and practices, using AC agricultural extension services does not improve farm production. Households’ health affordability and health access improve when they borrow money from, or trade with ACs. AC marketing services are more effective than AC credit in improving household welfare. To improve AC credit and AC support service participation, households must reduce their agricultural risks and improve their agricultural production capacities. One practical way is through participating in government-run agricultural development projects. To ensure the government farm development projects reach their target population, ACs should provide their members with advice about the program’s suitability. Moreover, ACs can increase service participation rates through providing farmers with specific information about the benefits of joining a cooperative, redesigning their service policies, and developing AC networks. ACs should also offer their services to poorer households if they meet certain criteria.
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