The Impact of Extension and Ecosystem Services on Smallholders’ Credit Constraint.

On formal credit markets, access to formal credit and reasonable credit terms of smallholder farmers
in rural sub-Saharan Africa is limited due to adverse selection. Financial institutions operating in
rural areas often cannot distinguish between borrowers (farmers) that are creditworthy and those that
are not, thus, allocate limited resource to agriculture to reduce credit risk. In the presence of limited business quality signaling by smallholder farmers, financial institutions shall demand for collateral and/or offer unfavorable contract terms. Moreover, agricultural productivity of rural sub-Saharan
Africa, dominated by subsistence or small-scale farmers, is also negatively impacted by the adverse
effect of climate change. A strategy that may make the farming practices of smallholder farmer’s
climate resilient and profitable may also improve smallholder farmer's access to formal credit. This
study investigates to what extent participating in ecosystem and extension services (EES) programs
signals business quality of smallholders, thus granting them credit accessibility. We collected data
on 210 smallholder farmers in 2013, comprising farmers that receive payments for ecosystem
services (PES) and farm management training from the International Small Group Tree Planting
Program (TIST) Kenya to test the aforementioned theory empirically. We use game theory,
particularly a screening and sorting model, to illustrate the prospects for farmers with EES to access
formal credit and to improve their credit terms given that they receive PES and banking services
training. Furthermore, the PES’ long term duration (10 – 30 years) generates stable cash-flow which
may be perceived as collateral substitute. Results suggest that smallholder farmers in the TIST
program were less likely to be credit constraint compared to non-TIST farmers. Distance to market,
education, livestock and farm income are factors that determine access to credit from microfinance
institutions in rural Kenya. Amongst farmers that have obtained loans, those keeping business records
enjoy more favorable formal credit conditions. These farmers were observed to pay ca. 5 percent less
interest rate in microfinance charges. For TIST farmers, this type of farm management practices may
be attributed to the banking services and other training they receive within the program. While the
availability of classical collateral (farmlands) and PES may reduce interest rate, the latter was found
to be statistically insignificant. This research underlines the importance of an effective extension
services in rural areas of developing countries and the need to improve gains from conservation
agriculture and ensuing PES. The benefits associated with EES and PES may encompass agricultural
financing.

Do pigs form preferential associations?

This investigation examined whether pigs form long-term preferential associations or ‘friendships’ and factors that may influence the formation of these relationships. Thirty-three pigs from 16 litters were housed together from 4 weeks of age. At 10 weeks they were split into two groups of 16 and 17 pigs and each introduced into 3.05 m × 3.66 m observation pens (1st pen). At 17 weeks the two groups swapped pens (2nd pen). The lying patterns of each group were recorded over 3 weeks in both the 1st and 2nd pens. To identify dyads with preferential associations, association indices were calculated for each pair based on their lying patterns and analysed using SOCPROG1.3 and the permutation method [Whitehead, H., 1999. Programs for analysing social structure. SOCPROG 1.2, http://is.dal.cal/~whitelab/index.htm]. Dyads with high association indices for at least 2 out of 3 weeks in either pen, i.e. =0.10 (twice the mean), were classed as having preferential associations. Mantel tests were used to examine the relationship between the relative sex, weight, familiarity and relatedness of a dyad and their level of association and to examine consistency of associations between pens. The existence of preferential associations was identified in both groups, since the standard deviations for the observed half-weight association index means were significantly higher than for the randomly permuted half-weight association index means (P < 0.001). Of the 33 pigs observed, 32 formed preferential associations with one or more pigs in their group, resulting in 50 dyads. Only six dyads (12 pigs) formed preferential associations in both pens, suggesting that the remaining dyads either formed short-term associations only or were simply displaying a shared preference for the same lying location. Levels of association between pens showed no significant correlation. The relative sex, weight, familiarity and relatedness of dyad members also showed no significant correlation with their level of association. These findings suggest that unrelated pigs are capable of forming preferential associations. However, it is unclear whether such associations are widespread or important to pigs, since most dyads’ preferential associations were not consistent between pens.

The Financial Accountability of Irish Credit Unions: an initial empirical study

Credit unions are member-owned, voluntary, self-help, democratic, not-for-profit institutions that provide financial services to their members. They have both economic and social goals. Over this last decade they have achieved remarkable growth levels and currently there are 600 such organisations in Ireland, with approximately 50 per cent of the adult population of Ireland belonging to a credit union. Accounting for credit unions is a much-neglected area and relatively little is known about the sector's accountability. This paper presents the results of an initial empirical study of the financial accountability of Irish credit unions. A series of interviews and a basic content analysis of 178 recent financial statements were used to identify the views of key stakeholders with respect to the discharge of financial accountability by credit unions and the current quality of financial reporting. Overall, the research points to a sector where financial accountability through the medium of the annual report is weak and possible adverse consequences of this are explored. On the basis of the interviews it is suggested that if changes in financial accountability are to be achieved then some more proactive engagement of parties external to the management of individual credit unions is needed.